How to manage WFA risks with RSM

Working from anywhere has been accelerated by the COVID-19 pandemic.

While it is true that some people have always been digital nomads, regularly traveled internationally for work, as well as relocated and move across the world for a particular job, “global remote working wasn’t particularly commonplace before”, Joanne Webber, tax partner in the global employer services division of accounting firm RSM UK, tells UNLEASH.

Joanne Webber, tax partner, RSM UK.

According to Webber, often working from anywhere was quite ad hoc and unplanned, “there [usually] wasn’t any kind of framework around it”.

But “the pandemic taught us that companies are able to facilitate that [remote work from anywhere] for large numbers” of employees, adds Webber’s colleague Brian James, RSM Netherlands’ director of global employer services.

This growth in interest in global remote working opportunities has been spurred on by employee preferences.

The pandemic forced white-collar employees to work from home full time, and, for many, they proved they could be just as productive (if not more so) than when working in the office.

While many are happy to continue to split their time between remote locations and their employer’s office – a phenomenon called hybrid working – others want to seize the opportunity to not let where they work influence where they live.

Employers are largely beholden to these workers’ preferences because of the ‘Great Resignation’, and the business need to minimize attrition rates.

But, of course, allowing your employees to work from anywhere they fancy is much easier said than done. In fact, global remote working, as James notes, creates a lot of challenges and risks for employers.

WFA: The challenges and risks

There are lots of potential risks when employees ask to be able to work from anywhere. They fall into a “number of buckets: tax and social security, legal, and then other associated compliance” challenges, like data protection, according to Webber.

James continues that these data challenges apply to both employees’ personal data, but also broader company cybersecurity risks.

There are also possible pension challenges, plus some employment and immigration law considerations.

But the major challenge for employers, and especially HR teams, is that the risks “will be different in each circumstance”, notes Webber. Every country has different regulations, and the rules differ depending on the type of role and seniority of individual employees.

Webber explains that, for instance, if someone is senior and part of their role is negotiating and signing contracts, then it is possible to create a “tax presence” in their new country – otherwise known as a permanent establishment – but this “brings with it, as you would imagine, quite a lot of administration, and possible additional tax”.

Ultimately, employers would then need to weigh up whether allowing an employee to work in that country is worth the extra administrative time and money.

Mitigating risks with education

Given the plethora of risks associated with working from anywhere, companies need to figure out a way to minimize them as much as possible.

Many large organizations with global workforces mitigate the risks by having “corporate entities in many countries [and] in many jurisdictions,” according to Webber.

This approach is how Spotify enabled its workers to work from anywhere during COVID-19 and beyond. But Spotify continues to expand its presence throughout Europe, for instance, to allow employees more choice of location.

However, it is not always possible for smaller organizations without the same global footprint to open corporate entities in a range of locations.

“They don’t have the same resources [both human and digital] as larger companies would have,” notes James. But they are still grappling with more and more employees requesting to work from anywhere.

The issue, according to Webber, is that “employees don’t understand all of the associated risks that come with” global remote working.

As a result, she notes, the first thing employers need to do is an education piece on “the key risks and obligations” with the relevant departments like HR and finance, plus line managers.

Towards policies and frameworks

The education piece then allows the organization to make an informed decision about whether working from anywhere is something the company can offer. If they decide they do want to offer it, they then need to formulate a plan and framework around what circumstances working from anywhere will be possible for their workers.

“The policy sets out what you will and won’t allow”, while the framework will lay out the application process, “so if you get an employee or applicant asking [about working from anywhere], organizations can say: this is the process we follow as an organization”, states Webber.

Brian James, director of global employer services, RSM Netherlands.

Employers, and HR teams, also then need to communicate very clearly with workers “what the organization is and isn’t going to allow”, and why, based on the risks.

James adds that the policy must also have clearly defined responsibilities, “so everyone is aware of what their role is in that process”.

Of course, there are all sorts of different policies and frameworks, which Webber and James have seen RSM clients introduce.

“We’ve seen it will vary by organization, depending on what they want to offer, and what their appetite for risk is”, notes Webber.

Some will be very hyperaware of the tax risks, while others will take a more practical approach and say: “We understand that there’s an underlying tax risk, but we cannot assess every single risk for every single request we get”.

Other options are to allow global remote working, but only from certain locations where the risk is lower, or to introduce blanket working from anywhere in the world, but only for a certain period of time.

The latter is the approach that Airbnb, for example, has taken. Airbnb has decided it cannot support “permanent international moves”. Instead, every employee can live and work internationally for up to 90 days at a time, but “everyone will still need a permanent address for tax and payroll purposes” and employees are responsible for getting the proper legal authorization to work from anywhere, as CEO Brian Chesky wrote in a blogpost.

Chesky continued: “Most companies don’t do this because of the mountain of complexities with taxes, payroll, and time zone availability, but I hope we can open-source a solution so other companies can offer this flexibility as well.”

How can tech help?

Another way to mitigate some of the risks faced by smaller organizations in particular is to work with an employer of record tech company. Examples include Globalization Partners, Remote, Deel and Atlas.

“Employer of record arrangements have been around for a long time, and they definitely have their place without a shadow of a doubt,” states Webber.

James adds that they can help “solve the local issues…in terms of payroll, tax, and social security contributions”, plus legal requirements. Webber continues: “They can facilitate quick deployment and entrance into other jurisdictions” where employers don’t already have an entity or infrastructure.

Webber notes that employer of record tech is particularly useful for shorter-term arrangements or where an employer wants to work in a less common location (eg. Sub-Saharan Africa) where employers are less likely to have internal knowledge of the legal requirements and other risks.

However, technology isn’t a silver bullet. Employer of record tech doesn’t eliminate all the risk (particularly for senior hires), according to James. Webber notes there is a need to understand “that it might not be right for every single remote working situation”.

There are other forms of tech that can also help companies with working from anywhere requests.

Webber shares that firms like RSM offer their clients software to help them calculate the risks around working from anywhere requests.

“How does it work? The HR team has received a remote work request, [they] push the data into the technology and it pushes out a high-level summary of the main risks”. This is based around the individual’s role and seniority at the company, as well as the country they want to work from.

“It gives really detailed advice to guide organizations who are receiving a lot of those requests,” continues Webber. Basically, it relies on a traffic light system, so if everything is red, then that request is probably not a good idea.

These technologies are being utilized by small and big organizations alike. This is because they have become more scalable and affordable for smaller organizations.

Ultimately, James is clear that global remote working is going nowhere. So it is now up to employers to find a way to make global remote working work for everyone; mitigating the risks that are incurred without facing an attrition crisis.

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