COMPLIANCE
and rights that are different from the home country’s regulations. Employees’ employment contracts may need to be re-drafted to take into account the host country’s labour law requirements. Certain situations may become complex and costly in situations like employee’s redundancy or termination. “Compliance is not just about adhering to laws it’s about safeguarding the reputation of your organisation and the well-being of your employees” Permanent Establishment (PE): Employees working overseas may give rise to a risk of creation of a PE for the home country employer. This, in turn, can lead to corporate tax exposure and compliance obligations in the host country. Immigration: Immigration compliance is another critical aspect when employees work abroad. Employees may require specific work visas to legally undertake employment in a foreign country and working on a ‘wrong’ visa could lead to severe penalties for both the employee and the employer. As such, ensuring that employees have the right to work legally in the host country is paramount. Corporate Criminal Offence (COO) UK businesses can be considered to commit a criminal offence if they have not taken reasonable steps to ensure that overseas tax liabilities
are met. Therefore, employers that allow their staff to work overseas need to be comfortable COO is not being committed. Establishing robust policies To manage compliance effectively, it is essential for employers to establish robust policies to navigate the complex landscape of international remote working while wishing to offer flexibility to their workforce. Such a policy should serve as a framework to manage the legal, tax and operational challenges which arise when employees work across different jurisdictions. A policy ensures a clear understanding of the respective responsibilities of the employer and employee. It ensures that those working overseas are not disadvantaged in terms of their employment rights and protections. A policy should also safeguard the company’s intellectual property and sensitive data, including confidential client information. It should set out the expectations for data security and the use of technology, which is particularly important when employees are accessing company networks from various global locations and dealing with client data. Finally, an International Remote Working policy can help employers attract and retain talent by demonstrating a commitment to flexible working arrangements. It shows that the company is proactive in supporting its employees’ desire for greater flexibility and a better work-life balance, which can enhance job satisfaction and loyalty and improve productivity. Establishing an International Remote Working policy is a strategic move that helps employers manage risk, ensure legal and tax compliance, protect
their business interests, and support their employees, regardless of where they choose to work. It is essential for employers allowing their employees to work overseas to have a robust International Remote Worker’s policy in place. Partnering with experts Sometimes, the best course of action is to seek external expertise. Partnering with experts can provide invaluable insights into the specific compliance requirements and assist with all the aspects surrounding International Remote Working: tax filings, operating of a ‘shadow payroll’ withholding in the host country, drafting / updating of employment contracts to satisfy requirements of the host country labour laws, implementing an International Remote Working policy, thus ensuring that your organisation remains compliant. Conclusion Managing the compliance risks associated with employees working from overseas locations is a complex but manageable task. By understanding the compliance landscape, establishing robust policies, leveraging technology, providing training and partnering with experts, an organisation can navigate these challenges successfully. Remember, compliance is not just about adhering to laws; it’s about safeguarding the reputation of your organisation and the well-being of your employees. With a proactive and strategic approach, organisations can turn compliance management surrounding International Remote Working into a great opportunity, but a seamless process must be introduced that brings benefits to both the organisation and their employees. n
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| Professional in Payroll, Pensions and Reward |
Issue 102 | July - August 2024
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