With the end of summer bringing a fresh call from some employers for a return to the office, it is easy to forget that there is more to the debate about where work is done than arguing about whether employees should be at their desks or in their homes. Increasingly, the term “work from anywhere” encompasses more than bedrooms or kitchens. It can mean another country or even a different continent.
While some companies — especially those operating internationally — have been flexible about the location of certain staff for some time, there is no doubt that the pandemic gave a boost to the concept, with some countries even introducing specific policies to lure “digital nomads” and other workers to their shores.
Thanks to technology making it as easy for someone in Barbados, say, to communicate with the head office in London as it is for a counterpart in the suburbs, working remotely in this way is certainly attractive to certain types of workers. And it may even suit some employers. But — quite apart from the practical difficulties — there are tax and other issues that need to be considered. Daniela Korn, head of employment and co-owner at London-based media law firm Tan Ward, said in a recent announcement: “Employers must navigate myriad regulations, from tax laws to data protection, when allowing employees to work from various locations.”
This is echoed by Dee Coakley, CEO and co-founder of Boundless, an employer of record based in Dublin, Ireland. Employers of record have been around for a while — especially in US, where companies typically use them to avoid falling foul of differences between state employment laws. But it looks as their time has come on a more international basis. Because of the issues highlighted by Korn, companies use organizations like Boundless to hire abroad without having to worry about navigating unfamiliar legal systems and to ensure they remain fully compliant with local employment and tax laws. The employers of record also help preserve and manage employees’ benefits, rights and feelings of equality with the HQ team members.
In a recent interview, Coakley attributed the growth of interest in the concept to a variety of factors, including work/life balance, employees having partners from different countries, companies wanting an international spread of employees for diversity reasons, costs and regulation.
These last two aspects are thrown into stark relief by recent research by Boundless. The study covering 32 European countries identifies marked differences in costs for employers and the take-home pay enjoyed by workers. Using the yardstick of a €60,000 ($67,000) salary, Boundless found that the most affordable nation for employers was Lithuania, where paying a €60,000 salary cost just €61,074, while the most expensive was Austria, where the costs on top of the #60,000 amounted to €28,618. There were also significant differences in take-home pay, with employees in Bulgaria on €60,000 taking home the most net pay at €51,239 and those in Iceland the least, with just €30,525. The U.K. and Ireland both rank among the lowest places for employment costs and also among the best for the amounts that employees take home, while Germany, the Netherlands and France were found to have relatively high employment costs. Commenting on the study, Coakley said that the lower employment costs enjoyed in the U.K. and Ireland were attractive to companies because they freed up “a lot of room in the budget. Businesses can use those savings strategically — whether it’s attracting talent or investing in growth.”
The results should make salutary reading for the U.K.’s new government, which has been talking a lot about the need for growth but also proposing new laws concerning workers’ rights and is believed to be contemplating higher taxes in its first Budget next month.
Regardless of what governments do, it appears that distributed workforces are here to stay. Organizations appear to be so keen to attract people they regard as vital to the prospects that they are prepared to contemplate all sorts of working arrangements. Indeed, if Coakley is to be believed, this is the way ahead. Referring to an earlier article in this space, she said companies doing this were “shaping their futures.”