It may sound counterintuitive, but it’s nonetheless the case that the Coronavirus pandemic has helped usher in a new era of global mobility. In the same way that remote work became the go-to in many industries during the pandemic, remote cross-border work took hold as well. And as the pandemic kept going, cross-border work kept adjusting and evolving. By now, working from a third-country location, extended business trips, cross-border commuter arrangements, etc., have become part of the employment landscape. For businesses, this means a new set of compliance laws to figure out, and employer responsibilities to review and modify to reflect the new reality.
With the traditional form of long-term expat assignments, immigration, tax, and social security implications for the assignee and the employer alike were understood and addressed in advance. Staying compliant was relatively easy because the parameters were largely known. But, as the concept of global mobility has expanded, issues of compliance (in all its forms) and employer responsibilities have become increasingly complex from both a regulatory standpoint which includes such things as duty-of-care, tax, immigration, and wellness, and an organizational standpoint with internal global mobility policies and their application in focus.
As the expanded pool of international work options is likely here to stay, many organizations are in need of redefining their concept of global mobility and the policies and practices that safeguard it, not just to stay compliant but to stay competitive and resilient for the future.
Just as the pandemic was a conduit for remote work on a broader scale, it also highlighted the question of lifestyle priorities for many. A 2021 survey by McKinsey shows that some 30% of employees (the percentage varies between 25-32 depending on where in the world you ask the question) would consider switching jobs if they had to return to full-time on-site work.
The same survey shows that 51% of employees want a better work-life balance, which for many is synonymous with having more flexible work circumstances, including being able to work abroad. Millennials are at the forefront of the changes taking place. They are highly mobile and by 2025, are going to be 75% of the workforce. Of those, 59% say they are willing to work abroad according to a Deloitte Study from 2021.
In short, flexible work — domestically and abroad — has become a tool to attract, retain, and develop talent.
While the “new” global working arrangements are often more cost-effective for the employer compared to traditional expat assignments, they do pose challenges that, if left unaddressed, can be detrimental to both the individual and the organization. In global mobility roundtable discussions held by BDO (Binder Dijker Otte) at the end of 2021 (outlined in this Bloombergtax.com article), participants shared that they were struggling to identify the location of their employees at any given time. Not knowing the location of your workforce in real time can be costly in several ways, from tax liabilities to compliance issues to disaster logistics.
Andrew Bailey and James Hourigan from BDO write in the Bloombergtax.com article: “Absent a business tracking its employees’ movements, then one or more of its mobile employee workforce can inadvertently trigger employer obligations in the overseas jurisdiction without the business being aware of any repercussions. For example, the business may not be aware that it is liable to withhold tax (and social security) from an employee’s salary, and non-compliance may result in penalties being imposed on the business from the foreign country authority. It could also lead to an employee being present in another country without the appropriate work visa. Such incidences of non-compliance could result in the business and its mobile employee workforce being sanctioned, such that the business is not permitted to conduct business in the foreign country and/or is liable to a financial penalty. Indeed it is not uncommon to hear of employees being deported in such instances.”
There is no one-size-fits-all solution to addressing global mobility issues as different countries have different tax and immigration rules, and no two companies operate under the same conditions. What organizations should do, if they haven’t yet, is take a long look at existing mobility programs and then update and adjust where needed to ensure they are fit for purpose, keeping in mind duty-of-care, tax issues, immigration, employee wellness, etc.
Some of the areas to cover include
- laying out what encompasses international work;
- defining the concepts of “extended business trip”, “commuter assignment”, “short- and long-term assignments”, “working from a third country”, etc.;
- determining the conditions and liabilities for each type of work;
- communicating to ensure all team members are aware of what the policies look like and what individuals’ responsibilities are.
By: Felicia Shermis