Thursday 19 May 2022

Work From Anywhere: whose responsibility is it anyway?

Hubli Stand: F23

Buyers wanting to know what the future of managed travel looks like could do worse than read an e-mail from Airbnb co-founder and CEO Brian Chesky to his workforce late last month.

Entitled “Airbnb’s design for employees to live and work anywhere,” Chesky set out a five-point plan including allowing staff to work in 170 other countries for up to 90 days each a year; and preserving collaboration by bringing teams together for one week every quarter.

Airbnb isn’t alone. E-commerce company Shopify and payment provider Wise also let employees work abroad for up to 90 days annually. However, such flexibility remains rare. As Chesky told his staff, “most companies don’t do this because of the mountain of complexities with taxes, payroll, and time zone availability.”

Chesky is absolutely right about that compliance mountain, says David Livitt, tax principal for mobility services at accountancy firm Mazars. It’s the reason, Livitt adds, that when a company announces “where you work from can be anywhere, it give a lot of departments heartburn.”

Speakers in a session on mobility compliance at the GBTA Europe/VDR conference in Berlin in March warned unanimously that many regulations could be breached if employees work outside their home country without preparation or mitigation.  

“Employers are saying everybody can work everywhere. I assume they don’t because there are tax risks,” Siemens head of global framework Meike Gleiken told the audience.

“It could either be a corporate tax issue or a permanent establishment risk. It all depends on where the employee is, how long she or he is staying, what task they are performing, do they have power of attorney? And then you have individual tax obligations that could be affected.

“Immigration is also key. You cannot just travel for a vacation to Thailand and then prolong it by two weeks to work and see it as tourism,” said Gleiken

Other conundrums include whether employees can maintain their home social security scheme in the country where they are working, whether local or home employment laws apply, and whether employee insurance remains valid.

Meanwhile, BCD Travel director of global account management Oliver Meinicke told the session that Work From Anywhere employees will also rub up uncomfortably against company travel and expense policy. “If you decide to work from Spain but you are normally based in Munich and your business client is in Frankfurt, the trip from your finca to Frankfurt will definitely not be paid by your employer. You will have to carry those costs yourself,” Meinicke said.

Given the hassle of managing WFA, why bother? The answer, says Aurélie Krau, customer success officer for meetings booking platform Hubli (which targets companies organising offsite and team-building meetings), is recruitment and retention.

Krau has worked with clients who “were losing the talent war. They said employees were leaving them for competitors where they had more freedom to work remotely.” Indeed, Shopify and Wise make a great virtue on their websites’ careers pages of their foreign WFA programmes. The former even gives it a brand name: Destination90.

"If you’re dealing with travel, you are at the crossroads of all the different departments and all the issues involved, like mobility compliance, employee value proposition and risk assessments"

If companies are going to make WFA a reality without courting legal or fiscal trouble they must tick three boxes, according to Krau: Will, Skill and Bill.

Will means putting the time in. “You’re going to have to accept that you need an extra effort to make it happen because every single country has different rules,” says Krau. “You need a decision matrix. It’s okay to offer flexibility within a framework. Employees understand because they are not self-employed. You have to offer a programme.”

Skill is about identifying the person who will lead WFA for your company, because this is a role that potentially could slip between several functions, including legal, HR and tax.

As Chesky’s memo made clear, internal travel is an integral element of a remote working strategy. Therefore, who better, according to Krau, to take charge of WFA than the travel manager? “If you’re dealing with travel, you are at the crossroads of all the different departments and all the issues involved, like mobility compliance, employee value proposition and risk assessments,” she says.

Finally, there is Bill. Time and resource inevitably require financial investment but what, asks Krau, is the cost of not offering WFA if competitors are?

There remains, however, the formidable challenge of resolving the many compliance risks raised at the GBTA Europe/VDR conference.

“The devil is in the detail,” says Livitt. “If you are going to work in a country remotely on a temporary basis and there’s a tax treaty with that country, the risk is reduced. But that doesn’t stop the host country asking: are you taxable? Do you need to operate payroll? Do you need to get an exemption from paying social security? Do you need immigration status? Do you need to register your entity for permanent establishment so that your company may be taxable here? Are you the only one coming to this location?”

For these reasons, Livitt doubts the wisdom of making public commitments to allowing staff a certain number of working days abroad, especially 90 days. That’s a limit, according to Livitt, which is even more problematic than, say, 60, because more rules such as “economic employer” (the point at which a company is deemed integrated into that country’s economy) potentially kick in.

“There’s a lot of risk there,” says  Livitt. “It’s not impossible to get through and make decisions on but if I were a tax authority looking at blanket statements, I would be rubbing my hands. I now know who to go and ask for more information.”

The way to mitigate WFA compliance risks, says Livitt, “is to manage the request and approval process through technology. The technologies I’ve seen can be configured to really compare variables [such as who wants to go where, for how long and why]. You can make those decisions without overwhelming one person or a team of people.”

Tools are emerging specifically to handle these issues. Mobility compliance tech provider Tracker Software Technologies, for example, now offers a special rules engine to cover remote working. Intriguingly, in his employee memo, Chesky wrote: “I hope we can open-source a solution so that other companies can offer this flexibliity as well.”

Livitt adds that companies will also need to communicate very clear WFA policies to their workforces. And inevitably travel and expense policies will change.

Regarding Meinicke’s comment about not reimbursing employees flying in from their Spanish fincas, Krau says: “I would challenge that. First, you need to articulate company culture, then what is your workplace strategy. This will define the set of rules you have. Maybe you could have an allowance for foreign travel because you are saving on real estate and see that money as an investment for your workforce. Everything is possible.

“Maybe, once you are no longer an office-centric organisation, the definition of a travel programme has to change,” Krau says.


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