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The Challenges of Remote Working with a Globally Mobile Workforce

The Challenges of Remote Working with a Globally Mobile Workforce Background Image

Time will tell whether the current pandemic will result in a significant long-term shift towards remote working, but in the short- and medium-term, employers continue to grapple with issues that arise with employees working from home.

For some employers, particularly those with a “white collar” workforce that can work from just about anywhere so long as they have a phone and a laptop, remote work can raise some potentially significant challenges. For example, employees who are normally based at headquarters in New York or London and have residences in those cities might decide, in the current circumstances, to work for several months from their more permanent homes in Madrid, Melbourne or Moscow. As the pandemic drags on, this is becoming an increasingly common scenario.

This blog post highlights issues that employers should consider when facing such situations.

  1. Tax – Perhaps the most important question for the employer is whether the employee’s activities in his or her home country could create a permanent establishment or other taxable presence for the business in that jurisdiction. If the business does not otherwise have an office or other presence in that country, it will need to take particular care to make sure that the remote working arrangement does not create unforeseen tax consequences. Similarly, the employer will also need to consider any local income tax, social security and reporting obligations that might arise by having the employee based in that jurisdiction for an extended period of time and whether there could be an impact on any tax-related benefits provided to the employee (such as if the employee has an expat package that includes tax equalization benefits).
  1. Immigration – Employees who are foreign nationals and return home might breach the conditions of their visas and work permits in the host country if they are away too long or fail to adhere to all of the conditions of their immigration authorization.
  1. Employment law – Depending on local law principles, individuals who are based within a country (even if working from home) might become subject to local employment laws and regulations. These laws could impact not only the individual’s rights and entitlements but also the employer’s obligations with respect to terms of employment, reporting, compensation and benefits.
  1. Regulatory – Those employers that are regulated businesses (such as financial services) will need to ensure that changes to where their employees are located does not violate (or introduce new) regulatory requirements for their industries.

Many employers now facing these issues might not have previously contemplated a scenario of long-term remote working for such a large number of their employees. Where employees are choosing to move abroad in response to current remote working requirements, employers will need to consider the consequences of such relocations and take appropriate local advice.

Please visit our Coronavirus: Preparation & Response series for additional resources we hope will be helpful.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.