As remote work gains in popularity, many employees are demanding more flexibility when it comes to where they live and work. While working remotely from another US state is relatively straightforward, what happens when an employee wants to take their talents abroad? Employers—who want to keep their employees happy while also expanding their hiring pool—can find themselves having to scramble to meet the needs of not only their adventurous employees, but their business as well.
Because it takes a considerable amount of time and money for an employer to facilitate an employee’s transition to another country, they should ask themselves a few questions first:
- Is the employee indispensable to the company and its goals?
- How will an employee working abroad benefit the company?
- Will the employee be able to perform their job while living in another country?
- Does the company have the ability or means to allow the employee to work abroad?
Beyond deciding whether an employee can effectively do their job outside of the US, there are a few other important issues to consider:
As an employer, you’ll need to make sure that any employee who wishes to work abroad can legally do so. In almost all cases your employee will be required to obtain a work visa in the country where they plan to live and work. A work visa is a type of formal license that grants an employee authorization to work in that country. Some countries employ a system in which foreign workers must first apply for a visa and then obtain a work permit once they arrive in country. Work visas are usually temporary but can be renewed in most cases.
Untangling the maze of visa and work permit applications is something that employers might not wish to leave entirely in the hands of the employee. For instance, in some cases, an employee working from another country without the proper paperwork can end up getting their employer fined by local authorities. This means the employer and employee need to be on the same page when it comes to legal work authorization. If an employee can’t be trusted to apply for and obtain the required paperwork, they might not be the best candidate for working abroad.
Financial and Tax Implications
Most countries issue a limited number of work visas, and those visas often come with financial requirements. Employers will need to have their accounting department figure out whether the employee meets these requirements. For example, Spain’s work visa application requires that any foreign employee seeking to live and work in Spain for a foreign employer earn at least €2,160 ($2,400) per month for a single adult.
You should also consider the impact to employee taxes. If your employee is a US citizen living and working outside of the US, their income in the country where they work is still subject to US federal income tax. The employee may also be subject to local taxes in the country and jurisdiction where they work. Alternately, the employee may qualify for certain foreign earned income exclusions or foreign income tax credits. Because of the differences in taxation, employers who let employees work overseas would be wise to hire accounting and legal staff with knowledge of foreign employment tax law.
Employee benefits abroad are often quite different from those in the US. In some cases, an employee working abroad might be eligible to receive local employment and health care rights. This might mean that that employee could obtain greater employment rights and benefits than their US-based counterparts. This could result in inequality between employees in relation to paid time off, holidays, wages, parental leave and even health care access.
If an employee is terminated, different severance benefits might be mandated by the country where the employee lives. Some countries also require that life insurance and retirement benefits are provided to employees. If you’re not already offering these benefits, consider if you’re willing to expand your benefits package for overseas workers.
Another issue employers should consider is the protection of company data. If your employee works with sensitive or proprietary company information, you’ll need to make sure that your IT department has the proper security measures in place to ensure the safe transfer of company information like emails, video calls, documents, spreadsheets, and other private files.
But that’s not all. Most countries and regions of the world have their own laws regarding data regulation. For example, if your employee is working from an EU country, you’ll need to make sure that all communication is compliant with the EU’s General Data Protection Regulation (GDPR). Failure to follow these regulations could put an employer at risk of heavy fines.
To maintain a productive workplace, communication between the employer and employees is key. However, time zone differences can make it difficult to include overseas employees in corporate meetings, video calls, and co-worker chats.
In order to make sure that the employee and employer are on the same page, some basic communication guidelines should be established. These can include:
- Scheduling conference calls or daily/weekly check-ins.
- Establishing an end date to the abroad work arrangement (if applicable).
- Deciding who will cover travel and/or relocation expenses.
- Determining any changes to the employee benefits package, including eligible holidays and paid time off.
It’s also a good idea to establish with your employee that even though they are working in another country, US laws and employer policies will still apply. All of these issues should be addressed in a written and signed contract. To handle the legal complications of having international employees, employers should consider creating a remote work department or hiring a company that specializes in international employee relocation.
Employees working remote in the US? Check out our guide for employees who want to work in another state.
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