GLOBAL PAYROLL MAGAZINE
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the statutory rules in that country when it comes to things like holidays, sickness leave, pensions and other employment rights. Employers’ insurance and other similar local obligations in the overseas country may also need to be considered. Many employers have sought to manage their overseas compliance obligations by the use of “Employer of Record” providers. In essence, these are companies which will employ an individual on the employer’s behalf overseas. Whilst such a solution can be very helpful, it should also be reviewed carefully from a tax and legal perspective prior to use to ensure that it is compliant and does not create additional compliance issues. For example, where a permanent establishment is triggered (see above), the employer of record solution would not normally be appropriate or compliant. Digital nomads Alongside globally remote work, there has also been an increasing trend of “digital nomads”. Typically, as implied by their name, digital nomads will not
settle in any one country but will move from one country to another whilst working remotely. Generally, employers do not allow their employees to become digital nomads because the compliance implications would be extremely difficult and time-consuming to manage. As such, digital nomads tend to be self-employed freelancers. Looking to the future Globally remote work is here to stay. Managed correctly, it can be a very positive way of working for both employees and their employers. Hopefully, given time, the globally accepted principles for tax, social security and payroll will catch up with the reality of globally remote work, making it easier for employers to engage employees wherever they live in the world. In the meantime, employers should consider putting in place a fit-for- purpose policy for their globally remote workers and, particularly in the case of those working from home overseas on a permanent basis, employers should review the tax, social security and payroll position before committing to allowing an employee to work in this way.
Author: Lee McIntyre-Hamilton Lee has 25 years of experience in international mobility, expatriate tax and employment tax. He works with a diverse range of international organisations, from small owner-managed businesses to large multi- national corporations and non-profit organisations. Lee delivers coordinated, joined-up global mobility tax, international social security and payroll advice across many territories globally. He is a published writer on international tax matters, notably the Tiley & Collinson UK Tax Guide. Contact Lee: lee@globalpayrollassociation.com
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