Step by step compliance on Global Telecommuting

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This article focuses on global telecommuting compliance. The guests discuss mostly immigration matters and risks, and it’s a sequel to a previous Nexus episode that focused on taxation and permanent establishment risks. 

 

Compliance in all its aspects and forms, from immigration to social security and tax, became much more difficult when employees started to work remotely. During the pandemic, remote work has actually become quite the norm. However, a certain demand for remote work actually existed before the pandemic started. We expect it to continue even after the pandemic is over. Whenever that may be. 

 

The popularity of remote working has not decreased when some of the restrictions were lifted, or some of the job markets reopened. Some of the industries returned to some level of normality. This means HR, global mobility professionals, and experts are left to deal with the intricacies of immigration, labor law, payroll, and tax compliance risks.

 

Q1: How did you manage to connect all the dots and make sure you have the right piece of information and details?

Jyotirmayee Chaturvedi, from GENPACT: 

I think what was more important was identifying those dots. Honestly, in the beginning, it was slightly overwhelming, but then we bounced back pretty quickly. At Genpact as a team, our main stage was compliance. We just wanted to be on the right side of things. So we had a multi-pronged, kind of approach which covered tracking employees, talking to their business leaders, HR leaders, to understand where employees are tracking their immigration status to see if we are compliant. Last but not least, we understood every employee’s personal situation as well. So, you know, these were those small dots, which formed part of a bigger hole.

Q2: What are the policy shifts that you have observed? If you do have a remote work policy, how do you keep track of your employee’s work remotely and make sure you both are compliant? Aside from the country-specific rules, what would be the key points a corporate should consider when devising and developing remote working policies?

Jyotirmayee Chaturvedi:

The challenge would be ensuring compliance. Employees are just located across the globe in different locations, and you have to be on the right side of things. So depending upon the country combination and location, you have to design a structure or you have to get them right. And the second thing which is very important as a mobility professional is the duty of care. You have to have that employee centricity at the heart of the policy solutions that you propose. With both these things in mind, we did come up with a remote work policy.

We also came up with a work-from-home policy. Honestly, no remote worker policy can be all-encompassing. Every country’s combination will have different kinds of regulations, which can be governed by the tax treaties that they have in place. They’ll always be different. As an organization, you will have to understand the level of risk that you’re willing to take. And then, I think what is all more important is change management. You would have to educate the businesses that weren’t the kind of risks that any organization will have to face if they are non-compliant in any region. And I’m sure no organization wants to be in that space, but I think these are the two considerations. And then obviously the key consideration would be if you know that level of risk, which can cover all kinds of country combinations and then educating and change management, driving that to the organization. 

Q3: If remote work is not allowed on a visitor status, what alternatives would employees have if they wish to work remotely from the UK, respectively USA?

Alastair Mason, from SMITH STONE WALTERS LTD:

The UK is primarily concerned with your physical presence in the UK and the physical arts of performing work. So it’s not concerned with where you may be employed or where you’re paid from, but instead, if you are physically in the UK performing work and you can’t do that on a visitor kind of work. There are some exceptions, so you can come in for meetings, you can come in for conferences. There are also some very specific activities: you can install software on a computer, but you can’t come in and just do your routine job sitting at a desk, working day-to-day. There are also limitations, as you can’t be paid out by a UK entity whilst you’re here as a Vista. And of course, they look at the whole situation. So if you show up at the border and you say I’m coming in for eight weeks of meetings, it’s a very strong likelihood that you’ll be turned away.

John Nahajzer, from Maggio Kattar Nahajzer + Alexander PC:

And in the US rules track exactly what Alastair just mentioned, it’s about where the person is physically. The US system was designed to at least put visitor status to promote business. Thousands of people enter the US every day as visitors, and they come for work purposes. The visitor status is not generally a work-authorized visa status. Generally, you’re not authorized to work and the guidance I’m giving stems from the nine rules or regulations, which actually define what employment is, and that’s defined in the law as providing or performing services for pay while you’re in the US. It doesn’t matter where the payroll source comes from, just like in the UK.

It’s all about where the person is physically. Anyone discovers that the person here in the US is undergoing, say, a specific type of training – that’s permitted as a visitor, but then at night, they go to their hotel rooms and then they start working normal jobs that they would do outside of the US and that’s not permitted. 

There’s no specific guidance from the government on this. Again, this system is intended to promote flexibility in business. So what you’re left with is understanding the rules, and then, these gray areas that Alastair mentioned, and trying to fill them in with some guidance. And so what we generally recommend is “Okay, you can check your email, right? You can check in with your colleagues or your manager, but you’re crossing the line if you start doing the normal job that you typically do overseas while you’re here in the United States.”

Q5: As far as we know, it’s almost impossible to work in the UK without an entity acting as your sponsor. What happens if a company does not apply for sponsorship, meaning you can’t work based on a visitor visa, but the employer (which would like to hire you) does not want to act as your sponsor either. Is there something like that? Do cases like this exist?

Alastair Mason:

Yeah, they do a lot, especially at the start of a company that may be based overseas and is first starting up in the UK. They won’t have the structure in place, so they might want to hire their first overseas national without having an entity in the UK. Unless that overseas national has some of the roots of the UK, like their ancestral links or a category known as global talent for particularly talented individuals, then it’s very difficult. What we see quite a lot is agencies that offer to sponsor you. They would employ you and then hire you out to your employer as well. But the UK authorities are firmly against this. 

What the UK doesn’t want to see is an agency sponsoring somebody and then saying to another company, “we’ve sponsored this person.” Here you go. You define their role. There needs to be a definition of role control over salary, et cetera. That’s why agencies and the UK sponsor system don’t really lie together. It’s not possible to seek sponsorship from somebody other than your employer.

Q6: What happens if the company doesn’t apply for sponsorship?

Alastair Mason:

If you don’t apply for sponsorship, someone will approach you and say: “I can sponsor your worker, but you should refer the tenant down and say, no, it’s gotta be us.” That gets the sponsor.

Q7: Do we have to pay a UK salary equivalent for ICT, migrant workers who move back to offshore home country for a few months to support the project from offshore, and then we’ll return to the UK?

Alastair Mason:

No. We have a government portal for sponsorship. It’s called the sponsor management system. When a person leaves the UK, their salary no longer needs to meet the ICT threshold. And you update that portal. Then when they’re returned to the UK, you updated again and just keep it up to date. And by that means, you can lower their salary when they leave the UK or change their salary.

Q8: How eager are the US employers in getting started with bringing employees to the US? If companies don’t want to get involved, what options are left for the individuals and how do companies expect to attract talents and skills without actually making this effort?

John Nahajzer:

Based on the questions I’m receiving from clients all over the world, the labor market here is really tight, meaning that there’s a high demand for talent right now. 

My firm’s extremely busy these days trying to come up with solutions for individuals, trying to hire basically any types of open positions. I just received an email this morning from a healthcare company, because they have a shortage of nurses and other types of staff.

Unfortunately, the US visa system is not geared towards hiring foreigners working in unskilled positions. It’s really meant for bringing over highly talented foreign national workers, working in professional positions, or for intra-company transferees who are professionals, managers, executives, and so forth. 

But right now, are they eager? I would say extraordinarily eager. We have very few pieces that are available for unskilled labor, and those are usually snatched up very quickly. I’m thinking of the H-2B visa. Our system is extremely complex. In the US, several different government agencies are involved with their own rules that sometimes conflict with one another.

Q9: Would there be any specific actions the employers need to take in case employment conditions change? What happens if an employee wants, or has to work from a different state, for example?

John Nahajzer:

For an H1B worker, you have to understand the area of intended employment. That is defined in the law as, you’re either within normal commuting distance of your home or the worksite that’s been approved – or you’re within the metropolitan statistical area or MSA. You can find guidance online from the department of labor on what a particular MSA might be, but defining within normal commuting distance has got to be pretty tricky because people are oftentimes commuting great distances for work. 

So you have to make a judgment call and in conjunction with your counsel, understand the risks, what you’re really dealing with, and why filing a nation amendment to cover the new worksite might be a good idea.

If you’re going to work outside of the MSA or the area of intended employment, then you may be eligible for something called a short-term placement exception where nothing has to be filed or posted, but there are very strict rules in place about eligibility for that benefit. And it’s a very temporary thing. You have to file the nature with the amendment to cover that area outside of the area of intended employment.

Q10: We already see that compliance risks are present in the immigration sector. In your opinion, what would you say the remote work had? Would you say that remote work had an impact on tax regimes, for example? What are the kinds of changes and impacts that you’ve seen and anticipate for the future?

Jyotirmayee Chaturvedi:

Honestly, the tax regimes didn’t change, but those changes have been minor in terms of extending the payments, deadlines, the tax filing deadlines, and pretty much they came as a response to the pandemic. The only big change was OACD announcing some guidelines, but then even they left it to the countries to design their own regulations in accordance with policies and importance. And it wasn’t even managed. So you could not like India patrol. I know they didn’t do it. A lot of countries didn’t otherwise do that. So any changes that we saw then were primarily in response to the pandemic.

I think once we start normalizing and talking about remote work, that remote work starts picking up. I think some changes that I personally anticipate there’ll be in terms of redefining some of the clauses in the tax treaties. Something like a new definition for a permanent establishment that encompasses something more to support the remote work – kind of a situation because the ultimate beneficiaries are already obviously lined from the drought. Similarly, something to share those taxes or some other changes could be totalization agreements, social security agreements that we have the extent of social security agreements is really not as wide as pretty.

So I think I see them growing in number. I think one important factor would be the buzzword around gig workers or digital nomads. I think there’ll be, there’ll be more coverage, Desi provisions, and degradations to bring greater governance around that. So these are the changes I anticipate. I think we as mobility professionals will have a lot of learning to do in times for that.

Q11: Do the UK and USA consider having in place one of the recent digital nomad, remote worker visas that some countries have already implemented?

John Nahajzer: 

The answer is really no. It’s unrealistic, any kind of changes to our laws these days for immigration, it’s just extraordinarily difficult. So, no, I don’t foresee it, at least not in testing.

Alastair Mason:

They’re talking about tweaking the skilled worker visa to make it more flexible, but the UK is very much focused on the compliance being on the side of the sponsor. And I can’t see that changing. Not in the immediate future for sure.

Q12: How do you see the current mobility trends in your personal perspective, given the rise of remote work scenarios? Will traditional assignments structures be kept SDAs LTAs? What trends do you see emerging given the circumstances in the past couple of months? Do you believe the pandemic changed the paradigm?

Jyotirmayee Chaturvedi:

Yes, it certainly did. How I see it is that long-term assignments are the traditional kind of assignments. I don’t think we will stay for long. They obviously see a tip desk telecommuting, we talking about it most, it’s your district. I think it can just grow over time.

However, the third thing that we say is the gig workers, so that is something that might just pick up, but not to the extent that we see the buzzing. And that’s obviously because of the compliance challenges that it brings along. And another third-party vendor getting integrated into the entire structure. So I don’t see that big workers will pick up that much.

Q13: Would you say that this rise in remote work and its popularity will have an impact on employees hiring and job application process? And if your organization adapted or changed anything in your internal policy to suit this new reality?

Jyotirmayee Chaturvedi: 

Our organization has always been known for its flexibility. So we really didn’t have to change much internally, but yes did come out with certain policy guidelines around work from home and remote working. Going back to the application process, I do see that it will impact it, because nowadays you just log into LinkedIn or you go to any job site, where you at least give them a hybrid kind of more, they don’t want to go back to the old normal or working from office deeply.

Q14: Given the new working from home/ remote work/ working from anywhere realities, have you identified possible new trends in companies modifying their internal policies in hiring new employees worldwide without an onsite presence and thinking about your clients perhaps?

Alistair Mason:

No, we haven’t. The big change for us really has been the introduction of continental Europe to the visa scheme. So people who were telecommuting from Europe now need to apply for a work visa, unfortunately, and work visas in the UK cost up to 10,000 pounds. So that’s where we’ve seen a big change in the system. So it’s kind of the two things coming together, Brexit and, and COVID remote working.

COVID remote working sort of huge number of people leave the UK. So something like over half a million leaving London alone to go return home to Europe. At the same time Brexit hit, well, those people are now working remotely from Europe, but their employers want them to come into the UK from time to time to work, whether it’s on a weekly basis, monthly basis or more infrequently than that. Um, but those individuals now need to have a work visa potentially to do that.

Q15: What would be the current status of the national interest exception waiver process, which is the additional Covid travel restriction created by the administration?

John Nahajzer:

The White House announced that beginning November, the travel ban would be lifted. Unfortunately, and as of today we still don’t have any specific guidance. For example, would that include all 33 countries that are subjects of the sort of travel ban at this point? There’s been a lot of pressure from the EU and the UK on the Biden administration, to lift the travel ban for folks who were there from Europe, coming to the US. Beyond that, it’s gonna be interesting to see if they’ll apply the lift for folks in India, China, South Africa, Brazil, where COVID is still a very big problem.

So the current state is we don’t know quite yet. And what I think folks are assuming is that then the US consulates will just reopen for normal business. And I don’t think so. We’re starting to see most US consulates are closed for normal visa operations around the world. We’re starting to see some reopen for normal operations, others on a limited basis. So my sense is that although the NIE waiver requirement will be lifted for most, if not all of these countries, travelers are still gonna find it hard to secure a visa appointment and may have to go through the emergency appointment, request path, which can be difficult, and expensive.

Q16: Have any of you had success getting a UAR employer of record subsidiaries to sponsor a work visa?

Alastair Mason:

In the UK, one entity can hold a license and multiple entities can piggyback off the back of it. Some companies will have individual licenses for each entity, so they split up the risk and mitigate any compliance issues that one entity might have. But then again, other institutes that we work with, will have 400 plus at the UK entities under a single license. So if you have an often distant HR-known entity in the UK, that already has a license, you need not get another entity.

John Nahajzer:

Our system is different from the UK system. For intra-company transferees, you’re either dealing with companies that are eligible for, and have a blanket L certification, or you have to petition US CIS, and there we go back to your prior comment Madelina about how complex our system is and all these layers.

So with a blanket, it’s relatively simple. If the companies are rewarded, the legal entities are on the blanket and the petition and application are made all at once for the visa at a US consulate and home country. The trick now is the COVID restrictions that consulates being open or closed.

Q17: What would be the key immigration issues and problems that your clients are usually facing?

Alastair Mason: 

At the moment, there’s a lot of people who are still stuck overseas or choosing to be overseas. That’s a big issue for UK entities who are sponsoring them, because after you’ve spent five years in the UK on a skilled worker visa, our main category of sponsorship you qualify for your permanent residence, but there are limitations on how long you can spend outside the UK each year. 

Obviously, if you’ve got an employee that spent a year working from their home country, then when it comes to five years down the line, they’re going to have such a large absence in their history that they won’t qualify for their permanent status. And as an employer, you’re going to have a block of potentially a hundred individuals that can’t get their permanent status. You’ll have to extend their visas and incur the cost of that.

So that’s one big fight that our clients are having with their employees. There is this ongoing argument, and we’ve actually seen companies offer bonuses to individuals to return to the UK to avoid this because it’s cheaper to pay somebody a bonus than it is to pay the UK government their visa fees. That’s a huge issue that we’ve seen and just the fees in general.

Q19: What would be two key compliance considerations?

Jyotirmayee Chaturvedi: 

Data privacy is one of the biggest things, and then tax and social security. With the remote working, so much information is sitting in different books of the world, that data privacy becomes one of the biggest concerns. 

John Nahajzer:

The first thing that comes to mind is a question that can be a good follow-up to the prior question you posed to us, which is “how do the authorities know if there are these risks? How are they gonna find out?” Right? There’s a lot of mechanisms in place and mechanisms to catch people and companies these days. The example I can give, hearkening back to the very first question about remote work, or entering as visitors, and then working remotely here. I had a client that was investigated by the government for that very reason because of the employee complaint, the employee filed a complaint with the department of labor. And because he wanted us to be compensated for that extra time.

He was in his mind working while attending these training sessions, then he went back to the hotel and worked for another six hours. So a complaint was filed. There were also site visits that the government makes after the case has been approved after a petition has been approved. So they’re watching more and more of the systems being tied together, even with other countries. 

If you’re a bad actor in the eyes of the government, you’re going to have a very hard time with your visa sponsorships in the future.

Alastair Mason:

My biggest thing is to have someone that is a gatekeeper to everything. And when somebody is here in the UK as well, if there are any changes to their employment, we need to report it to the UK authorities. 

Number two is factoring in immigration as early as possible. We’re sort of fortunate in the UK so far, as you can get a visa pretty quickly. In New York, you can get your UK work visa within 48 hours. And if you’ve already agreed to bring somebody to the UK, and then you realize they need to sit an English language test, they need to set a TB test. It’s sort of the age old story of thinking about it before it’s an issue.

Thank you Jyotirmayee, John and Alastair for your valuable inputs.

You may watch the entire interview with our 3 guests HERE.

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