Work From Anywhere Policies: How EORs Can Help?
The COVID pandemic has accelerated work-from-anywhere policies, and it is one of the most significant shifts global markets have witnessed, in recent years.
These policies allow employees to work from any location – whether it’s their home, a co-working space, or even another country. This shift has also reshaped traditional work practices and office environments.
Employees appreciate the flexibility of working from locations of their choice Work from anywhere (WFA) policies enhance job satisfaction and reduce turnover. It opens up an avenue for companies to hire skilled professionals regardless of geographical location. Companies therefore, are offering more flexible arrangements in order to attract higher quality talent.
Companies for instance have been looking at attractive markets in APAC such as Malaysia, Thailand and Vietnam, which offer a skilled and affordable talentpool. Whilst other APAC countries like Singapore, Hong Kong and Japan possess high quality workers in the spheres of economics, technology and innovation.
However, implementing WFA policies is in itself challenging due to cultural diversity and varying manpower regulation across countries. This is where engaging an Employer of Record (EOR) service provider can help ease the complexities of global employment.
This article will run you through the advantages of hiring an EOR and how it can help address the challenges of implementing WFA policies.
Challenges Of Implementing WFA Policies
While the adoption of WFA initiatives offers numerous benefits, the implementation part could pose some challenges. This especially is true for HR personnel who are :
- not familiar or have very limited knowledge in handling international labour laws
- possess little to no experience in managing a remote workforce.
In light of this, businesses might face some hurdles :
- Non–compliance of varying tax regulations and labour laws. Insufficeint cover of mandatory benefits, leave entitlements, etc., can result in legal disputes, penalties and irreparable reputational damage.
- Companies may inadvertently create a “permanent establishment” in a foreign country, leading to corporate tax obligations for both the employer and employee.
- Payroll processing can be resource-intensive and making local currency payments in some countries can be ‘painful’.
- Securing appropriate health insurance and other benefits coverage for remote workers can be a complex affair when trying to manage from overseas.
- In the hiring of Foreign Employees in another country, visa processes may be complexed and difficult. There is also a risk of wrongful application which may lead to an accidental violation of immigration laws.
- Managing time zone differences.
- Managing cultural differences and employee engagement.
- Overcoming communication barriers.
How can EORs help simplify WFA initiatives?
An Employer of Record (EOR) can help simplify the implementation of work-from-anywhere policies by acting as the legal employer of the employees on behalf of the client company. The EOR will handle critical aspects of employment administration while allowing the business to focus on more important tasks. Read our Guide ‘What is an EOR’ to understand how EORs help businesses manage their workforce globally.
Although an EOR takes charge of the entire employment process in a specific country, the parties must define the scope of responsibilities to seize the full benefit of the EOR service.
EORs assist with :
1. Ensuring Compliance
Employers of Record (EORs) have local expertise in compliance with its country’s employment laws and regulations. It takes charge of employment requirements whilst minimizing risks of fines, penalties and lawsuits.
For example, an EOR ensures that the terms of the employment contract such as salary, working hours, benefits, termination, etc. comply with local manpower laws. Likewise, it also takes responsibility for minimum wages, tax and social security, benefits and leaves, health and safety, fair treatment and workers’ rights, etc.
2. Simplifying Payroll and Tax Management
The EOR will process salaries in local currencies considering exchange rates and regional pay cycles while managing statutory components like overtime, bonuses and benefits.
The EOR also needs to ensure tax compliance across jurisdictions by remitting taxes and social contributions on time. The EOR has to comply with tax treaties to avoid double taxation for employees and exit tax policies.
3. Providing Equitable Benefits
The Employer of Record (EOR) has to make sure that their employees across different locations receive fair and comparable compensation and perks despite the varying local regulations from country to country.
The EOR has to align salaries and allowances with the cost of living in each country to maintain financial equity among employees. It provides (where required) flexible benefits such as stipends for home office setup or coworking spaces.
4. Handling Immigration and Work Permits
The Employers of Record (EOR) also facilitates the application and management of work permits and visas for employees to legally work in a foreign country. It has to handle documentation, application process and compliance with immigration laws.
After the visa application is successful, the EOR has to continue to monitor any changes in regulations that could impact the foreign employee’s legal work status.
5. Managing Risk
Being the legal employer, an Employer of Record (EOR) absorbs many of the risks associated with international employment. For example:
- Non-compliance with diverse labor laws can lead to fines and lawsuits.
- Mismanagement of taxes, social security contributions and payroll, may result in legal penalties.
- Employing workers in foreign locations could create an ‘unwanted’ taxable corporate presence.
- Unauthorized work in foreign locations may lead to penalties or employee deportation.
- Treatment of workers as ‘Contractors’ instead of ‘Employees’ can lead to misclassification risks.
6. Streamlining Onboarding and Offboarding
Employer of Record (EORs) make it easier for companies to implement WFA policies by providing country-specific guidance and smooth onboarding and offboarding of employees.
It handles everything from drafting employment contracts, payments and access to technology tools for an effective end-to-end process.
7. Data Security and Infrastructure
Ensuring compliance of data privacy laws like PDPA in Singapore and PIPL in China, is a very important exercise for all EORs.
EORs need to deploy cybersecurity measures such as firewalls, multi-factor authentication and advanced encryption. A centralized data management repository and secure systems for payroll and benefits are all critical components in a full-fledged Employer of Record (EOR).
How are EORs essential for businesses who want to expand their global workforce?
Different economies around the world follow different business and legal practices. The APAC region in-specific offers a healthy mix of developed and developing nations with vast cultural diversity. Many companies especially see the benefits of utilising EORs in popular APAC destinations. For example :
- Singapore : where there are strict regulations on employment contracts, CPF contributions and work visas.
- Japan : With its complex labour laws and social security regime, employing talent in Japan requires careful compliance management.
- Australia: Employers must adhere to the Fair Work Act, which governs wages, hours and working conditions.
- Indonesia and Vietnam: Rapidly growing economies with evolving labour laws pose many challenges for foreign companies.
Conclusion
Work-From-Anywhere (WFA) policies represent a transformative approach to the modern workplace, offering unparalleled flexibility and access to global talent. However, successfully carrying out these initiatives require dealing with a variety of legal, tax and administrative challenges. Galaxy Group’s Employer of Record (EOR) services provides a practical and efficient solution for companies who want to embark on WFA initiatives with confidence.
Partner with Galaxy Group to unlock the full potential of your WFA policies. Foster innovation and growth in your organization, with the help of an established EOR provider like Galaxy Group.
Implement Your WFA Initiative with a EOR provider today!
Partner with Galaxy Group, a leading EOR service provider in APAC for 20 years. We will take care of everything, while you focus on core business operations.
FAQ’S
How can an EOR help simplify WFA policies?
The EOR is a country expert at handling complex tasks such as compliance, local employment regulations, payroll processing, tax remittance, work permits, addressing cultural and communication barriers, etc.
How does an EOR handle immigration and work permits?
EORs will arrange to get work permits and visas for employees. They have to ensure compliance with immigration laws to enable the employee to work legally in the country.
What are the benefits of using an EOR to help with WFA initiatives?
The EOR typically helps simplify key WFA aspects which pertain to compliance with local laws, tax and risk management, payroll administration and provision of localized benefits.
Can an EOR help mitigate risks of permanent establishment (PE)?
An EOR minimizes PE risks by acting as the legal employer in the target country, ensuring that the client company is not liable for corporate taxes in the country.
How does an EOR ensure data security and privacy?
The EOR takes cybersecurity measures, complies with data protection laws and uses secure platforms to protect sensitive employee information.
