Responding to increased cross-border remote working

Over the last few decades, jobs have become increasingly data-driven, and an array of collaboration and communication platforms have allowed for the creation of a remote workforce and increasingly decentralized teams. Employers benefit from being able to rethink their workspaces (think what can become of the crowded conference rooms under the “new normal”), while employees economize on commuting time. By 2020 half of surveyed workers believe that they are equally or more productive working from home than at the office (Roy Maurer, “Majority of Employees Embrace Remote Work,” SHRM, April 22, 2020).

Existing trends on the supply side such as automation & crowdsourcing – giving life to terms such as contingent workforce and virtual employment – have all been catalyzed by COVID-19 on the demand side.

Impact on Employers & Global Mobility-specific considerations

The pandemic triggered a huge redeployment of the workforce: employers in the UK facing a rise in the proportion of those working remotely rose from 5% to 47%, around 42% of the US labor force working from home full-time (based on Stanford Institute for Economic Policy Research) and Norwegian jobs with potential to be performed at home estimated at approximately 39% (Statistics Norway, Research Department).

Such profound change demands that organizations are not only aware of, but also are able to navigate tax, payroll, social security, immigration, and policy complexities of the change of where work takes place, particularly in a global mobility context.

This is particularly relevant as organizations (38% based on Deloitte HC Trends 2020) and their employees (3 out of 5 workers who have been working remotely during the pandemic, according to Megan Brenan, “US Workers Discovering affinity for Remote Work” Gallup) are considering making remote work arrangements permanent for at least part of their workforce.In some instances, a single employee engaging in international remote working can create employer repercussions in areas such as:

• Annual individual tax return filing
• Payroll reporting and employer filing/reporting
• Immigration considerations / right to work 
• Employment law compliance and regulatory compliance
• Permanent Establishment / Tax Residence Considerations
• Transfer Pricing
• Intellectual property location and corporate structure
• Indirect Tax and Withholding Tax Exposure

Global Mobility functions, HR & Tax teams have found themselves at the heart of developing a Remote Work policy, as well as managing ongoing compliance responsibilities.

Formulating a Response

Inevitably with such a broad range of considerations – the organizational response must be uniquely tailored to specific needs & circumstances.

A range of questions can kick-start an organizational assessment and response:

• Is a workforce review being undertaken, including categorization and segmentation of roles to assess those which can be performed remotely on a sustainable basis?
• Will individuals be permitted only to work from their ‘home’ country or from any country? How frequently can individuals change their remote-working ‘base’ country?
• Can the HR system tag and track an employee as a remote worker? 
• How will third party vendors be identified and managed? E.g. payroll, pension, and healthcare?
• Is there a mandatory requirement to provide certain minimum benefits in the remote working location?
• How will remote workers be remunerated? E.g. will their salary, benefits, pension be benchmarked to local salary?
• Are the taxation of benefits e.g. pension, share schemes, expenses, and benefits understood in the “base” location to minimize surprise tax costs?
• Can remote working locations and remote worker travel be tracked adequately to minimize compliance risk and facilitate required tax reporting? 
• Is tax/social security currently being withheld in the wrong location? Will overpaid tax/social security be refundable?

Formulating a response during a pandemic may be perceived as an overcorrection, yet some of the change is permanent and will stick.

Deloitte’s polling of large business audiences in a weekly COVID-19 webinar shows that around 60% of respondents would like to work in the office for three or fewer days a week after the pandemic, highlighting the urgency and importance of firms focusing on their International Remote Working policies.