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WFA: the unforeseen consequences of remote work

by | Mar 16, 2022 10:04

WFA or working from anywhere has become part of the employee value proposition – employers have begun to report that it has become difficult to attract and retain staff without providing them with the opportunity to work outside of their contractual employment location. As a result, whether by design or by chance, cross-border remote working has become a feature of job offers.

WFA as a ‘digital nomad’ provides employees with a great deal of freedom and flexibility, allowing them to spend time at home, in their host country, or in a third country that best suits their personal and family circumstances. Allowing and/or enabling employees to WFA has a number of advantages for employers. Access to a larger global talent pool, workplace agility, work-life balance as an employer benefit leading to higher productivity, and lower office/property costs are just a few examples.

The benefits of working from anywhere are at the tip of an iceberg, visible above the water’s surface. However, there are a number of implications lurking beneath the surface, including legal, compensation and benefits, and taxation. Furthermore, there are a number of resource implications. You need to consider all of these factors carefully before working cross-border or remotely.

Working from anywhere has a wide range of legal ramifications

First and foremost, employers must consider labor laws. Employees may be able to obtain employment rights such as termination and consultation rights on a local level. Limitations may apply to employees due to Regulatory requirements. For example, can lawyers practice in a location without registration?

Immigration is another issue – can people legally work in the country in which they live and work? There are also data protection implications. Is it legal for employees to access and store data in the locations where they live and work?

There are also compensation and benefits issues to consider. Living and working in a country other than the one where employees have contracts, can have implications for pensions as well as mandatory benefits. The tax treatment of employee salaries/benefits may also necessitate consideration in light of the local tax regime.

Employers may also want to think about the implications for their pay structures. Role-based compensation may be less appropriate than location-based compensation. That is especially if employees have opted to live in locations where salaries and cost of living are considerably lower. As a result, organizations may need to revisit salary data benchmarking. Plus, to rethink pay reviews, taking into account alternative peer groups.

Source: relocatemagazine.com 

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