Italy’s ‘smart working’ model is based around a legal framework providing greater independence and flexibility to employees in terms of when and where they work. Under this framework, employees have greater independence when it comes to their working hours and their working location.
Earlier this year Austria implemented a directive on remote working, specifying that telework must be mutually agreed by the employer and the employee.
Argentina, too, has implemented new legislation around remote working, including working hours, employer responsibility for the provision of equipment, and employee entitlement to expense reimbursement.
In response to some of the global workforce trends triggered by COVID-19, The Adecco Group has made some policy recommendations to governments, one of them advocating a return to an open economy via a modernised, demand-driven labour migration policy.
The challenges of a remote working model
Despite the many positives, flexible working arrangements also create challenges for companies, workers, and governments. Here are some of the challenges companies might face with a new, flexible remote working model with employees across borders:
Management: The effective management of remote teams, for example, requires different skills to the management of teams onsite, with a greater focus on empathy, agility and creativity. The reskilling and upskilling of remote workers also requires a different and more flexible approach. Coaching is the best way for leaders to acquire the soft leadership skills that are so in demand today.
Security of information: No matter the size of your company. Remote workers may access sensitive data through external WiFi, making companies are more vulnerable to cyber threats. Businesses might find they need to invest more in cyber protection and the upskilling of employees in IT security.
Taxation: Then there’s the complexity of taxes and the legality of having employees work across borders. In the U.S. alone, simply working in a different state can incur different tax liabilities. For companies, the arrangement will depend on the location of the worker and the duration of their ‘away from home’ working arrangement.
Corporate tax: When an employee works in a different country, companies will have to consider how corporate taxation works in the second country as well. Mistakes can prove costly, as can failing to update employees’ contracts when they relocate overseas, which may incur unexpected costs for the employer. That includes the setting up of separate payrolls in other countries.
Work-related expenses: Expenses, such as IT equipment, internet access, and basic utilities, also need to be factored in when employees opt to work elsewhere. Governments may be forced to legislate on which work-related costs should be borne by the employer.
Other Expenses: Miscellaneous expenses, such as remote workers’ social security contributions and how they will be covered for health insurance, will also need to be addressed by companies and countries. An individual who is not taxed overseas could still be liable to pay social security contributions there, as well as in their country of residence.
Levelling the playing field
Should employees who work remotely be paid differently based on where they live? Salaries for remote workers re a contentious issue and crucial one for companies to solve for their future talent attraction strategy.
Historically speaking, the location where an employee is based has almost always been a key factor in their remuneration, considering cost of living indexes and market rates to fix a salary. The last 12 months, however, have heated up the debate of location-based vs value-based salaries.
Some companies have decided to implement location-based salary policies for their new remote working frameworks. Tech giant Facebook has suggested that people who choose to work where the cost of living is lower should expect to be paid less. Spotify, on the other hand, will allow its staff to work from anywhere without any impact on salary levels.
The potential cost savings of a location-based pay policy could be reinvested by the business to boost growth, upskill workers, and expansion plans. However, the decision could potentially undermine the value of their talent, which is crucial to engagement, productivity, and talent attraction.