Remote work is here to stay - so how can legal and HR teams implement a 'working-from-anywhere' model? Remote's Head of Legal, Roderick van Vliet, discusses the legal challenges involved.
Roderick van Vliet is the Head of Legal at Remote. This is a chapter from The Bundle: issue #1. Download now.
Lockdowns worldwide brought to an end the work routines we took for granted - such as commuting, being in an office, and seeing colleagues in-person on a daily basis.
And instead, those fortunate enough to still have jobs found themselves mixing work life with home life in virtual meetings, spending quality time with loved ones, and learning the true value of a healthy work/life balance.
Now, understandably, some people want their work life to remain untethered to the office - and legal teams at scaleups are looking to implement a ‘work-from-anywhere’ model at their companies.
It’s easier said than done, however. Remote work is simple enough to facilitate when employees are in the same country, but extend that challenge across multiple jurisdictions, and it becomes far more complex. Add to this the fact that lawyers in scaleups usually run a lean legal team, or are the sole counsel in the business, and it’s easy to see how a simple question - “can I work from another country?” - can become a daunting project.
Smaller business, bigger challenges 🤔
A large enterprise often has presence across several countries, and local teams in those regions. This means it’s much easier to handle local regulations and compliance; the business has internal resources to manage that workload, and experience managing local rules and regulations. Local hiring is much more simple with an established office on the ground.
At a scaleup, the dynamics are different:
- The business itself is likely still situated in one or two countries. Hiring locally is relatively easy, but hiring someone to work from anywhere is more complex
- The team is still growing, and the business might not yet have a dedicated function to handle cross-border employment and compliance issues
- The teams responsible for implementing this distributed model - HR and legal, usually - are lean in comparison to sales or customer success teams. This means they have a mountain of work to complete and limited resource
The complexities of this project only add to the workload, to the point where legal and HR teams find it easier just to say ‘no’.
At Remote, we specialize in addressing these challenges and implementing a distributed work model for our clients. As head of legal, I advise businesses and their legal teams on how to approach particular challenges. Here are the top three points legal teams should consider when supporting the implementation of a work-from-anywhere model.
“The employee can easily become complacent, expecting their employer to handle all aspects of compliance, but with such high stakes involved, legal can’t afford the risk”
1. Immigration: what are the grounds for staying in the country?
This is arguably the most important question around implementing a ‘work-from-anywhere’ model: is the worker eligible to work for you in that country?
If the employee isn’t a local national, then finding ways to accommodate the ‘can I work from x country?’ request can be cumbersome - especially as regulations vary from region to region, and are regularly being updated.
Legal and HR are responsible for making sure all employees are working legally for the business that hired them. If they fail to guarantee this, or overlook a critical regulation, they open the business to serious risks, fines, and even ending up on the radar of governmental authorities.
It’s up to legal and HR teams to consider immigration laws and the grounds any employee may have for staying and working in a particular country. The employee can easily become complacent, expecting their employer to handle all aspects of compliance, but with such high stakes involved, legal can’t afford the risk in this area.
2. Employment: what is the local employment law in that country?
The biggest mistake a company can make is building a work model based on certain assumptions about employment law. Applying the laws from the country of incorporation to the worker abroad can have major implications from a compliance perspective, but it also leads to incompatibility with annual leave, sick leave, or dismissal.
For example, a company based in the US can hire someone in Europe, but European employment laws apply to that worker, and those laws vary considerably to those in the States. Lawyers need to ensure that policies for remote working don’t conflict with local law, and that legal, HR, but also the leadership team, understand local requirements before hiring overseas or implementing a distributed work model.
If legal is working on a ‘working-from-anywhere’ model, they also need to ensure they mention these differences in the employment offer letter. The company, usually before hiring a lawyer, works with certain standardized processes and internal policies. These work when they are built for a specific country, but can’t be copy-pasted and applied to another country.
It’s the legal team’s responsibility to get ahead of that problem, know what they’re up against, and make sure any changes are confirmed in writing.
“The complexities of this project only add to legal and HR’s workload, to the point where teams find it easier to just say no”
3. Tax: has the business considered tax residency in that country?
We pay income taxes without having to think twice about it. When you’re a resident of a certain country, you’re also a tax resident in that country. That’s simple enough, but what happens when an employee wants to work in another country for six months?
The question is made all the more complicated if your business doesn’t have an office in that country. If you’re a US-based company, and you have an employee working from the UK, you need to pay tax in the UK - how are you planning to do that?
Which system will the business implement to accommodate this? How do you ensure that the employee isn’t paying tax twice, across their country of residency and country of origin?
And extending this complication, how many employees need to be in a certain country for the business to be eligible for corporate tax? It really depends on how much of the company those employees represent; the more substance the business has, the sooner they will get the assessment on where they need to pay taxes, and whether they’re eligible for corporate tax.
If the business finds out after the fact that they should’ve paid taxes, overcoming that obstacle can be a time-consuming process for legal teams. Instead, lawyers should ensure that the business has a robust policy for employees working overseas. It’s often easier for legal teams to outsource the work to specialist counsel, or to solutions like Remote that handle the heavy-lifting.
“The rules themselves aren’t that complex. If you have that knowledge, you can apply it - but you need to know what the rules are”
Scaling with a distributed workforce 📈
Implementing a ‘working-from-anywhere’ model for your scaleup is challenging, but by no means impossible. Here are my top tips for GCs embracing the project.
Know what you’re up against
The problems above might sound daunting, but like any legal challenge, they become easier with awareness and understanding. Once you’re aware of the obstacles the business may face, you can work to address and overcome them. The three considerations I listed are essential for a business that aims to allow employees to work from anywhere, but there are other points that should always sit in the pipeline, like intellectual property, data protection and insurance. Make sure you carry out thorough research to prevent any unwelcome surprises.
Don’t forget the small details
There are plenty of smaller considerations to take on board when implementing a distributed work model - like health and safety, for example. This varies across different jurisdictions, so health and safety points can be as detailed as making sure employees have easy access to an exit, or that they’re situated with a fire extinguisher at their desk. Networking with other lawyers in that country is a huge advantage - the Juro community provides a great platform to ask these questions and understand the regulations.
Collaborate where you can
The scaleup lawyer needs to keep abreast of a huge number of tasks, mitigating risk as the company grows. Chances are, when implementing this distributed work model, lawyers can see the risks coming, but lack the answers to help reduce that risk. In the end, they might just say ‘no’ to the project altogether until they have more bandwidth to carry out proper research. This can be avoided - if you’re buried under a mountain of work, or you have reservations, it’s easy to find solutions that can help you with these requirements.
There are many considerations legal needs to be aware of when implementing a ‘working-from-anywhere’ model, but the rules themselves aren’t that complex. If you have that knowledge, you can apply it - but you need to know what the rules are. Once you do, your scaleup will be able to grow with a distributed workforce, in this new, post-pandemic way of working.
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