EPISODE 61: Remote work is the way of the future, which means your employees can work from anywhere in the world. Having the ability to seamlessly work between countries and states will be crucial for a business’ success going forward. Join guests Shiv Malhotra and Ann Bondurant as they discuss the growing need for global mobility.
[00:00:09] JL: Welcome to today's edition of DHG’s GrowthCast. I'm your host, John Locke. At DHG, our strength lies in our technical knowledge, our industry intelligence, and our future focus. We understand business needs and are laser-focused on company goals. In this ever-changing world, DHG's GrowthCast provides insights and thought-provoking conversations on topics and trends that address growth opportunities and challenges in the current and future marketplace. Thanks for joining us as we discuss tomorrow's needs today.
[00:00:42] ANNOUNCER: The views and concepts expressed by today's panelists are their own and not those of Dixon Hughes Goodman LLP. Always consult the advice of your legal and financial professional before taking any action.
[00:00:58] JL: Our topic today is the importance of global mobility. Our guests are Ann Bondurant, Manager, and Shiv Malhotra, Senior Manager in DHG's International Tax practice. Welcome to you both.
[00:01:11] SM: Thank you so much, John. It's a pleasure to be joining you.
[00:01:13] AB: Happy to be here.
[00:01:15] JL: Well, global mobility. A big topic needs probably a little definition. Shiv, help us out. What really is global mobility?
[00:01:24] SM: Global mobility deals with a variety of things for an organization and their employees. But if you really want to drill down to a firm definition, I would have to say it refers to the ability of a workforce to seamlessly move from one country to another and succeed both in business and personal lives. I stress the importance of succeeding in personal life because I feel for an employee to succeed in their business life, they have to be comfortable with their surroundings and in their personal life.
[00:01:53] JL: Help us understand the various aspects a company has to consider as part of a global mobility program.
[00:02:00] SM: Absolutely, John. Like I said, I feel that all personal life is very important for employees to succeed. One of the things as part of a global mobility assignment is the employer wants to get their employee comfortable in the environment that they're working in. Something known as culture acclimation is when the business teaches their global workers about local business practices and interpersonal relationships. What I mean here is when one individual goes from one country to the other. It's the employer's responsibility to make sure that the employee’s comfortable in their new setting and that's setting them up to succeed in their future business endeavors, for both the employee and the employer.
Another thing I think that's very important as part of a global mobility program is employment law. With employment law, you have HR. You have finance. You have various aspects of a business organization involved, and what you want to make sure is that all contracts, assignment letters, and local legislation requirements in the host country are being properly guided by. So you're not missing any of your filing requirements. You're making sure your payroll is on top, your immigration is done. Immigration is something that Ann could touch on further down the line, but there are so many different aspects of a global mobility program, and employment law is another very important thing.
One more thing I’d like to touch upon is global talent management. Giving your employees the ability to go on an assignment, go to a different country, go to a different state is very important for some employees. They do want to travel around the world, and if you could get some work done in the process, that's very important. It helps the company retain their employees and shows them that they're invested in them long term and that they're looking to make sure that they succeed not just in business, as well as their personal life.
Ann, since your specialty is immigration, why don't you let us know something about immigration as part of a global mobility program?
[00:03:55] AB: Sure. As every country have different immigration law, the business need to connect with like immigration attorney in each respective country so that all the necessary paperwork would be set up, free assignment for the employee so that they all handle and taken care of in terms of getting work permit, residency permit, and visa for the employees, as well as family traveling.
[00:04:26] SM: One example I do want to add in there is for immigration purposes. I actually had a client in the past who was on an international assignment. One day, when they were traveling to their host country, they were able to get in. But then when it came time to leave, they actually were not allowed to leave because they weren't on top of all their residence permits as you mentioned, Ann. Their visa was expired, so there were a bunch of issues. I think immigration, like Ann highlighted, is very important to make sure that your HR department and your legal department is on board with your assignment before anything gets put into place.
[00:04:58] JL: I’m sure income tax comes into play in this as well too, right?
[00:05:03] AB: Definitely. Income tax and social security tax obligations are always the focus here because as you go from one country work and performing work in another country, you would be obligated to pay some type of income tax and then get into social security tax in that country. So it's very important for the business, the employee to consider the impact of income tax and social tax.
[00:05:32] SM: Absolutely. What goes hand in hand with income tax and social security obligations is payroll, and that's something that a lot of employers do seem to forget about when they do send individuals on assignment. They feel they could just keep payroll as is, operating the way things have been done. But usually that's not the case, especially with long-term assignments.
When you do have an individual going from one country to the other, usually your host country will require you to either shift payroll predominantly to the new country or something known as operating shadow payroll, which means you're basically running the same payroll in your home country as your host country, but you're not actually paying the individual out that money. They're still getting paid from their home country. Their paycheck is as normal. But just for reporting purposes in their host country, they're having a shadow payroll run which is being given to the host country’s payroll team and immigration team to making sure that everything is operating correctly, and they are doing their correct tax withholding and reporting requirements.
Another thing that I think is very important and, Ann, you might have some more insight on is pension and benefits.
[00:06:40] AB: Sure, yeah. As you go from one country to another, your pensions and benefit package would change, depending upon the requirement of the host country, as well as the requirement of the home country. Or there's like an agreement between both countries. So if you go on a short-term assignment, that would not matter because you would stay on the home country payroll and have all the benefit and the pensions, payouts. But as you go on a long term or permanent assignment, then you would need to think about the long-term pensions and benefits.
[00:07:19] SM: One last thing I do want to bring up as part of a global mobility program is relocation insights, and that's very important for the employer and especially the employee. Typically, global mobility programs do have a structured relocation and return program that the employer funds, and that just helps the employee situate themselves with ease in their new country and also helps them along with the move that they have to go through. So they usually hire a relocation vendor who helps with the shipping of goods, helping the employee find the new housing in their new host location, getting them basically situated out there and comfortable with their new surroundings to make sure that they're comfortable and they're able to get whatever they need.
[00:08:03] JL: I’m sure this last year with COVID-19 has really been a challenge for companies as they assess their global mobility services and their programs. When do you see activity and business travel picking up?
[00:08:16] SM: Well, that's honestly up in the air. I mean, with COVID, things are really – You don't know what's going on with the virus and when things are going to slow down, calm down a little bit. But to put in simple terms, COVID has really resulted in major project disruption for employees. I know a few of my clients have been stranded in locations due to travel restrictions. Trying to get them back home is one of the most important parts for the employer at times.
But looking ahead, having conversations with clients, we do anticipate maybe towards the middle or the end of this year that assignments start picking up more. People start traveling more. I don't anticipate business travel to be as strong as it was before, especially initially. But I do see a year or two down the line. Things probably do get back to a little bit more normal, but we probably will have less business travel. But in terms of assignments, I could see those picking back up and going back to the way things were because these are not assignments that are for one or two weeks. These are much longer assignments known as long-term assignments which are over a year, and employers do have the need for their employees to go to certain locations and get projects underway to make sure that their business is operating the way that they wanted to. My guess is give it at least another half year to another year, and then you could see activity picking back up.
[00:09:36] JL: A lot of remote working situations that are very unique probably people wouldn't even thought of a year or two ago. But now, people are living all over the world and working in different situations. Why is it important for employees to notify their employers of where they're working, even if they aren't working from home?
[00:09:55] SM: Yeah. I mean, I touched upon this earlier about payroll obligations, right? So payroll obligations are not just only when you go from one country to the other. It also is from one state to the other. You have different payroll obligations in each state, different reporting requirements. When you do work from home, someone like me, for example, if I work in New Jersey but my company operates in Georgia and they have me coded to Georgia, I do have to let them know that I’m working in New Jersey, so they have the proper withholding being done with the State of New Jersey, even if I’m coded in a different state.
Examples like this I feel a lot of employees are not aware of, but it is a good thing to bring this up in discussions to make sure that your employees are situated in their home office. If not, then making sure that the payroll is being properly operated in the location where they're actually residing, and they're paying the correct income tax through withholding, and you're not running into any state issues with this kind of stuff.
[00:10:51] AB: Definitely. And that from the employer's perspective, there would be additional company entity income tax, withholding tax on like state or country that they've never have people assigned to or have the obligation filing prior to COVID or people working from home from different countries. So it's very important for the employer to determine where the employees are working, performing the work so that they can identify potential compliant issues in each state or each country.
[00:11:32] JL: Well, we've talked a lot about kind of the do's and don'ts and things that kind of keep companies in compliance. But why would it be important for an organization to really have a well-defined global mobility strategy?
[00:11:51] SM: I think it's important for various reasons. One is I think it's a key element in the company's talent strategy to attract great candidates. If you tell them they have an opportunity to travel with taking the job, I think that's a huge benefit to them, especially younger people coming out of college who haven't fully set into their career. They do like to travel, right? You would like to go to places, see things that you can, and work at the same time. So I think it's very important to attract candidates, retain talent, and develop diverse leaders, which in turn creates business agility to face constant change.
[00:12:25] AB: As technology data analysts and AI automations has been on the rise, along with the new demographic of the employees like younger generation joining the workforce, a great number of the traditional workforce, we need more opportunity to move into the new role, new locations. We usually see in the past that global mobility is being utilized mainly by logistic company or large modern or multinational company. However, these days, global mobility can be used virtually in most businesses that seek cross-border operations.
[00:13:06] SM: Exactly, yeah. Like Ann is saying, now global mobility exists in pretty much every organization, whether you know it or you don't. You have people traveling from one place to the other for business purposes. Like Ann mentioned previously, with just large multinational companies taking part of global mobility, but now you see new startups, smaller companies. All really taking global mobility at its face and trying to get their employees mobile and get them to different locations. Set up projects in different jurisdictions and just build out the business not just locally but globally.
That's very important for a business structure. If you could expand globally your operations, you're really increasing your revenue, increasing your growth, and overall just people know that you're worldwide for your employer.
[00:13:54] JL: Yeah. No question. That's – We're living in a global economy, and being able to project that would be incredibly important. As we wrap up today, share with our listeners a few key elements that they might consider as they craft a successful global mobility program.
[00:14:12] SM: Absolutely. I could start with a couple and then I’m sure Ann has some also that she could tag on with. But one of the first things is I think it's strategic plan to create a business plan for mobile employees to align with the broader business needs and growth, rather than based on an opportunity basis. It’s very important to have a successful global mobility program.
It's also important that you have the right support within your company. You need a team of trusted HR advisors, your technology team, your attorneys, your tax advisors, whether it's in-house tax advisors or an external provider. Your payroll management, the team who issues your paychecks making sure that they know what's going on, as well as your relocation advisors to make sure that your planned move goes as it should go.
I would say all aspects of a company are involved in global mobility in one way or the other. To make sure that you have a successful program, you have to make sure each different business segment is aware of what's going on.
[00:15:13] AB: Yeah. I agree with that and piggyback on that. Communications among all the advisory, other team, employee, and the employer are very important throughout the cycle of the employee assignment. Also, tracking the return of investments on these programs would help the company plan and further the business plan for long term, not just a short term or opportunity-by-opportunity basis.
[00:15:46] JL: Really appreciate you both sharing your insights today, and we want to thank our listeners for joining our GrowthCast discussion with two members of DHG's International Tax team, Ann Bondurant and Shiv Malhotra. We hope that today's discussion has provided you with new insights on the issues and priorities surrounding a global mobilization program. I’m your host, John Locke, and I look forward to reconnecting with you soon on another episode of DHG GrowthCast. Until then, be sure to rate, review, and subscribe to DHG GrowthCast on Apple Podcast, Spotify, or Podbean.
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