Organisations need to address flexible work plans for employees as COVID-19 continues to spread

By Selina Keller

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With the impacts of COVID-19 continuing to cause widespread concern, disruption and uncertainty around the globe, many foreign nationals living and working in impacted countries are requesting to temporarily relocate to an alternative country. This increase in movement is testing international flexible and remote working arrangements like never before, with many employees requesting these modified working arrangements before businesses have had time to prepare for it.

Whilst technological developments make it possible for individuals to work from almost anywhere, flexible work arrangements bring with them potentially unexpected tax and immigration compliance obligations for both the employer and the employee, particularly as regulatory authorities around the world continue to become more stringent. In order to minimise the risks to the organisation and the individual from non-compliance, it is critical that these obligations are considered before the travel happens.

In PwC Australia’s 2019 APAC Global Mobility Policy Survey, the results showed that whilst there continued to be an increased interest by employees in working flexibly internationally, only 2% of participating organisations had a policy that dealt with flexible work arrangements in a global mobility context. Without a documented policy, together with standardised processes and a robust governance framework, managing these requests can become time consuming and result in both the employer and employee being exposed to unintended risks if obligations are not met.

What are the obligations?

Whilst the obligations may vary from country to country, for employees working flexibly from Australia, it is important that the following factors are considered:

Do you know where your employees are physically located and what activities they are undertaking?
Does the employee have work rights? A business or tourist visa is typically not sufficient for work purposes.
Will the employee become a tax resident and therefore have unexpected tax filing obligations in Australia? This may be the case if they establish a permanent home in Australia and/or if their family accompanies them.
Is tax relief available under a Double Tax Agreement? Australia has agreements with many countries, including China, however, does not have an agreement with Hong Kong for example. This may mean that employees undertaking their Hong Kong role in Australia, could be taxable from day 1.
An individual can be taxable on their employment income, even if they are paid from a foreign payroll. It is therefore important that the employer is aware of their withholding and reporting obligations across the countries in question, including any obligations under Single Touch Payroll in Australia.
There may also be other obligations in Australia including Fringe Benefits Tax, Superannuation, Payroll Tax and Workers Compensation. Some of these may exist even if double tax treaty relief is available.

The question also inevitably arises around what level of support the employer will provide the employee when individual compliance obligations do arise, and the broader level of support during the flexible work arrangement, including flights, accommodation and cost of living.

What is an International Flexible Work Policy?

With the increased demand for flexible work arrangements, many organisations have adopted flexible work policies and practices within their domestic workplaces. These domestic policies, however, typically do not address the complexities that arise from an international arrangement. Leading organisations now have a Flexible Global Mobility Policy within their suite of global mobility policies, that compliments their domestic flexible work policy, but which addresses the particular complexities that arise in global mobility arrangement. They typically outline when an international flexible work arrangement will be accommodated, how it will be managed and what assistance will be provided.

Why have one?

Having a documented Flexible Global Mobility policy in place has a number of advantages for both the business and your employees, including:

It helps ensure consistency in what arrangements are permitted and what assistance is provided to the employee;
Assists in bringing greater transparency for employees considering such an arrangements, and provides a clear scope as to when such an arrangement will be approved, what is covered and what is not permitted under this type of working arrangement;
It will help save time and administrative costs, reducing the need for preparing bespoke arrangements for your employees who request to work flexibly;
Assists the company to be more prepared when unexpected changes in the external or internal environment result in your employees needing to promptly adopt new working arrangements, and more importantly, when there is a need for urgent or temporary evacuation/repatriation.

To be effective, it is important that the policy is supported by robust internal processes, is supported by senior and business unit leaders and that the risks associated with non-compliance are well understood.

Future proofing your mobility program

The nature of mobility and the way employees work across borders has evolved over the last decade, and the current environment suggests that it will continue to do so. PwC’s APAC survey indicates, however, that mobility policies haven’t necessarily evolved to reflect this. The implications for the global workforce following the outbreak of COVID-19, demonstrates more than ever the need for employers to be adaptable, fast-moving and open to more flexible and different ways of working, whilst at the same time managing the range of compliance and regulatory obligations associated with having an international flexible workforce. Ensuring that your mobility policies adequately support the ways your mobile workforce operates is an important first step.

If you would like to discuss how a Flexible Global Mobility Policy could help support your globally mobile workforce, please reach out to me or your regular PwC contact.