Bringing remote work out of the shadows, into the open

Bringing remote work out of the shadows, into the open

The checkpoint separating Singapore and Johor Bahru is one of the busiest in the world. Thousands drive across the Singapore-Malaysia border daily for work, to visit family and friends or simply enjoy a change in scenery. If you are an employer in Singapore that has permitted remote work, can you be sure one of your team members is not in Malaysia right now?

As experienced advisers on global workforce strategies, immigration and tax, we can attest that this is exactly the situation many large multinational companies face. An employee can slip across an international border while continuing to participate in video calls and virtual assignments, under the guise of working from home.

This might suit the employee's productivity and even present benefits for the employer. Yet the prevailing human resources attitude of "don't ask, don't tell" ignores potentially serious compliance obligations.

An employer's duty of care for their staff's health and well-being compels them to know where their people are. Yet we have come across companies discovering years later that the person they always thought was based in Singapore had, in fact, been working from another geography.

Remote work is here to stay

During the peak years of Covid-19, border closures minimised this illicit arrangement. However, the rise of the "stealth" remote worker is merely a subset of a larger conundrum companies face as the pandemic recedes.

Remote work is here to stay. The pivot has become permanent. In a Deloitte global survey of 820 professionals last year, almost 80 per cent said they plan to allow some level of remote and hybrid work.

Based on our analysis, up to 47.8 million people in the Asean-six nations (Indonesia, Malaysia, Singapore, the Philippines, Thailand and Vietnam) could shift to working remotely in the coming years. As an island nation with pervasive broadband connectivity and a tech-savvy population, Singapore stands at the crest of the wave. We estimate 45 per cent of the island's workforce has the potential to work remotely.

The task is clear: If employers can develop strategies to manage the risks that come along with remote work, they can harness this shift to its full potential.

A key attraction for talent

While remote work is not suited to every industry—retail and hospitality come to mind -- it reflects our economy's evolution from labour-intensive industries such as shipbuilding to financial services, telecommunications, technology and research.

The tight labour market in many professional services occupations also means that talent can afford to be selective. A survey last year found that two in five Singaporean workers would not accept a job if they were unable to work from home. In fact, 27 per cent said they had already quit a role that provided insufficient flexibility in working hours and location.

Remote work also makes commercial sense for companies. It enables them to source new pools of talent regardless of location, including women previously limited by family or caregiving responsibilities. Employers can flex workforce size by leveraging the gig economy or tapping on the international market. Judging by the emptying out of commercial space in the central business district, many are also taking the opportunity to slash overheads by downsizing their physical presence.

The reality is that Singaporeans have gotten used to freedom and flexibility, shorter commutes and greater work-life balance. Physical workplaces are transforming into spaces to build human connections and deepen team collaboration. Based on our experience at Deloitte and with other large clients, two to three days in the office is the new norm.

Developing new policies and frameworks

During the early days of the pandemic, several global tech chief executive officers announced that they would allow their staff to work anywhere in the world -- after which, they were hit by the reality of complex immigration and taxation arrangements, among other complications. While the United Arab Emirates, Indonesia, Thailand, and Malaysia have instituted so-called nomad or remote working visas, every country is different.

In Singapore, the focus has been on introducing the new Complementarity Assessment Framework (Compass), to establish a balance between the overseas and home-grown workforce. The government is also encouraging employers to commit to the voluntary Tripartite Standard on Flexible Work Arrangements to enable employees to better manage their work-life needs through flexible work options.

More companies in Singapore may want to untether their workforces. However, a gap exists between ambition and action. In our experience, the first step is to decide whether remote work fits with the organisational strategy. Does an organisation need to improve employee experience in order to attract or retain talent? Are cross-border teams required because of a shortage of talent locally, or is the organisation relying mostly on site-based teams?

Once these questions are answered, the organisation has to assess how to operationalise remote work while managing its compliance responsibilities and business risks. Typically, this means establishing guard rails on issues such as who can work remotely, in which cities or countries and for how long.

Legally, there is nothing to stop a foreigner who never sets foot on the island from working remotely for a Singapore entity. The question is if a local worker wants to go offshore and log in from somewhere else.

What happens if an employee decides to go to the Philippines and work from a beach? Hypothetically, they could do so incognito as a tourist, but would be subject to double taxation if uncovered. Their Singapore employer should also be concerned about creating a fixed place of business under the definition of permanent establishment, exposing the company to potential tax liabilities in the foreign jurisdictions as well.

Ensuring remote work works

Establishing a successful remote work strategy that is supported by proper governance requires internal stakeholders to be fully aligned. It is not enough for a team leader to approve a request to placate restless talent if functions such as tax, finance, human resources, payroll and legal are not kept in the loop. Cybersecurity and privacy of client data across borders are also critical considerations. Strict rules will be needed to regulate device usage and authentication.

Finally, remote work raises novel ethical issues regarding employee monitoring. For example, we know of companies tracking IP addresses or virtual private network access to check on the location of their staff. In general, as employees seek greater leeway, maintaining the integrity of programmes will require digital tools and technologies to keep pace.

Previously, employers rarely had to worry about these issues. Even during the pandemic, circumstances felt exceptional and unlikely to be repeated. However, our experience indicates that hybrid and remote work represent nothing less than the future of work. Therefore, it is time for companies to fully embrace the idea, recognise it as key to their talent strategy, and control and manage it.