Submitted by Global Tax Network

The Future of Work: Why the C-Suite Needs To Align With HR on Employee Mobility Issues

A landslide of remote work requests is crashing into businesses, and it’s revealing alarming holes in the way corporations are managing employee mobility. Chances are, remote work is already bogging down your HR department, and if you don’t act soon, your company and employees could be exposed to global tax compliance and employee incentive problems.

Most C-suite executives know the remote work revolution is coming, but not all see the pressing reasons to align with HR on employee mobility issues right now. I’ve picked out some of the most important reasons alignment is needed and how C-suite executives can successfully plan for an increasingly mobile workforce.

Remote Work and Tax Enforcement Agencies are on a Collision Course

Most C-suite executives are seeing a massive workforce shift toward remote work and global employees. In fact, remote work has skyrocketed during the pandemic, with 44% of employees spending at least five days per week working in a mobile setting. What’s more, it looks as though the number of remote workers will continue to climb in the future. According to a recent Gartner survey, more than 80% of corporate leaders plan to let employees work remotely at least part time after the pandemic subsides.

For C-suite executives, a move toward more flexible work appears to be inevitable, and it presents new opportunities to lower operational costs and dip into a wider talent pool. However, some leaders don’t realize how lenient tax officials and regulatory bodies have been up to this point, and even fewer see the potential compliance violations mounting on the horizon.

As employees flock to new locations and their companies lack the resources to track their whereabouts, governments are increasing their ability to monitor who is working within what borders. More and more regulatory agencies now have the technology to monitor employee activity, and immigration offices are linking up across the globe to coordinate their tracking efforts. With a growing number of employees clamoring for remote work and few companies actively mapping out a compliance plan, companies could face heavy consequences in the near future.

Why Do C-Suite Executives Need to Align with HR on Mobility Tax?

As employees begin to work across state and country borders, their employers (often unknowingly) also become responsible for reporting wages and withholding taxes according to the specific obligations of the jurisdictions in which the employees are working. With so many different tax rules tagged to different areas, keeping track of mobility tax alone becomes extremely complicated. If C-suite executives and HR aren’t aligned, these complications can escalate into company-wide problems.

Here are a few of the most immediate potential consequences that could soon hit company leaders:

• Tax and compliance penalties: With the confusion of COVID-19 throwing off processes, many regulatory agencies gave non-compliant businesses a pass in 2020. That’s a trend that’s likely to change in the near future. Unfortunately, if companies don’t have a way to track where employees are and ensure tax compliance, they may risk damaging their reputation or incurring penalties, fines or even jail time.
• An overwhelmed HR team: Remote work is popular among employees. In fact, according to a recent Buffer survey, 97.6% of employees want to work remotely at least part time for the rest of their careers. So, it’s no wonder that C-suite executives are often quick to promise flexible work opportunities for employees. Unfortunately, if there aren’t policies backing up those promises, they can overwhelm the HR team and impact a company’s culture. As requests flood in, HR professionals will need to know where employees can work, for how long, and how to manage tax compliance in different scenarios to avoid an overwhelming workload of one-off requests.
• Discouraged employees: Without a clear remote work policy, employees can become frustrated and even leave for other opportunities. If they don’t have clear answers and direction about where they can work and how long they can work there, it can sour the entire company’s culture.

What Critical Actions Should the C-Suite Take?

Adjusting to the mobile work onslaught may seem overwhelming, but there are some clear-cut actions C-suite executives can take with their HR teams to properly manage their global teams:

1. Let Your Company’s Priorities Guide Your Efforts

Companies generally have three broad priorities fueling their policies: employee experience, cost reduction, and corporate compliance. By determining your company’s biggest concerns and setting priorities accordingly, you narrow the scope of responsibilities—making it easier to drive remote work policies that promote your company’s goals.

2. Designate a Remote Worker Project Manager

To lay out expectations for employees and push mobile work policies forward, it’s important to assign a single remote worker project manager. As remote work requests ramp up and employees come up with inevitable questions, your project manager will spearhead new initiatives and help identify what processes your employees need.

3. Give Your Remote Worker Project Manager Support

It doesn’t matter how capable your remote worker project manager is—they’ll need support going forward. Addressing remote work requests on a case-by-case basis creates a bottleneck in HR. To properly manage mobility tax issues arising from remote work, your project manager and HR leaders may need to consider everything from immigration, corporate tax, employment tax, retirement benefits and other areas outside their expertise. That’s why it’s a good idea to empower your project manager to build a cross functional internal team that can address all remote work compliance work issues. Additionally, it is critical to give them the budget they need to bring in external vendors to address the complex mobility tax issues that come with remote workers.

C-Suite and HR Alignment is the Recipe for Better Work in the Future

As the workforce changes, C-suite executives have an opportunity to stay ahead of trends, keep HR employees happy and safely manage the tax complications that are inherent to remote work. To achieve this, it just takes stellar communication and policies that align C-suite executives and HR. By bracing for changes early, corporations can fight off the tax hazards that are on the way and propel work forward in this new employee landscape.

ABOUT THE AUTHOR

Brett Sipes has more than 20 years of experience in providing international tax services. He joined Global Tax Network in 2006 and currently serves as Managing Director for GTN's Pacific region. He is responsible for providing global mobility tax compliance and consulting to mobile employees and their employers. Prior to joining GTN, Brett worked in the global mobility area and in international executive services with Big 4 accounting firms. He earned his Bachelor of Science degree from Northwestern College and is a CPA.

Originally featured in Future of Sourcing: https://futureofsourcing.com/the-future-of-work-why-the-c-suite-needs-to-align-with-hr-on-employee-mobility-issues