Are ‘global employees’ the next big thing?
This article was published in Personnel Today
The shift to remote working has forced many organisations to think about whether physical office space is still important, and whether location should still be a key factor for certain roles. In theory, technology now allows employees to work from anywhere, but how easy is it to run a global workforce? Jo Faragher reports
When Sarah Warren and Robert Dawson set up Vet-AI in 2019, their aim was to make pet care more affordable and accessible. Through its app Joii, owners can consult with vets at any time of day via a video consultation on a smartphone.
But it’s not just customers that have benefited from this flexible approach. Vet-AI’s team of around 60 professionals can work remotely, fitting shifts around their own passions or caring responsibilities without the restrictions of having to be based in a certain location.
The company now employs around 15 vets and one administrator outside the UK, adopting a ‘follow the sun’ approach that means UK-based vets don’t have to work night shifts as colleagues in different time zones can carry out those appointments.
Employees include a triathlete and mountain biker in the French Alps and a Swiss vet who now lives in the Caribbean and splits her time between Joii consultations and working for an animal hospital charity.
“There’s a better work-life balance compared to the long hours you’d get in a traditional veterinary practice,” says Warren. “The vets can take control of their careers and lives, combining their jobs with travelling or raising a family.”
Thanks to a surge in pet ownership during the pandemic, demand for Vet-AI’s services is also growing, making recruitment a priority over the coming months. And because vets can consult from anywhere, Warren and her team have adopted a location-agnostic approach to taking new consultants on board.
All team members are registered through the Royal College of Veterinary Surgeons in the UK and have broadly similar contracts with the same holiday entitlements and salary ranges “because we want to ensure we attract the right skills and have parity across the profession regardless of their location”, she adds. Each team member is responsible for their own tax and there is bespoke insurance cover for vets and nurses who do not live in the UK.
According to analyst company Gartner, more than 80% of companies plan to allow employees to work remotely at least part time after the pandemic. Nicole Sahin, founder and CEO of consulting firm Globalization Partners, predicts that this shift will level the playing field for talent – enabling organisations to employ people from anywhere and disrupting traditional perceptions of recruitment.
“Remote work will democratise opportunities for talent because it enables the ability of any talented person, anywhere, to get the best job for which they’re qualified – whether that person is within a 50-mile radius of the HQ location or 5,000 miles away,” she says.
“Operating remotely means companies can cast the recruitment net wider, in turn creating jobs in countries and economies where there are few.”
In the UK, a report by Totaljobs found that net migration out of cities is increasing, with 38% of Londoners reconsidering where they live in light of the pandemic and the shift to more digital and remote working. “With an increasing number of companies now planning on operating remotely, location could become less of a barrier for attracting talent altogether – dispersing opportunities more widely,” Sahin adds.
Internationally, opportunities for self-employed contractors in South Africa and India are booming as companies seek talent outside Europe, according to contractor management company 6CATS. “Much of this shift has arguably been driven by the uptick in remote working options for contract professionals – meaning that recruiters and hirers are less limited by borders when sourcing temporary experts,” says sales director Stefanie Cook.
“Instead, we are increasingly seeing staffing businesses able to take a more strategic standpoint and focus on where the talent can be found, without concerns around in-country right-to-work regulations, immigration checks and visa requirements.”
This shift is prompting many organisations to look into new employment arrangements such as PEOs (professional employer organisations), similar to umbrella companies or personal services companies, which remove some of the employer obligations and risks around local employment legislation (see box).
But while engaging with contractors and temporary staff in another country may be a way to fill a skills need in the short term, employing people in another jurisdiction on a more permanent basis is not always so straightforward.
“Hiring people to work from another country, or allowing UK staff to work abroad, is very much a ‘stitch-in-time-saves-nine’ thing,” explains Juliet Carp, an employment solicitor at Keystone Law. “At the very least the employer will need specialist international tax and social security, immigration and employment law advice. It’s worth doing some homework early, and in any case before making promises.”
Taking the example of a UK company hiring an employee working in Spain, she adds: “As a rule of thumb if a UK company hires an employee who lives, and will work remotely, wholly from Spain, the employee is likely to be subject to Spanish, rather than English, ‘mandatory’ employment laws. The employer and employee will need to comply with host country immigration requirements, if that’s where they will live and work.”
Do you know your PEO from your elbow?
Employing staff overseas on a permanent basis can be a minefield in terms of compliance with local tax, social security and employment rules. PEOs are popular in the US because of varying employment and tax laws between states. PEO stands for ‘professional employer organisation’ and they operate as a co-employer that manages the payroll, benefits and other HR responsibilities for employees on behalf of a client company.
Businesses use PEOs to reduce the cost of administering benefits, to streamline payroll operations, and to enable them to successfully expand to an international market without setting up their own entity. The employee goes onto the PEO’s payroll, but their client is in charge of giving them work and responsibilities.
PEOs are also a cost-effective way for smaller businesses to offer employees benefits and reassurance that they are working compliantly, without having to fund expensive legal advice or rely on an in-house HR team. The National Association of Professional Employer Organizations in the US estimates that PEOs serve more than 175,000 small and mid-size businesses, and their use is growing outside the US as a way to onboard staff efficiently and cost-effectively in global locations.
Using a PEO is not risk-free. If it fails to fulfil its obligations in the host country, the client company would still be held liable for that legal and financial burden, so it’s advised to use one that is certified (in the US, the IRS provides a list of certified companies).
There may be other practical challenges too, according to Sahin at Globalization Partners. “The infrastructure required to support a global remote workforce is one of the top obstacles to overcome for a complete shift that embraces everyone, everywhere,” she says.
“Companies will also need to have infrastructure in place to automate employee onboarding and support, no matter where they live. This includes ensuring that the rights and benefits packages offered are appropriate and in line with local regulations, that new employees are on a locally-compliant employment contract and taxes and that a time-sensitive and compliant payroll is in place.”
Monica Atwal, managing partner of law firm Clarkslegal, says there are a number of questions an employer should ask if it is looking to adopt a ‘work from anywhere’ strategy. “The reality is that the business will need to do a detailed assessment of the consequences to both them and the employee,” she advises. In the meantime, organisations should ask:
- Will the ability to work anywhere apply to all staff, both existing and new? Is there the risk it could create a tiered workforce?
- Will the role be permanently based in another location, and if so, is it easier to make the employer a company in that jurisdiction?
- Does the role support a particular jurisdiction and who is the employing legal identity (the company?)
- Will the employee need to travel for work? Can they work from anywhere and change their location at any time? Or will certain employees work abroad for fixed limited periods?
The answers to these questions will determine how arrangements are set up, she adds. When considering issues around tax, for example, the host country generally has primary taxing rights over the employment income that the employee earns while physically working in that country.
However, Atwal advises, if there is a double tax treaty between the UK and the host country, the employee may be exempt from income tax if they are a tax resident in the UK and they are not present in the host country for more than 183 days over a 12-month period.
“A short stay abroad in many locations is not going to result in the employee becoming liable for host-country income tax,” she explains. “However, each country may have complex rules on calculating the number of days and the rolling period.
“Also even if an organisation and employee seek to rely on the double tax treaty, If you have an employee working in an overseas company you may need to register with local authorities as an employer and/or report on the income that is being paid to the employee.”
If they can get to grips with these practical considerations, however, businesses will be able to access a far more diverse range of employees, whether that’s individual contractors offering hard-to-find skills or the perfect candidate for a permanent role who happens to be based abroad. Smaller businesses, by the same token, will be able to compete with bigger employers because they too can reach out to talent anywhere.
“Hiring remotely helps to legitimise smaller businesses regardless of their scale to compete with bigger ones,” says Ben Thompson, CEO and co-founder of HR platform Employment Hero. “We know that geographical diversity can be managed and adds immense value to an organisation. Having employees working in different locations across the world can support smaller businesses to access a previously unreachable market cost-effectively.”
It’s important, however, not to forget that keeping a globally dispersed team engaged and cohesive can be more of a challenge than it may be for one that operates in the same country and time zone.
Thompson adds: “It’s key to always put communication first. Employers and remote employees should be encouraged to do virtual check-ins that can accommodate all, while also taking time zones into consideration.
“Meetings should be reserved for team discussions and collaborating, and company news and information (unless sensitive) should be delivered virtually. Whether it is a regular email blast, a shared Slack channel or an online HR platform, be sure to keep your staff regularly updated.” He recommends adding a personal touch to those communications so employees can gel. “Whether a team member is about to get married, someone has completed a marathon or a team member has welcomed a new baby, sharing life milestones can give your team talking points and make them feel more connected.”
This has certainly helped at Vet-AI. “We have a social committee that organises virtual yoga, a photo share channel on Slack, while vets ask each other questions or share photos of difficult cases,” adds Warren. “These might be people who have never met before but these small things build a tapestry that makes them feel really connected. We have to work a bit harder to engage and support a team working remotely but testimonials from employees say they feel more in touch than they ever did in a physical practice.”
It may take a degree more effort to tackle the arrangements and to build engagement between colleagues, but becoming more borderless about the workforce has many positives to offer.