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Operationalise remote work: Five steps organisations can take now to manage tax and business risks

Remote, controlled – This changes everything

Almost 80% of respondents to Deloitte’s first Global Remote Work Survey for tax said they allow some level of remote and hybrid work. However, many companies are struggling to identify the best approach to operationalise their remote work policy in a way that enhances their talent and culture strategies while also managing complex tax compliance and business risks. 

Deloitte surveyed more than 820 tax, HR, finance, mobility, and payroll professionals across the globe who were asked how they have handled and responded to remote and hybrid work practices and policies. We also reached out to HR, tax and mobility leader’s to glean their insights about the global remote work journey.

What can you do to accelerate the operationalisation of your organisation’s remote work program?

Here are five steps that our global Deloitte survey results, interviews with leaders across all industries and our experience suggest you should be taking to drive your remote work journey forward.

Remote Work Definitions

Five key actions to take now to operationalise your remote work program

1. Align your remote work model to organisational strategy

Approaches to enabling remote work vary widely, with philosophies that range from ‘defaulting to no’ - where domestic or international remote work is not allowed; to ‘always get to yes’ - where organisations are inspired to be as accommodating as possible and implement a policy without limitations. Most land somewhere in the middle. As our survey indicates, 80% of organisations allow some form of remote and hybrid ways of working.

Just over half of our respondents (53%) say they allow employees to do ‘hybrid work’ – in other words, there are a set number of days they must go into their assigned workplace and a number they can work remotely. Another 27% allow employees to work ‘fully remote’ on a regular basis without requiring any physical onsite presence. Around one-in-ten of our global survey respondents say they do not currently allow any hybrid or remote working as a matter of course.

Every model and approach will look different. There is no universal solution, and much will depend on your company’s philosophy and vision for remote work and overall strategy. Start by knowing what your business wants to achieve and design a remote work policy that will facilitate and enable the organisational strategy – that could be thinking and acting more diversely, offering greater flexibility, increasing productivity and satisfaction, or something else entirely. If your organisation relies on site-based employees, the right policy may be to not allow remote work requests unless under specific circumstances. If your strategy is to source talent from around the world, you may want to focus on developing your cross-border work models. This may require you to accept certain risks or costs to achieve your ambition. To implement a successful remote work policy, you must align your remote work strategy to the business strategy and collaborate across functions – HR, Mobility or Tax cannot do this alone. A triage process is essential to enable informed decision-making within the business.

2. Assess the risk

To unlock the benefits of remote and hybrid work and to limit any risk exposure, organisations will need to align internally on the overall corporate risk tolerance and then assess the appropriate guardrails that must be implemented to enable cross-border remote work and balance risk for the business. An organisation’s ‘guard lines’ are the specific limits that must be agreed based on their risk appetite and will dictate the guardrails that are included in a remote work policy.

For organisations looking to embed a successful remote working model, it is essential to work across functions and embrace a broad perspective. You will need to work with your leadership and coordinate across all stakeholders (tax, compliance, global mobility, talent, HR, payroll, legal, data privacy and technology) to articulate and align on priorities as part of a holistic approach to building a compliant and operational workforce strategy.

It is imperative that organisations know where their employees are working, know what they are doing and how long they have been doing it. There are significant tax, corporate responsibility, immigration*, and duty of care considerations when people are working “under the radar” and in new and different jurisdictions.

“The first thing we would want to verify is whether that employee has the right to work in the country they want to go to. We also need to think about the acceptable business risks – things like cyber security, access to customer data and licensing for platforms and systems – as well as personal risks, hence there are some countries where we do not allow this.”

Cathryn Vose Head of International Mobility and Global Employment Taxes, Vodafone

With tax compliance and compliance regulations cited in the top three challenges for organisations, it is not surprising that the most common guardrails tend to be immigration*, right to work, day thresholds, and eligibility criteria that could expose the organisation to tax and legal risks.

Our survey and our conversations demonstrate that the most cited guardrail is that the employee has the existing legal right to work (64%).

“We had a fairly robust mobility program going before the pandemic, but that event certainly drove an evolution. At first, it was about making sure everyone was safe. Then we shifted our focus to make sure we were compliant. Now that has evolved into a much bigger discussion on the Future of Work at Mastercard.”

David K Buchner Jr, VP of Global Mobility, Mastercard

While many organisations are clearly on the path to creating and formalising their remote work guardrails, some organisations admit they have not yet done so. Almost a quarter (23%) say their time limits are still under consideration. Thirty percent say they are either still thinking about what guardrails to put in place or that they have no guidelines in place. Waiting too long to apply appropriate restrictions is a potentially risky path that one that may also compromise an organisation’s employer duty of care, together with a potential exposure to other compliance risks.

Deloitte’s view is that organisations should develop an action plan that addresses current and future potential compliance risks. Companies need to implement guidelines and guardrails around remote worker policies including eligibility criteria and approval routes, location identification and associated due diligence. It is essential to adopt a holistic view to enable individual cases to be controlled and assessed (from a corporate tax, employer and employee compliance, legal and regulatory perspective) and that there is appropriate tracking.

*For legal and regulatory reasons some of the Deloitte Touche Tohmatsu Limited (DTTL) member firms, including the US member firm, do not provide immigration services.  Such services are provided by the legal and immigration practices of DTTL Member Firms outside of the United States and their alliance partners.  The Deloitte US firms do not practice law nor provide legal advice.

3. Identify the routes to enablement

After defining and aligning on the organisations risk appetite and the resulting guardrails, organisations will need to develop a policy that captures these remote work guidelines within the context of:

  • The approval process
  • The payroll reporting and withholding requirements
  • The management of exception requests
  • The consequences for non-compliance
  • Its interactions with other policies, as well as many other considerations around well-being, insurance including healthcare, expense management, compensation structure, and so on.

The top challenge to enablement cited by survey respondents was policy and regulation (46%). Our experience suggests organisations are struggling to understand the relevant regulations and how to set appropriate governance structures for their policies that reflect the level of control they want to achieve over their risks.

A key enablement barrier for many organisations has been identifying where remote work is governed within an organisation as remote work doesn’t naturally fit within a specific function due to the mix of talent and compliance implications. Our survey results indicate that more than 90% of organisations surveyed have since identified a remote work program owner and approval route for remote work requests. About three-quarters of organisations surveyed indicated that HR is either the primary or one of the core owners of the remote work policy and that the line manager/business unit leader is the primary approver of requests. The approach was broadly consistent across industries, regions, and company sizes.

“We want to be a fast follower; we don’t want to rush this. Our approach is to find the right partners to help us assess the market, find solutions, and build up our knowledge. The point is you are not on your own. There are lots of ideas out there if you know where to look.”

Mobility Leader, Global Healthcare Company

Tax and regulatory compliance are complex issues, particularly for organisations that want to enable cross-border remote work. It can become even more challenging when considering the interactions between the new remote work policy and other existing policies and processes already in place at an organisation. Our experience suggests that well-designed policies with clearly stated purpose, eligibility criteria, compliance risk guidelines, governance process, employee rewards and benefits, and roles/responsibility are more successful.

4. Determine how to best track and govern your remote population

Many organisations are keen to enhance compliance and mitigate the risk of their remote work policies, but our survey suggests there is a gap in some organisations’ ability to manage and enforce the guardrails they have implemented.

Tracking can be crucial to an organisation’s remote work risk mitigation as it enables an organisation to know where their employees are physically working. Without proper tracking, cross-border remote work could potentially result in employment tax and corporate tax exposure as well as broader legal risk. While opportunities do exist to track employees (such as by tracking VPN access), many companies are hesitant to implement employee tracking through involuntary means due to perceived privacy violations or fears of eroding employee trust. Gaps in technology capabilities and utilisation may also play a role.

With increased employee dispersal comes increased employer responsibility. There are several technologies and tracking tools that can help provide greater visibility into remote work requests, activity, and employee locations. Better technology and tools can deliver better insights and analytics – which leads to more efficient programs, better enablement, and better employer duty of care – improved employee experiences, and more robust tax and regulatory compliance. Technology is also key to ensuring relevant information is fed back into the payroll, legal, internal audit, and corporate tax functions.

Focus on having the right digital solutions in place to assist with managing tax compliance concerns can help identify where employees are working and enable triage and informed decision-making. In addition, technology and tools that track and analyse remote worker locations and educate stakeholders on actions to mitigate risk can help organisations sustain a successful remote work strategy.

"At the height of the COVID-19 pandemic we dealt with more than 800 remote work requests to more than 80 different countries. Our tax technology team built us a workflow that allowed us to automate approvals from line managers and HR, which fed into the tax assessment process. We still didn’t get much sleep that year, but the technology helped us deal with the deluge.”

Jon Henderson, Head of Global Employment Taxes, RELX

5. Stay connected to the long-term talent strategy

Take time to revalidate that your organisation’s remote work policies are still rooted in employee experience and talent strategy. This is, for most, the primary driver behind implementing remote work. Indeed, when asked why they were implementing remote work, some of the most frequent survey responses included enhancing employee experience (84%), expanding the talent pool (59%), promoting diversity and inclusion (39%), and enabling an alternate career path for employees (10%).

This data reinforces that remote work is here to stay as a key talent strategy. It also suggests that organisations are looking at the trends in the post-pandemic workforce to make sure they are competitive against their peers and aligned with their objectives to expand the talent pool, support diversity and drive sustainability goals.

"The feedback from our Talent team is that we are getting positive recognition from candidates for being somewhat more flexible than some of the other opportunities they are considering. Like everyone, we are competing for skills, particularly in cyber and digital, and we believe our policies have a direct impact on our ability to access talent in our chosen markets.”

Cathryn Vose, Head of International Mobility and Global Employment Taxes, Vodafone

How does remote work relate to talent? In today’s market, all roads point to reimagining work with a tailored approach. While the forces may be similar across industries, the impact on people, their purpose, the work they do, and where and how they do it will be very different across sectors, businesses, and roles. To unlock on-going potential, it’s time for leaders to shift their thinking on talent and the very nature of work itself.

About the Research

Deloitte’s online survey was in the field from August 11 to August 31, 2022, and garnered responses from 822 participants representing a wide variety of regions, industries, company sizes, and functional specialties. During September 2022, Deloitte also conducted a series of in-depth one on-one interviews with HR, mobility and tax leaders to gather additional insight.

Survey respondents (% of respondents; n = 822) across 45 Countries

Organisational model

  • 67% Global Organisations
  • 12% One country, multiple locations
  • 11% Regionally, in multiple countries
  • 10% Locally—in one country with limited geography
“The insights we’ve gleaned from our work with these clients and from our survey will help companies to further bridge the gap between their ambitions and actions when it comes to making remote work, well, work.”

Jim Pickett, Deloitte Global GES Clients & Market Leader