• Michelle Berners Price, Partner |
6 min read

The pandemic has changed the way we work. It has transformed the psychological contract employees have with their organisations and permanently shifted their expectations.

One such expectation is that they should be able to work from wherever they wish.

Remote working is, of course, nothing new; its emergence has been driven by digital technology over the past decade or more. But it was greatly accelerated by the pandemic, to the point where it has become a baseline expectation.

According to Microsoft’s research, 71% of employees now want their employers to provide location flexibility. Indeed, our clients tell us that candidates' first question at the job interviews these days is: ''What's your remote working policy?''

Enabling people to work from anywhere is therefore vital to attracting and retaining talent in today's market. What's more, it widens the talent pool accessible to organisations and it offers them greater agility in matching staff with priority business assignments.

But remote working comes with a complex web of tax and compliance risks, especially when it involves cross-border working.

So how can your organisation balance these risks whilst strengthening its employee value proposition by giving the employees the freedom to work remotely?

The hybrid era

In March 2020, the pandemic brought about mass remote working almost overnight. The introduction of strict lockdowns has seen employers hurriedly implementing the infrastructure and policies necessary to support working from the employees’ home office.

Fast-forward 18 months and, as workplaces begin to reopen, the era of hybrid working has arrived. Working from home has effectively become working from anywhere.

When it comes to the challenges this shift presents, the employers have only begun to scratch the surface. As we heard at our recent Future of Tax event on remote working, employers have "merely put a band-aid on the problem."

Now is the time to establish robust hybrid-working strategies and policies, and rethink your employee value proposition for the new reality.

This will mean considering how to:

  • Align your work-from-anywhere strategy with your purpose and objectives

    Your approach to remote working should reflect what you stand for. It must support your business and workforce strategies, as well as your brand positioning, purpose, and values.
  • Deliver the right space and facilities in your workplaces

This may include collaboration areas, individual workstations, private rooms for confidential work, meeting facilities with remote access, communal spaces and much more.

  • Rethink your in-office perks

Advantages such as in-house gyms, restaurants and prestigious buildings might not be as attractive if staff can only access them a couple of days a week. The provision of benefits needs to be more flexible, either in terms of employees’ choice or their availability in all locations where the employees work.

  • Equip people for remote working

You must ensure your people are set up to work productively and fully supported by the organisation, wherever they are, including when they transition between the different workplaces. This means providing suitable furniture, devices, and remote working tools while facilitating secure access to data and applications wherever your employees are and whatever technology they're using.

Finding the balance

Digital technology makes collaborating with people in other countries as viable as working with colleagues in the same workplace. But cross­border working takes employers into complex compliance territory.

That's because it often comes with a number of international tax and regulatory implications, including:

  • A risk of a permanent establishment being created in the remote working location,
  • Potential payroll, income tax and social security compliance obligations, both for the employee and the employer,
  • Issues concerning remuneration, expenses, and pension benefits alignment,
  • Cybersecurity and data protection considerations,
  • Health and safety risks, and
  • Potential Immigration and right to work requirements, among others.

Some of these concerns may be, to a large extent, mitigated but organisations should pay careful attention to locations that attract high levels of cross-border activity among their employee population - such as major international business hubs and popular holiday destinations. 

This not to suggest businesses should necessarily shy away from using digital technology to power international collaboration; each organisation will have a unique risk profile, based on their organisational structure, corporate footprint, and employee population demographics, and, when properly assessed, the risks can be managed in the longer term.  

A consumer perspective

Ultimately, your hybrid strategy must strike a balance between enabling working from anywhere whilst managing the business’s tax compliance risks.

Where this is successful,  we see tax leaders work in close partnership with HR colleagues and the wider business to recalibrate the strategy for the hybrid era.

We've seen clients taking innovative approaches to this challenge. Data analytics provider Kantar began by gaining an in-depth understanding of its employees' remote working needs - by looking at them through a consumer lens.

The pandemic has affected us all as individuals first and foremost, impacting our experiences and expectations as consumers. Taking that perspective helped Kantar to understand employee preferences on where to work, and identify the drivers behind their choices.

To do this, the firm has carried out employee surveys, combining the results with analytics on how staff use, and interact on, digital tools and collaboration platforms. This has helped them design a policy which truly considers their employees’ reality and expectations.

Steps to success

ln our experience, getting your work-from-anywhere strategy right means going through the following process:

1. Scope out the benefits

Take a collaborative approach. Involve all stakeholders in early discussions to identify the advantages of a work-from -anywhere strategy. What is the opportunity cost of taking an overly defensive position?

2. Start small but fast

Work out what you can do to enable a degree of international remote working in the short term while keeping the tax and compliance risks minimised. Banning it altogether while you work out your strategy and policies might not sit well with your existing and prospective talent.

3. Set your guardrails

Identify where your company should sit on the flexibility spectrum, whilst maintaining the desired compliance risk and cost profile. What restrictions on remote working will this require? What policies will be needed to enforce them?

4. Communicate your approach

Make sure your strategy, and the thinking behind it, are known throughout the organisation. That way restrictions on remote working will be readily understood by employees, rather than potentially causing resentment or being ignored.

5. Accelerate decision-making

Establish frameworks to streamline decisions on who can and can't work where. Dealing with every case individually as it arises is unlikely to be sustainable in the long term and delays may leave your employees frustrated.

6. Test and adapt

Be prepared to see how your policies are received by the employees and what impact they have on the desired levels of flexibility within your workforce. Adjust as necessary: whilst all organisations continue to redefine what the hybrid model looks in practice, it may mean that your policies will need to adapt with time as well.

In summary

Not getting your hybrid model right risks losing out in the competition for talent, exposing your organisation to risks or both.

In an uncertain future, the winners will be the businesses that take an agile approach and keep listening to their people as they move along the location flexibility spectrum.

Lesley Flowerdew, Head of Tax for Astellas Pharma Europe, summed up this challenge at our Future of Tax event: ''We want to see how far we can push to move along the spectrum, from prioritising business considerations to fostering a work-from-anywhere culture."

lf you'd like to discuss your work-from-anywhere strategy and how to implement it in your organisation, please feel free to contact me.