Remote cross-border employment: Find a solution

Virtual work is here to stay.

For HR, the question now is whether remote work policies should also be made available for cross border employment. Should HR police their organizations, telling them remote cross-border employment is not possible because of compliance reasons—or should HR find compliant solutions?

We’ll explore this HR challenge and provide a potential solution for HR on how to deal with cross-border virtual work.

Now that companies around the world have adopted remote-work policies—even if out of necessity due to the COVID-19 pandemic —it will be hard to reverse course.

“We have gone through a one-way door. We can’t go back, in part because some organizations have offered to let their people work remotely permanently,” as Ryan Smith, CEO and co-founder of Qualtrics, says in a recent HBR article. “They’ve already set the terms for what the future is going to be and when organizations are competing for talent, we’ll all be competing against that.”

Further making the case for virtual work: a Stanford University study, which reports a 13% performance increase for home working along with improved work satisfaction and decreased turnover. It won’t be easy to rescind these work-from-home policies.

At the onset of the pandemic, many companies—especially in Europe—were faced with local employees and business travelers stuck in another country yet continuing to work virtually. There were also foreign local hires, who could not be at their desks due to closed borders, starting work from their home country. HR and talent mobility teams were forced to manage compliance and other issues of the cross-border employment.

Even when this global crisis passes, the demand for remote cross-border employment will remain.

Businesses have begun asking: Why can’t we send a role to an employee, instead of sending an employee to a role? Additionally, companies are questioning international assignments and evaluating whether to replace them with remote work to save costs, which is for many businesses, imperative during and after the crisis.

Some companies, especially in the tech and online business sector, are managing the crisis and growing—in fact, they want to recruit internationally but are hampered by current cross-border employment restrictions. Many newly hired employees for U.S. multinationals are reported to have started their jobs in their home countries.

And with the rise in remote work, some countries are promoting themselves as ideal locations from which to be based while working remotely, offering so-called nomad visas. Among them are Estonia, Bermuda, Barbados, Georgia and Croatia, with many others certainly to follow.

This atmosphere, in which employees and the business see remote cross-border work as a viable option, creates a demand and a challenge for HR and talent mobility teams.

Although some organizations have ruled out virtual cross-border employment, only allowing remote work on a domestic basis might not be sustainable. Why? Think of daily cross-border commuters, particularly in Europe, and whether they should be excluded from making use of a WFH policy.

It is up to HR and talent mobility to work with the business to develop a playbook for all possible WFH use cases and define how to meet demand. This includes identifying the existing and future employee groups that would be eligible for remote cross-border employment based on various compliance issues: taxation, social security, immigration, health insurance, duty of care, compensation levels, benefits, payroll and permanent establishment risks.

The ad hoc solutions that companies have employed during the COVID-19 crisis frequently do not answer all compliance questions or eliminate all existing risks. Employment compliance grace periods in the EU helped for the time they were in place, but as they end, organizations need to determine whether they can or should recall employees from abroad to their workplace—while their local colleagues may continue working from home.

Another frequent question is whether the company or the employee should bear the higher tax burden that was created by the involuntary cross-border remote work—and who should bear the burden if cross-border remote work is voluntary.

For some talent mobility teams, the additional effort to ensure the compliance of cross-border virtual workers might mean they simply tell the business that it is not possible. But is it really prohibitive? Can remote cross-border employment only be allowed on an exceptional basis?

Or is there a way for HR and talent mobility to protect the business—and their efforts—while also allowing employees with the dream of working from a beach house on the Bahamas to be able to do so? There just may be.

Now that the initial urgency of the crisis has passed, it is time for finding a more standardized solution for virtual cross-border employment. One approach for HR and talent mobility to consider as they define their organizations’ playbooks: global employer of record companies, which are known for providing a feasible solution for expansion into new markets but can also serve as a solution for virtual cross-border work.

Some of the reasons an employer of record as alternative should be investigated are:

It’s important to weigh the benefits of an employer of record solution against the cost of compliance risks and administrative effort—including potential legal entity establishment —that a company would have if they handled the implementation of remote cross-border employment in-house.

Many companies have already done the analysis and found that the employer of record solution is the more cost-effective and compliant solution for their virtual cross-border workers.

The future will show how well HR strategies will allow for the future of work culture. Although I believe this is illusionary for all employees, the pressure is on for talent mobility to choose between playing policy police or finding feasible solutions that allow companies to adopt virtual cross-border employment if and when they need to.

Chris Debner is an award-winning talent mobility thought leader and frequent speaker on the future of HR. He has more than 20 years of experience in international HR advisory and has worked in over 35 countries across all industries. Chris runs his own consultancy, Strategic Global Mobility Advisory, out of Zurich, Switzerland.