It’s a major perk for employees to be able to work from outside of the United States – one that will earn you an immediate edge in the fierce competition for remote talent these days.
Here's what you need to know about what to do when a remote worker starts working from another country:
- Understand that various countries have regulations about American companies doing business from within their borders.
- Be aware there are potential tax implications.
- Stongly consider creating a explicit work agreement between you and the remote worker.
- There needs to be benefit to both the company and the worker.
- Recognize this is a perk that may be very enticing to potential employees.
At first, the pandemic shut the world down almost completely. Then, after a while, the shift toward staff working remotely opened up the world in new and different ways for workers who were no longer chained to their desks.
Many American workers used their newfound freedom to swap expensive coastal cities for more affordable and super beautiful places like Bozeman, Montana. However, some set their sights on locations outside of the United States. Thanks to work abroad programs that cater to remote workers from countries like the U.S. and Canada, in some ways, it’s easier to work outside of the country than ever before.
But what does that mean for your business? Do you need to be paying taxes on your remote workers to the countries they’re residing in? Whether you’ve got requests from employees who want to take advantage of a work abroad program or you’ve discovered that you already have employees working in another country, here’s what you should consider.
Consider time zone differences
Naturally, different countries come with various hurdles. Keeping U.S. work hours will be much more difficult across time zones in Southeast Asia or Australia than from Mexico or South America. Of course, it’s possible that a person’s work doesn’t require keeping typical office hours. But if it does, location is going to matter.
Then, you’ll also want to consider the internet connectivity element. There are countries whose internet infrastructure matches or surpasses that of the United States. Yet there are plenty of countries that don’t. For instance, suppose your workers need a good chunk of bandwidth to run a VPN or have multi-person video calls. Then you’ll have to make sure that wherever your workers are going, they will have the adequate digital infrastructure to allow them to carry out their work.
Consider asking employees who are looking to work abroad to research what their situation would be and outline how it would work. This will take some of the burden off of you, and it could help them realize that there might be holes in their plan that they didn’t think of.
Understand the potential implications
When it comes to allowing your employees to work remotely from another country, you’ll have to:
- Balance the benefits to the worker (which are huge!)
- With the potential challenges the situation would create
First, it’s a major perk for employees to be able to work from outside of the United States – one that will earn you an immediate edge in the fierce competition for remote talent these days. Plus, if you’ve ever had employees work while on vacation from another country, they’ve already been working from another country, and no one ever noticed.
Looking the other way is one option, but one that becomes riskier and risker the longer it goes on. Just because someone goes unnoticed doesn’t mean that what they’re doing is ok.
If you want to let employees work from other countries the right way, you’ll have to look into precisely what that would require. These topics will range from taxes to health insurance and much in between.
What’s your biggest 2022 HR challenge that you’d like to resolve
Answer to see the results
How do you find the answers to these questions?
Unfortunately, there isn’t a one-size-fits-all answer to these questions. The answers vary dramatically based on the country and sometimes even region within a specific country.
So, it’s all about looking into the specific situation in the location (or locations) where your employee wants to work.
Luckily, remote work programs often have a lot of this pre-sorted and simply require proof of employment for workers to join them. Going this route can save you some work. Still, it does mean that the location options are limited to a given company’s offerings.
If you’re going the individual route, things you’ll want to look into include:
- Local labor laws
- Income tax obligations for both your business and the employee
- Health insurance and social security
- Visas and other travel or immigration documents
- Value Added Tax (or VAT for short)
- Regulatory issues
Craft an explicit agreement between you and the remote worker(s)
Whether you already have an employee working remotely from another country or you’ve just agreed to let someone do so, the critical next step is creating a clear agreement between your company and the employee.
The purpose of this agreement is to clearly outline the implications of:
- The employee working as an ex-pat
- Who is responsible for what
From paying taxes and securing travel health insurance to whether or not the employee is required to keep normal working hours and much in between, an explicit agreement removes the guessing and assumptions from the situation.
Especially if your small business doesn’t have the capacity to cover things like travel insurance, this agreement will clearly outline where your company’s responsibility ends and where the employee’s begins.
Not only does this eliminate potential confusion, but the agreement can also be a living document that gets updated as things change. Over time, relationships between countries and local laws tend to be somewhat fluid.
Consider creating a global mobility policy
If you spend the time going through all of this for an employee or two, do yourself a favor and develop a global mobility policy for your company. You can use this to outline specific countries where workers are, and are not, allowed to work, whether or not your company participates in remote work programs, the length of time an employee is permitted to work outside the country, and more.
Would the enticing benefit be worth it?
In the end, the process will likely be an arduous one. But considering the competition for talent in an increasingly globalized world, the chances are you’re going to have to deal with this issue sooner or later.
Why not be at the forefront of this forward-thinking trend?