How companies can manage digital nomad employees

Brand Voice

In 2020 millions of people and businesses had the same realisation: There was no reason their work had to be done in an office – and it could probably be done from anywhere in the world.

All-remote work was already starting to emerge as a trend before the pandemic. Still, it was limited to a few companies willing to embrace the benefits and flexibility of remote work (including Remote, which was founded as a remote-first company in 2019).

When the pandemic made remote work a necessity, it led more companies to understand that they could still be just as successful with distributed teams, and more workers to realise how much they prefer remote work. It also introduced tools and innovations that have made it easier than ever.

The ability to work remotely means that people can now live far beyond the geographic areas of their offices. In some cases, really far. A growing number of remote workers are relocating short- and long-term to new countries, whether to be closer to friends or family, experience a new culture, or fulfil a lifelong dream. Now, they can do it while maintaining steady careers simultaneously.

Dozens of countries have now launched digital nomad visa programs for remote workers. These visa programs make it possible to spend longer in the country than on a typical vacation, providing benefits to the local economy.

But what does employing digital nomads look like from the company’s perspective? It takes much more than rescheduling conference calls for new time zones. A dream relocation for an employee could be a compliance nightmare, requiring employers to follow an entirely new country’s local employment laws and tax regulations. Employing digital nomads may sound nearly impossible. But most companies, especially genuinely innovative ones, will have to adapt. Why? Great workers want to shape work around their life, not the other way around. And if their company cannot accept that, great workers will always have other options. With that in mind, here are a few things to watch out for.

Digital nomads work while they travel, whether for short visits or extended stays. They are often self-employed or independent contractors, but they may also be employees on a company’s payroll from another country, provided that the company is up to the task.

Wherever their nomad team members work, employers must ensure that their employees operate legally and that taxes are paid correctly. Laws applying to wages, leave entitlements, work hours, terminations, and statutory contributions differ by country, and each country has unique requirements that could be easily overlooked. Companies may even face legal requirements related to remote work, like providing the equipment for a home office and a safe work environment, even if the employee works from their own home.

Not all laws apply to all employees in all situations, and numerous factors could influence which protections and requirements apply. However, knowing the difference can help employers from running the risk of costly penalties.

Enabling digital nomads while maintaining compliance

Digital nomad visas allow travellers to stay in another country longer than a typical tourist visa and enable the visa holder to work within the country for a non-local company. But supporting digital nomads goes beyond establishing the correct right-to-work entitlements; employers must also understand how international taxation requirements and employment laws apply. Retaining digital nomads also introduces new risks like permanent establishment, which means the company could be subject to new corporate taxes.

If the company plans to have several employees in one country long term, it may want to manage these risks by establishing its own legal entity in that country. However, this could be a long and expensive process and doesn’t solve other thorny issues like managing local payroll and benefits.

Opening entities to enable digital nomads is unnecessary and cost-prohibitive for most companies. An employer of record (EOR) is the easiest way to simplify global employment, from visas to local benefits, payroll, and managing risk. An EOR is a service provider that has done the legwork of establishing legal entities abroad and acts as the local employer on your behalf.

Remote’s EOR services allow companies to onboard, manage payroll, handle tax withholding and reporting, and provide locally compliant benefits packages, no matter where team members are based, all through an easy-to-use online platform.

EORs enable employers to offer a benefit that employees really want, which has an incredible effect on retention. Research conducted by Remote found that 20% of remote workers said that if they could work anywhere in the world without it affecting their salary and benefits, they would likely stay 10 years longer with their current company.

Supporting a global workforce is also a significant benefit to companies – not a challenge. Companies have more opportunities than ever to build a robust and diverse workforce and hire from a massive pool of amazing talent anywhere on the globe. With a global workforce, your company will be well-equipped to help you thrive in the new work age.

Check out the Remote Tech Talent Report here.