Business Ramifications of a Globally Dispersed Employee Population

Now that the remote working genie is out of the bottle, how should employers respond to the legal implications of a globally dispersed remote employee population?

The pandemic compelled organisations to embrace remote working through greater use of technology. Businesses that had been previously reluctant to do so due to concerns about productivity, innovation, culture, and development saw that some roles could be performed just as effectively remotely. Thus, many employers’ attitudes towards remote working significantly changed, such that remote working is now more than a transient outcome of the pandemic and may be a permanent feature of the global working landscape.

Yet the issue of more permanent changes to remote working arrangements remains far from settled. It poses a variety of ongoing questions for employers, including how the legal, regulatory, and logistical challenges can be managed effectively. When arrangements extend across borders, these considerations take on an additional dimension.

Does opportunity knock for businesses embracing remote working?
Advantages of more workers working remotely include business premises cost savings and business resilience. Companies can draw on geographically dispersed talent pools to better manage location-specific influences. With skills shortages across all markets globally, the attraction and retention of talent is also a key factor, as workers judge remote working an essential feature of an employer’s offering.

As attractive as these arrangements may seem, they also carry challenges and potential pitfalls for the unwary if not properly understood and managed.

Where workers are spread over dispersed locations, maintaining culture, a clear sense of purpose and consistent values, as well as ensuring wellbeing and maintaining an oversight of conduct and performance, can be a significant challenge. Effective cybersecurity can be more difficult to achieve, particularly where a proliferation of devices is in use without physical oversight of work.

Where the flexibility extends to working across jurisdictions, several additional (often complex) legal issues require navigation, including employment law, tax, and immigration considerations. Business protection for intellectual property and assets such as key talent and client data can also be more difficult to manage across diverse locations, with varying legal constraints and principles in operation depending on the location. Seeking to adopt a universal approach across all countries which is both effective and lawful is unlikely to be successful without some flex.

The advantages must therefore be set against the increased risks for employers, particularly when adding cross-border issues into the mix.

Managing the myriad of legal considerations for cross border working
For cross-border remote working arrangements, the question of whether local and/or other relevant employment laws will apply will be critically important. This will often directly impact the cost and risk of an organisation’s people strategy and inform the legally correct approach when an employer recruits, rewards, or dismisses an employee. It also determines the extent to which workers can validly ‘forum shop’ or ‘cherry pick’ the jurisdiction that offers them the most beneficial position.

Employment laws are just one consideration, with long-term or permanent cross-border arrangements also often raising complex tax and social security considerations. Health and safety, insurance, contract formalities, immigration and benefits considerations also come into play.

Many governments have started to put in place additional legal protections to keep in step with the uptick in location-fluid ways of working. Some countries’ new laws take the form of financial support for remote workers, e.g. tax-free lump sum payments and allowances in lieu of expenses. Others have reformed measures to protect the mental health of workers, including through bolstering workers’ right to disconnect from work, and ensuring greater rights for employees to request more flexible working arrangements.

Hybrid or nomad arrangements, or something in between?
Many organisations have facilitated hybrid working arrangements, where employees work part of their time at the employer’s premises and part of their time remotely (usually from home). This ‘best of both worlds’ approach seeks to balance the advantages of remote working against the gains from a physical presence in workplaces.

Some companies have gone further, embracing so-called ‘digital nomad’ arrangements, under which remote workers do not have any base location and instead use technology to work all their working time remotely from different locations around the world. A wave of new digital nomad visas and other related laws have accompanied the rise of such arrangements, making it easier for individuals to live and work in a foreign country.

Despite their attractions, location-fluid arrangements can impact an employer’s ability to maintain control over the employment relationship: the where, when, and how work is done. Often overlooked are the employment law, tax, and immigration implications – the risks of which are heightened where a company has no formal legal entity in a country. Despite some organisations offering ’employer of record’ and similar services to manage such risks, where there is no local presence, such engagement models are unlawful in many jurisdictions.

No going back where arrangements are already in place?
A question that often arises, particularly where companies continue to trial more flexible working arrangements, is whether there comes a point in time at which such arrangements become permanent as a matter of law. In particular, how far can employees wishing to continue with more flexible working arrangements argue that they are now contractually entitled to continue to work on such basis? And can employers insist on employees returning to original, office-based, arrangements?

What the contract says is part of the answer, but not the complete picture. Obligations can arise with employee representative bodies, and with the parameters of any right for employees to request or demand flexible work arrangements. Discrimination may also come into play where an employer’s approach has a particular impact on certain groups of employees.

Informed planning and careful implementation are key
As cross border remote working continues to evolve, establishing a clear and comprehensive set of rules and procedures tailored to individual workforces will be key to the effective management and risk mitigation of such arrangements. These should take account of the unique interplay between tax, social security, employment law, immigration, health and safety, and corporate law – but be flexible enough to consider the practical needs of individual workforces and the influences of different locations.

Managing globally dispersed workforces is not straightforward. But addressing the legal issues and implementing appropriate control structures to manage risks opens a working landscape with significant opportunity for organisations to make considerable gains through more agile workforces.