How to evaluate whether your organization can and should allow remote cross-border employment
This is a guest article from Chris Debner of Strategic Global Mobility Advisory, based in Zurich, Switzerland.
Can a company really offer their employees the ability to work from anywhere?
What would be the conditions, and who would be eligible? How should an organization define a business case and a strategy?
COVID-19 travel restrictions and lockdowns have forced many companies to contend with issues surrounding remote cross-border employment. And although it was borne out of necessity, the rise of remote work has helped fuel the #workfromanywhere movement—if employees are working from home anyway, why not to work from another country? This question isn’t just being asked by the rising workforce and the so-called digital nomads who want to travel and see the world; it’s also executives who like the idea of working from their holiday home abroad.
It is an illusion that you can allow all your employees to work from anywhere. Just think employees in manufacturing, retail, specialty medicine, aviation and many more—for them, it is out of question.
But it is also wrong to believe that you can successfully prohibit it all. That’s why it’s important to evaluate the pros and cons of #workfromanywhere, as well as potential solutions and how to define a strategy. It will take a multidisciplinary effort of various functions in your organization that will deliver results.
Pros of working from anywhere
It’s easy to see why #workfromanywhere is attractive to employees. This type of remote-work policy would enable employees to live:
- Where they spend their holidays or where they want to travel to see more of the world
- In areas where they’re more satisfied with the local governments, governmental services and health systems
- Where there’s a lower cost of living
- Where they don’t have to commute; especially for those who cross borders, commuting can be arduous, so eliminating the commute gives them more free time
- Closer to relationships or family
- In more favorable climates
Cons of allowing employees to work from anywhere
Although there are numerous pros for employees, there are potential downside for employers, particularly from an international HR and compliance perspective. These obstacles are often met with ignorance by employees and management alike, but the need to be taken seriously:
- Social security and pensions
- Permanent establishment, which is even potentially applicable in some jurisdictions within states or cantons
- Industry restrictions (e.g. financial services due to regulatory constraints)
- Duty of care issues
- Geographic pay differentials and pay equality
- Transfer pricing, cost exchange and VAT issues when employment in an owned local entity is chosen
Building a business case for #workfromanywhere
Does your organization have a business case for remote cross-border work? A cost-benefit analysis is needed to find out whether the benefits of offering the ability to work from anywhere outweigh the associated costs, the inherent risks and administrative effort it creates.
Ask yourself the following questions to determine whether your organization could benefit from offering this type of remote-work policy include:
- Could we see a competitive advantage in the labor market?
- Will it help attract, engage and retain the talent we need?
- Is there an increased demand from employees to work from abroad beyond the crisis?
- Can #workfromanywhere support our global talent sourcing?
- Does your organization need to offer a solution for expansion into new markets, cross-border mergers and acquisitions, immigration restrictions, multi-state workers or family situations?
The benefits of offering #workfromanywhere are hard to quantify, and the answers to the above questions will vary widely from company to company.
Next, it’s important to understand potential solutions for overcoming any challenges brought on by allowing employees to work from anywhere, especially those related to compliance. This will help you understand the cost and effort you need to invest. What approaches and solutions are available? Consider:
- Employment in a local entity
- Using an employer of record
- Setting up a global employment company
- Allowing employees to become contractors
All approaches and solutions must be evaluated, including how they fit to your needs and company culture, and what their cost-benefit ratio is.
Without clarity on what you want to offer employees and a strategy for making certain employment policies feasible, you end up dealing with situations and requests on a case-by-case basis. You become reactive instead of proactive and cannot communicate a consistent message to your employees. It may make sense to analyze the scenario of doing nothing as well and to identify the cost, effort and risk of such an approach.
Finally, to build a solid business case, it’s important to look at some additional considerations for a work-from-anywhere employment policy:
- Will the employment policy be offered to all employees, only in special circumstances, or in clearly defined scenarios, such as with duration limits?
- How much risk is your organization willing to accept and how does it balance with the benefits of remote work?
- How much additional administrative effort and associated cost is your company willing to invest?
- How will dissatisfaction from those employees not eligible to work from anywhere be handled?
The business case shall be able to clarify whether it’s in the organization’s best interest to offer employees the ability to work from anywhere, with the resulting answer a “yes,” a “no” or a “yes, only in specific circumstances.” If it’s determined that a #workfromanywhere policy is in the best interest, a business case can help clarify the chosen approach for the policy, as well as the investment and expected benefits. And once the business case is created and the buy-in from key stakeholders is secured, you move on to design and implementation.
The bottom line on #workfromanywhere
There is a remote hope for legislation to ease the compliance challenges that come with allowing employees to work from anywhere, especially if states become more protective of their labor markets and tax revenue during and after the pandemic.
While it is evident that #workfromanywhere is not for everyone, companies need to develop a vision what to do about it. No approach for #workfromanywhere is risk-free and cost neutral, and you may determine that that it’s in your organization’s best interest to restrict or forbid cross-border remote work. But it would be a blatant oversight not to look at the costs and benefits, in order to justify the path taken.
Chris Debner is an award-winning talent mobility thought leader and frequent speaker on the future of HR. He has more than 20 years of experience in international HR advisory and has worked in over 35 countries across all industries. Chris runs his own consultancy, Strategic Global Mobility Advisory, out of Zurich, Switzerland, and may be reached here.