Myth: only multinationals manage an internationally mobile workforce

International mobility no longer just includes the traditional assignments that can be expensive, and commuting arrangements. International remote working is now a new trend, especially post a global shift in how people want to work post covid. Readily available tools and structures mean more and more SMEs are also able to adopt an international working arrangement in order to remain competitive.

Structures such as Employer Of Record (EOR) and Professional Employer Organisation (PEO) which tend to be adopted by companies with expansion plans, are now also being used by those employers to facilitate and implement a flexible international working arrangement.

Tools such as Hubstaff are being used by international teams to track activity and manage payroll reporting requirements.

The number of countries that offer digital nomad visas continue to increase, to attract remote workers who want to reside in a country temporarily whilst working for a foreign company. More creative ways to experience working abroad such as workation are being provided as an employee benefit.

The recent update to the OECD's guidance on remote working demonstrates that a flexible and borderless working structure is here to stay. We will continue to see changes aimed at enhancing both the employee's experience at work and the employer's experience to manage risk and ease reporting requirements.

Myth: because multinationals have entities around the globe, they do not need to monitor employee mobility.

Imagine a scenario where a UK employer enters into a contract with an individual which allows the employee to work remotely from their home in the UK. The employee does not tell their employer that every week they are spending 2-3 days working from another country. The employer does not have a process to track where the employee is working from. Several months go by.

The issues that can come up are:

• the employee becomes tax resident in another country and is required to report and pay tax overseas

• the employer is unaware that the employee has triggered a payroll reporting obligation overseas, thereby exposing them to additional costs including penalties

• legal complications such as immigration and employment rights

• reputational damage for not being tax compliant

A presence overseas does not, on its own, alleviate reporting obligations and risks. Processes and policies are key.

The key takeaway

Most companies are able to benefit from an international working arrangement, with the right structure and processes:

• EOR or PEO? : whist an EOR may seem attractive, especially for those who do not want to create a legal entity overseas, it may not be a suitable structure for the activities that will be undertaken overseas.

• A remote working policy: Gather data to assess what your employees are doing and would find attractive as a perk to help you design a policy that is fit for purpose. Once designed, educate all stakeholders on when and how to apply the policy. Ensure the policy is reviewed annually, or when there are changes to remote working regulations.

• A tracking process: Often this is limited to logging in a request for remote working, tracking the request until it is approved and tracking the number of requests. What happens after? Eg what should happen when an employee extends their stay? What was the employee's experience?

If you have any questions or need help to implement a remote working arrangement, you can contact me on vanesha@vkmack.co.uk.