For remote work proponents like Kate Lister, the past year may have seemed like a watershed moment to usher in the age of “borderless labour.”
And that may still be the case as companies in several sectors continue to woo workers outside their regions to maximize their talent pool while potentially minimizing costs by hiring from cheaper markets. That future, however, is strewn with pitfalls, said Lister, president of consultancy Global Workplace Analytics and a leading tele-work researcher and analyst for more almost two decades.
There is a lot of interest in having more staff working remotely, even when employees are allowed to return to their offices, said Nishant Mittal, senior vice-president and general manager at Topia, a talent mobility platform for managing a widely dispersed workforce.
Mittal said business has more than doubled in the last year as companies scramble to find ways to track their workers, their locations, wages, local labour laws and other pertinent information.
Many of these companies, he said, are looking to hire outside of the country where their offices are.
“This is the way the world was going anyways, but COVID pushed it forward five, 10, maybe 15 years,” he said. “I did a webinar for about 700 people [in early March], and I asked these companies how many of your workers will return to the office once it opens. Almost half said they are expecting at least a quarter of their workers to not be working in the office.”
But the temptation to tap into this new resource can be problematic. Mark Thompson, professor emeritus of the organizational behaviour and human resources division at the University of British Columbia’s Sauder School of Business, said a company that hires from out of province locations is getting more than just an employee.
“If you are hiring from Alberta, there will be some minor differences; but the further you go, the more issues will emerge, including things like immigration laws when you go across national borders.”
Lister called the issue a series of rats’ nests for companies to untangle if they go too far from headquarters for their remote hires. Under Canadian law, a company with a “permanent establishment” in a province is typically responsible for paying corporate taxes in that province. That definition can be murky when it comes to a teleworker’s remote workplace.
There are also issues like payroll deductions for employees working in different provinces, different tax rates and employment standards laws that vary from province to province.
Lister noted the United States is no less complicated, with many states stipulating that even a single day worked by an employee in a state requires his or her employer – no matter where it’s based – to pay corporate income tax in that state. Determining higher or lower salaries when hiring workers from different areas with different costs of living further complicates decisions on importing employees.
Lister added that there is also the question of intellectual property rights. A tech company may lose the right to its products if development occurs partially in a country with different regulations governing ownership of new technology.
Thompson added that companies hiring outside of local markets also have to consider an employee’s home office space and other support infrastructure.
That’s why Thompson and Lister agree that the future workplace will likely be a hybrid model. Instead of companies with workers scattered all over the world, some employees will be spread out regionally, but usually within reasonable travel distances to headquarters for team-building work and social interactions to build a corporate culture.
However, Lister said that, given the advantages of a diverse, remote workforce, companies should welcome more remote employees, even when people are allowed back in the office.