Cross-border work refers to employment or job activities that involve individuals working in a country other than their own. It often implies working in a different jurisdiction with different labor laws, immigration regulations, and tax requirements. The concept of cross border work existed long before the pandemic, it operated under pseudonyms like mobility and remote deployment. However, the operating conditions were much more contained and often only occurred on assignment by the employer to aid in skill transfers. Companies often allowed a whole transfer, but only to locations that had active branches that the employee could report to.
The pandemic blew this system out of the water. Employees expressed the ability to produce results from their homes, the technology having always been available now put to good use. During the pandemic, some employees were ‘trapped’ outside of the country, having gone on holiday or assignments before travel restrictions set in. The concept of ‘work from anywhere’ had been realized. Cross-border work is much more common today, yet there are still many complex issues that surround the concept i.e., tax, employment contracts, benefits, and talent retention. To demystify some of these issues Khokhela conducted a survey on current practices in the market. The survey was sent out to companies across multiple sectors, of various sizes.
The data revealed that 50% of the sample allowed cross-border work, of this, 43% allow their employees to work from anywhere while 57% only allow transfers to locations where the company has existing operations. This may affect the future employee value proposition and hiring patterns as employees that have the desire to relocate will join companies that will allow them to do so. The greater portion of the sample elected skill-shortages and talent retention as reasons for allowing cross-border work and noted that’s the greatest challenges for companies are tax issues, work schedules and availability of skills.
The complexity of tax issues and remuneration are handled from a situational judgement scope. Assignees are paid by their home countries and permanently relocated employees are paid by the host country. For companies that only allow transfers to locations where they have existing operations, depending on the situation, the home country may set up a secondment contract or the host country can absorb the employee permanently. The largest part of the sample pays employees in the currency of the country they are working in and adheres to the applicable tax laws of each country. A small percentage make use of a tax consultancy service.
To determine how companies retain remote employees from a talent management and development perspective, the largest portion of the sample selected remuneration, followed by individual development plans and reevaluation of value proposition. The survey has provided a host of data on current trends. The most obvious is the fact that talent and skill shortages have played a large role in the establishment of cross-border work and active efforts are being made to retain key skills and key employees.