Some were stuck in locations they didn’t want to be in, while others wanted to work from new locations to be near family.
The whole situation was unprecedented, and tax and immigration authorities were pretty understanding, accepting that it was impossible for many employers and employees to remain compliant with the regulations. Work permits expired but employees couldn’t leave, and people were stuck in places without ever being authorised to work there for more than a day or two. There’s barely an international company on the planet that doesn’t have a similar story.
Remote working has made compliance much more complex
An almost unbelievable three years later, and the closed borders and the lockdowns are a thing of the past for most of us. Yet the working world has changed forever. Many employees work from home permanently and international assignments can now be fully remote – where the employee never sets foot in the country they are working in (or for). The fact of the matter is, many employers either don’t know where their employees are, or if they know, they don’t realise it’s a problem that they’re not in the same country as their employer.
What compliance issues are companies are facing?
1. Immigration compliance doesn’t mean tax compliance
Global Nomad visas are well publicised. Many European countries like Portugal and Greece, as well as more far-flung locations such as Barbados have created new visas for remote and freelance workers. Whilst it’s true that some of these locations have had the foresight to cover tax considerations, others haven’t so it’s critical to check that the work arrangement is tax compliant by discussing with a tax advisor.
2. Personal tax compliance doesn’t mean corporate tax compliance
Your employee may have regularised their own tax situation by registering with tax authorities, but corporate tax considerations are entirely separate. If your employee is conducting business on behalf of the company, they may be creating a taxable presence from a corporate tax perspective. This situation can be managed by using an Employer of Record, but again, it’s critical to take advice from a tax advisor.
3. And then there’s social security compliance
Many countries allow employees to remain enrolled in home-country social security and be ‘detached’ for a defined number of years (usually two, but it depends on the nature of the contract, the duration, and the location). Again, it’s critical to take advice because it’s usually not possible to keep paying standard contributions in a country if the employee isn’t actually working there.
4. Labour laws
If an employee is employed by a French company on a French contract but is working remotely in the UK and they have a dispute with their employer or the employer needs to make then redundant, which country’s labour laws apply? Employee protections can be vastly different in different countries, so it’s critical to take advice from someone like a professional services organisation experienced in international work arrangements.
Where should you start to achieve compliance in your organisation?
1. Find out where your people are.
First things first- you need to collect the data. You need to make it absolutely clear to employees that they must be truthful about their work arrangements (and that they are obligated to do so). Be clear that the purpose of the exercise is not to change employee work arrangements, but to understand what is happening in the organisation. Only when you have this data can you begin to understand if there is a problem, and if so, how to manage it.
2. Create policies.
Employees need to feel that they’re all being treated fairly, and that they are part of the solution, so talk to them about what they want. When you have established the size of the problem that you’re dealing with, you can establish the best way to manage your population. The solution will depend on the size of your organisation, how risk averse your organisation is, and how much of a talent shortage you’re experiencing. If you have serious issues with recruitment and retention, you don’t want to do something that will mean losing a large proportion of your workforce!
3. Regularise your employee population.
Now you have established the scale of the problem and decided how to deal with it, you need to put the plans into action. This will include:
- Working with an immigration lawyer to ensure compliance from an immigration perspective
- Consulting with an Employer of Record who can employ your employees on your behalf if you don’t have a legal entity in a remote location, or looking into establishing a legal entity in locations where you have sufficient employees to warrant it (or will have in the future)
- Working with employees to see what works for them. It’s critical to bring them on the journey with the organisation. If you take a heavy-handed approach, employees are likely to resign en masse. If you explain the issues and work with employees to find solutions, you’ll have better outcomes. If you need to bring employees back to the country that their contract is in, or back into the office, make sure employees understand why you’re doing it and what you’re aiming to achieve.
4. Establish policies for the future.
Now your employee population is fully compliant, set out clear rules and expectations for employees going forward about what is and isn’t allowed. Again, this will depend on your organisation, but some employers allow employees to work outside of their home employment countries for a defined period each year (e.g. 4 weeks), others have no rule but ask employees to discuss requests in advance.
Ensuring that your globally mobile employee population is compliant doesn’t have to be a headache. It just requires an understanding of the issues, methodical thinking, and a knowledge of who the right experts are to talk to.
For support creating global mobility policies for your organisation, get in touch.