Working from anywhere – the hidden implications of cross-border and remote working

A recent webinar hosted by Santa Fe Relocation set out the advantages and potential disadvantages of employees working in destinations other than their contractual employment location. Dr Sue Shortland reports.

Man with suitcase walks across a piazza with the Eiffel Tower in the background. In Paris

Sue Shortland

18 January 2022

This article is taken from the latest issue of Think Global People magazine.Click on the cover to access the digital edition.

Being able to work from anywhere has become part of the employee value proposition – employers have begun to report that it has become difficult to attract and retain staff without offering them the opportunity to work away from their contractual employment location. As a result cross-border remote working has become a feature of employment offers – either by design or by accident.

Digital nomads: freedom and flexibility

For employees, working from anywhere as ‘digital nomads’ provides a large degree of freedom and flexibility, enabling them to spend time in their home, host or a third country as suits their personal and family circumstances. For employers allowing and/or enabling employees to work from anywhere also presents a number of advantages. These include access to an extended global talent pool, workplace agility, work-life balance as an employer benefit leading to higher productivity, and reduced office/property costs.The advantages of working from anywhere sit at the top of an ‘iceberg’, visible above the water-line. But lying below the surface are a number of implications – legal, compensation and benefits, and taxation. In addition, there are a number of resourcing implications. These must all be considered carefully before employees are permitted to work cross-border/remotely.

Digital nomads: the legal implications?

The legal implications of working from anywhere are wide-ranging. First, employers need to consider labour laws. Employees may be able to acquire employment rights locally such as termination and consultation rights. Regulatory requirements may limit what employees are legally able to do – for instance can lawyers practice without registration in the location? Immigration is also an issue – are people legally able to work in the country where they are living and working? There are also data protection implications – is it compliant for employees to access and store data where they are living and working?There are also a number of compensation and benefits issues to consider. Living and working in a different country from where employees are contracted to work can have pension ramifications as well as implications for mandatory benefits. The tax treatment of employee salaries/benefits may also require attention linked to the tax regime locally. Employers may also wish to consider implications for their company’s pay structures – role-based compensation may be less appropriate that location-based compensation (especially if employees have opted to live in locations where salaries and cost of living are considerably lower for example). This may result in organisations needing to revisit benchmarking of salary data and rethinking pay reviews, giving consideration to alternative peer groups.

More from Dr Sue Shortland:

Flexibility in mobility policy designEmployers are managing talent in a very different environment today than pre-pandemic. Flexibility has become key to talent attraction and retention. Dr Sue Shortland explains some of the implications for mobility and policy design.The future of international mobilityAlthough the Covid 19 pandemic has slowed down international mobility, organisations still require global moves to fill skills gaps and develop their future leaders. What are the recent changes that are shaping the future of international mobility?

Remote working: taxation is a crucial issue

Taxation implications must also be taken into consideration, including any obligations for payroll taxes and whether social security payments have been triggered. Income tax rules must be adhered to and tax treatment implications for any expenses paid locally also need to be considered. The presence of an employee may also generate a permanent establishment risk but, even if the organisation has a permanent establishment locally, the nature of the work performed by the employee may not align with the business thereby generating risk.With respect to resourcing, it is important to consider how talent will be managed. Employees who work virtually may not be seen frequently and thus how to instil company culture, ensure safety and security, deliver training and development, facilitate career progression, manage performance, and develop future leadership cadres becomes more challenging. It is also important to ensure that the person employed is actually carrying out the work and that s/he does not carry out work for other employers.To deal with these issues, Santa Fe recommends that organisations make use of business travel trackers and involve global mobility professionals. A work from anywhere policy should be devised to apply either universally (such as limited by time where the individuals works for a little longer in the location following a vacation for example) or tailored as necessary (with the length of the time spent in any country varying country by country). Bespoke case assessments are also considered helpful whereby the role and the person fit is assessed before working from anywhere is approved. Employers might also wish to review an employee’s performance before approving a work from anywhere arrangement (only offering these to highly performing personnel). Finally, the use of secondments and/or contractors might prove a useful tool.

To explore more widely the growing importance of new ways of working, why not join us on 9 June for the results of the Think Global People and Relocate Awards and the Future of Work Festival?

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