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Are Virtual Assignments the future of Global Mobility?

Dinesh Jangra, Partner Head of Global Mobility
17/09/2020
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More and more employers now have virtual mobility scenarios. The pandemic has certainly resulted in a surge of these arrangements, and many of them may well be here to stay in some shape or form. 

Significant people and compliance risks exist in these scenarios. There can also be unplanned cost surprises that are very unwelcome in the current environment. We are helping many organisations to tackle this area in a technology enabled, holistic way that focuses on putting in place policies, process and technical expertise to support HR and Global Mobility in reviewing these arrangements. 

As Global Mobility and HR professionals come across these arrangements, what should they help the business think through? 

Definition

Global mobility is skilled at connecting resources across borders to where there are roles. A business need arises for a certain set of skills and experiences in a country and resources are then identified, prepared and deployed. Equally, there may be a development opportunity for an employee to grow their own skills and experience, with the opportunity to do being outside their current country of work. This mobility involves a physical relocation and/ or at least regular business travel to the location of the work.

Virtual mobility sort of does this, all in reverse. The person doesn’t physically move, the work/ role now comes to them – the work/ role is mobile not the person. This creates virtual mobility – reverse assignments, or reverse business travel. 

While virtual mobility has no doubt been a feature of the workforce pre-COVID-19, the pandemic has definitely accelerated and amplified its adoption and occurrence. The result is an increased and more complex compliance and HR risk.

What does virtual mobility look like?

There are many examples of virtual mobility out there right now. Here are a few.

1. COVID Displaced/ remote workers 

Employee was in Country A at the outbreak of the pandemic. As part of the response to COVID they either moved back to their country of origin, or to another country or series of countries. During these movements, they continued to perform their roles remotely. Things may have normalised since, the employee may have gone back to the country where they originally were or they are based in the country of origin now. There is still a need to check that the periods of presence in each country has not triggered compliance.

2. Virtual assignments 

There were employees who were about to relocate to take up a new role in another country but that relocation has been put on hold due to the pandemic. Despite this, they started the new role (in the other location). They have therefore been working in their home country but on a role in the other country. 

Some of these arrangements may be/ have been temporary - a response to the pandemic but a relocation has now happened. Other arrangements like this might become part of the new normal for the time being – ongoing in nature with employee and role in different countries. 

3. Remote working 

Remote working and working from home is nothing new. Over the last decade there has been a huge increase in the size of the workforce that regularly works remotely. The shut-down of most offices in the pandemic resulted in the majority (if not all) workers in organisations working remotely from home. The key point here is working from home in which country? The pandemic meant some employees naturally gravitated to their roots, where their wider families and support networks were. In the rich, highly diverse workforce we all value, this meant people were and still are, working from other countries.

4. Regularised work from home requests 

As lockdowns have been eased, more and more offices have reopened but the mass return to working normally (100% of workers in the office) may never return. After all, for months businesses have been able to function with remote teams – the effectiveness has been proven. As a result, many employers are now actively considering new requests (and with it policies and process) to cover employees who will be fully or partially remote going forward. Being remote could well be working in another country or compliance jurisdiction. 

5. New local employees –  organisational/ entity mobility 

Even during the pandemic, many businesses have been increasing their employee global footprint adding local employees in countries outside of HQ. Some of this has been driven by the temporary difficulties caused by lockdowns that have now lifted, are being lifted. In a number of cases the employee may be in a jurisdiction where the employer has no formal presence or in country where they have a presence but the new employee(s) are not part of that business. Compliance here is a must as labour law, payroll, tax and social security aspects need to be reviewed.

6. Non-resident Directors 

Not new, these types of workers existed pre-COVID too. Where employees live in one country but have statutory (Directorship, formal management roles) in other countries it is important to review how those arrangements should be set up to be locally compliant. It’s not always as simple as keep them on payroll and employed in the country where they reside.

What Virtual mobility considerations need review?

At the heart of the issues is the reality of a disconnect, a disconnect between employment location (where no doubt the employment, employee welfare support, payroll and related compliance is set up) and the employee’s physical location. 

Each case may well be different but some core areas that need action/ review are:

1. Operational viability: It’s important to actually review whether a proposed virtual/ remote working arrangement in another country is actually viable. Time differences/ working hours, data privacy, systems access, employer’s liability insurance, health & safety are amongst the practical areas to review. 

2. Policy: Many organisations will have a home or remote working policy and will probably have some form of global mobility policy. Those policies will not necessarily cover the case of the virtual or remote work in another country. Additional considerations may be necessary – how do you pay and reward these employees (which population do you benchmark their compensation to?) What expenses can they claim for or not – travel, technology etc. Who in your organisation should sign off or approve on a virtual or remote mobility request? There are many areas to think through.

3. Training: Employees may be functioning in a new cultural and work culture without really physically being part of it. What skills and knowledge are needed to assist them in working in virtual teams across cultures and timezones.

Some of these may well be soft issues around culture and communication, others may be hard issues for example, if someone is managing teams in other countries to what extent do they need to be aware of the employment law and labour consideration considerations? Don’t assume employees’ line managers are aware of these areas, after all this could be new to them as well. 

4. Access to Healthcare: An absolutely key issue. If the employee is not physically living or working in the country in which they are legally employed how will they access healthcare. It’s important to check the local state provision and local access criterion. Does the employee qualify? What supplemental healthcare is required and the appropriate private medical insurances set up recognising the employing is a remote or virtual worker? 

5. Payroll: Virtual mobility can drive changes to payroll obligations both in the country of employment/ role and the country in which the employee is physically working. Not addressing these obligations proactively can result in exposure to non-compliance, penalties and interest and result in cash flow difficulties resulting from dual payroll obligations. 

6. Tax and social security: Where will the employee be subject to taxation, what tax returns must the file, what tax registrations are required? Where will social security become due as a result of the virtual or remote work arrangement? These are critical areas to review to ensure that employer and employee non-compliance does not arise. It’s important to note that tax rules in some countries are dependent on states or cities (USA is an example), so virtual mobility and compliance requirements can be created even if the employee is the working in the same country.

7. Immigration: Does the employee have the right to work in the country in which they are physically working? Are any associated work permits or VISAs required and have registration requirements been considered?

8. Labour law: In a virtual mobility situation, an employee may hold a contract of employment in country A. However, they are living in country B. It can be that they are now acquiring rights or giving rise to mandatory employer obligations under the employment law of country B. Has this been assessed? This can be a complex and costly area that needs review.

9. Corporate structure: If you have any employee living and working in a country where you have no formal corporate presence or have the presence of a different business unit a number of intended consequences can arise. The nature of the work the employee is doing can create a permanent establishment (whether or not this was intended) resulting in corporate, sales and VAT tax obligations and compliance. 

10.Tracking: As business travel returns, knowing where your workers are, and have been, is now more important than ever. The role that tracking plays in the ability of an organisation in the post COVID world to manage its duty of care to its employees is really clear. Sadly, we face other risks – an uncertain world brings other reasons to quickly identify where our workers are quickly and efficiently. 

How do you do this with virtual employees? Where does the role of your organisation begin and end versus the role of the state/ healthcare system in the work/ role location and the country of the employees’ residence?

What should organisations do?

The current economic environment means that many HR and Mobility teams are resource constrained. This is happening at the same time there is a surge in new cases of virtual mobility. 

There is no doubt, it’s critically important that Global Mobility expertise is applied to these cases. 

A good sound process to review the cases (so that HR and Line Management are supported) without necessarily increasing workload of the global mobility/ HR team is key. Without a process or framework organisations can expose themselves to potentially significant people, cost and compliance risk.

Contact us

Dinesh Jangra
Dinesh Jangra
Partner, Head of Global Mobility
London