Rethinking Employment In A Distributed World

Posted on  May 22, 20 by Dee Coakley
global employment

People. Nothing holds the key to a company’s success and ensures the business survives, thrives, and grows in certain and uncertain times more than the people that work in it. They innovate, build, sell, and care for customers on behalf of the founders.

People are the biggest asset a company has as it brings its vision to life. Their experience as employees matters a lot, from how they are first recruited, to how they are employed and treated.

We have known this for a long time. However, as of not too long ago, we have had to accept the hard truth of how unlikely it is to find the best people within commuting distance of our offices. The chances that a person will possess the right skills, have the right experience, will be sufficiently interested in the role, will have appropriate salary expectation, and availability to start right now, are very slim.

The openness to the idea of remote/distributed/teleworking or however you want to call not working from “the office” was the result of realising this reality. For those who hadn’t opened up to the idea of their employees working from home, the COVID-19 global pandemic forced them to. 

So here we are now, willingly or not, fully remote and distributed for the foreseeable future. According to recent polls, more than half of the workforce does not want to return to an office once this is over. Having tasted this flexibility, many future recruits are going to demand it. They are going to select companies which offer remote work and support distributed workers, even if they are halfway across the globe.

As I have previously shared, I started Boundless after I had experienced considerable challenges in managing employment for geographically distributed teams. While at the time the employees in my previous company going remote was unplanned, it was in no way as sudden or all encompassing as in the time of a global pandemic 

If leaders do not make their companies fit for a world where a remote and distributed way of work is far more prevalent, they risk becoming less competitive employers. A change in how we operate is needed, which goes beyond opening up the recruitment pool and advertising remote-friendly jobs. To attract and retain people, we have to rethink the employee experience in a way that it addresses people’s needs. Let’s explore a vision of what leaders are going to have to do in terms of global employment, and how.

Develop your remote employer brand

Getting the best candidates into your pipeline, and convincing them to come and work with you is all about ensuring that you are perceived as a great company to work for.

what employees need in terms of global employment

More and more, the definition of a great company is that of an organisation, which stands behind the values it puts on posters around the office. There is nothing more off-putting than a company saying one thing but doing another. You do not have to search much to find stories of companies filled with hypocrisy and how much that has tarnished their brand. (Communication, Respect, Integrity, and Excellence were the values Enron plastered on its walls ).

We have also come to understand that what makes a great employer has nothing to do with: 

ping-pong tables
free lunch
beer on tap
or flashy offices ...

(Right now, what defines a great employer certainly isn’t flashy offices or cool amenities!) 

Even before COVID-19, what was becoming abundantly clear is that what employees want and value most of all is respect. Alongside that, they put importance on things such as:

  • Permanent flexibility 
  • Work/life balance and emphasis on well being
  • A sense of purpose

Recognising why these are important to employees and providing them as part of the employee experience, requires leading with empathy. Especially given the current situation - or the fact that, even when things are going great, a new recession, pandemic or another form of crisis is just around the corner - people crave safety, security, and stability. 

How should all that affect how you lead your organisation and how you build your employer brand? 

It’s time to ditch the idea of ping pong tables and focus on allowing your workers to have flexibility about when and where they do their work. That has to come on top of providing legal, secure, and stable global employment for all your employees, regardless of where they are based. I know that providing employment is more difficult for geographically distributed than for co-located teams. Still, I am here to tell you that global employment solutions are now more accessible than ever. Before we get to that, let’s look at your options for hiring someone in a different jurisdiction.

Existing global employment People Ops solutions

global employment requires offering flexibility, safety and security

There are several potential options for running your internationally remote team, which vary in their legality (or lack thereof), cost, and ease of implementation:

  • HQ country payroll: while the person may be in a different jurisdiction, they “appear” in the books of the HQ. They receive their payroll and pay taxes in the country where the company is located. This may appear as an attractive solution; however, it generally isn’t legal. Employers are legally obliged to provide employees with the rights of the country that they live in, and their pay must be processed for tax purposes through the tax system of the government that they're tax resident in.
  • DIY setup: this will see you do everything necessary to set up as an employer in the country where your employee resides. You will have to work directly with in-country accountants to register entities and register with local tax authorities; use translation services to produce dual-language employment agreements; find local payroll processors to handle monthly payroll; take care of all of the ongoing overhead that comes with regular filings. It would involve getting to grips with local employment legislation and understanding the terms and rights that your employees in that country are entitled to. This route can take anywhere between ten weeks and 18 months, which you will have to go through each time you have an employee in a new country. Costs vary hugely, but it will often cost about €10,000 to get set up to employ people in another territory. Then there is all the work you need to do monthly to actually run country-specific payroll and file local taxes.
  • Intermediaries: you can use suppliers to help you with all of this, connecting you to local service providers and guiding you through the process. There's a lot of work that they can't do for you, so it still ends up being a pretty involved, and lengthy process, and it can be costly. In addition it adds a communication overhead and layers of responsibility.
  • Employer of Record: a model (and legal status on an employment agreement) that takes care of the employment and legal relationship with an employee. The model is applied through a third party Professional Employer Organisation, such as Boundless. As the Employer of Record we would enter a tripartite agreement with the company, and the employee.
  • Independent contractor agreements: probably the most common way to work with people in different jurisdictions, this involves signing people up to fixed term or ongoing service agreements. While on the outset, it seems like the most straightforward option, and it's one that's used by many companies, it's very rarely legally allowed unless it's a short-term arrangement. Due to its popularity, I want to take a minute to explain just how problematic it is.

The problem with independent contractors

While contracting sounds an easy and quick solution, and seems like it will solve all your admin challenges, it is, unfortunately, a hack. And as such works only in a situation such as a fixed-term project and, in many countries, this project would need to be something that’s not core to your business. 

Most companies will, at one time or another, use fixed-term contracts for specific projects such as creating an inbound marketing strategy, process improvements, fundraising readiness preparation, etc. For such time-boxed projects, there usually is no permanent role in the company and most governments will look at that and say, “yes, that's a legitimate contractor.”

However, there are many scenarios where it is not legal to classify a worker as a contractor. Every government employment agency/tax authority has slightly different criteria for what qualifies as a contract role and where someone should be classified as an employee but, broadly, the following are the key measures that they'll look at:

  • Does this person work full-time for your company?
  • Is your company this person's only client?
  • Do they earn their primary income from your company?
  • Do you, or the management at your company, direct their work?
  • Do they use company equipment and infrastructure to produce work for you (laptop, company email account, regular participation at internal meetings)?

If the answer to all/most of these questions is yes, then the local government - the employment authorities and the tax authorities - will say this person must be classified as an employee. The general rule of thumb is, if someone looks like an employee and sounds like an employee, then they are an employee!

In 2019, many governments actively started taking action on remote workers being misclassified in multiple jurisdictions. We have anecdotally heard of cases in the UK, Serbia, Canada, Spain, Germany, the Philippines and others. We believe this is only going to continue.

However, the problem with independent contractors spans wider than just the legal repercussions. Building a team using a hack will eventually dilute the value of your employer brand. When your company reaches an inflection point, such as a more considerable funding round, it's common for a new investor — or the existing board — to look at how international employment is being handled, and say that it's time to level-up and ensure that the company is compliant.

This is particularly important when a company is preparing for an exit. An acquirer that is looking to acquire talent is not looking to acquire a bundle of easily terminated service agreements. They're looking to get a compliantly employed, fully engaged, loyal team.

As much as we live in a globalised world and remote collaboration and communication are viable from a technology perspective, the employment of people which is heavily dependent on local regulations remains very difficult. Regulations and laws are as fragmented even in seemingly united unions (such as US States, Canadian provinces or EU member countries, to name a few). One common thing, however, is that according to every jurisdiction, a person working full time for a company needs to abide by its local regulations, regardless of where the employer is located.

the problem when global employment relies on independent contractors

There is another way for global employment

Abiding with stringent governments is only part of the reason why companies need to seek a better way to employ international staff. We see seeking to compliantly hire international workers as an excellent opportunity to be a great employer by:

  • Nurturing great culture in your organisation and avoiding a two-tier system, where employees feel valued, while (international) contractors feel like 2nd-class citizens
  • Providing stability and security to your international workers. With uncertain present and future, your international workers need the protection of local employment regulations as well as the aid of local social support, which are usually only available when the individual has been contributing to the local tax system 
  • Improving your employee retention rates by fulfilling what are now recognised employee needs and desires
  • Adding value to your employment brand, ensuring your company is in a position to compete for the best candidates against other companies that are offering secure employment 

Above, I mentioned that there it is now more accessible than ever to employ distributed teams compliantly. The solution for that is a global employment platform that too has rethought distributed employment. A global employment platform takes the Employer of Record solution and enhances it with easy to use technology. The team building all that, possesses years of experience in the fundamentals of global employment and can tackle any issue or challenge immediately. All three combined allow for the entire internationally remote team to be operated from one single point. 

The Employer of Record solution gives access to local corporate and employment infrastructure to enable legal employment. At the same time, the technology platform manages HR compliance, payroll and tax filings on behalf of the client company. For this to work well, both the infrastructure and the technology need to be owned and operated by the same entity. This ensures that international workers are compliantly employed, automates all of the hard stuff —minimising the risk of mistakes— and frees you up to focus on your core business. 

This is our vision for Boundless. Solve global employment, make it easy for companies to avail of the abundance of diversity, creativity, and ingenuity of 1bn knowledge workers around the world, and democratise access to well-paid jobs for all. It's with that vision in mind that we have built our team with great internal expertise in global payroll, international People Ops and international employment.

Rethink people ops in a distributed world

It will be long before people will be able to return to offices and, even when they do, how they interact will probably never be the same. Many people will want to remain working from home or from places they have always wanted to live. Now is the right time to develop a considered employer brand, with empathy is a central value, which offers candidates flexibility, stability and security. By rethinking employment and people ops for a remote world, you are laying the right foundations for future growth.

You have the power to provide safety and security by ensuring people are legally and compliantly employed. The good news is that it’s not just on you to carry the responsibility for that. Building the world’s first global employment platform, we are here to help you. Start legally employing today.

Need help in figuring out how to employ your international workers?

Speak to an expert
The making available of information to you on this site by Boundless shall not create a legal, confidential or other relationship between you and Boundless and does not constitute the provision of legal, tax, commercial or other professional advice by Boundless. You acknowledge and agree that any information on this site has not been prepared with your specific circumstances in mind, may not be suitable for use in your business, and does not constitute advice intended for reliance. You assume all risk and liability that may result from any such reliance on the information and you should seek independent advice from a lawyer or tax professional in the relevant jurisdiction(s) before doing so.

Written by Dee Coakley

Before founding international employment platform, Boundless, Dee Coakley was a three-time COO, having spent 10 years with B2B SaaS businesses (Masabi, Bizimply & Axonista). In her COO roles, she experienced first-hand the operational challenges of setting up employees in new countries, and so set about building a solution. Boundless handles cross-border HR compliance and payroll for small and mid-size businesses, removing the barriers to growing teams internationally.

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