Trust breakdown: Employees keeping HR teams in the dark about their whereabouts
Companies with remote and work-from-anywhere policies, have a common challenge: their staff don’t seem to want to tell them where they are. And it’s becoming a major problem.
HR departments have struggled with this recurring problem over the past year, but are now appealing to workers to be honest about their whereabouts so as to avoid payroll issues and tax compliance penalties.
But employees aren’t playing ball. One in five employees globally misled employers about working abroad in the past 12 months, according to SAP Concur’s new Work from Anywhere research. The U.K. was the least honest with more than one in three employees misleading employers.
“The ability to work from a laptop or mobile phone, not tethered to a desk, creates an environment where people feel that they can become more mobile, but there’s some inherent risks,” said Rob Harrison, managing director of SAP Intelligent Spend Solutions, SAP Concur. “I’m not sure those risks are fully understood or clearly articulated by organizations. People are taking proactive measures to disguise where they’re working from.”
The SAP Concur survey of 835 HR decision-makers, 835 finance decision-makers and 1,670 employees found that 69% of HR leaders believe they would need to make significant changes to HR processes within the business to make working from anywhere feasible. Currently, 59% of leaders agree that the administration of managing employees who are working from anywhere abroad leads to increased stress and burnout in the HR department.
That’s why it’s important to get the details right, especially since 18% of all employees surveyed have worked abroad in the last 12 months without disclosing it to their employer.
“The data supports the fact that it’s not just the finance sector,” said Harrison. “Historically, we would’ve called each other on landlines and you would know where I am. Now, unless you share with me where you are, I have absolutely no idea.”
A global remote workforce does take more work and adjusted HR processes. The SAP Concur research found that leaders recognize there is room for improvement and strongly feel that adjusted business processes and better expense management technology are required to allow employees to feasibly work from anywhere.
“Employers are now implementing things like IP tracking software that tells you if a person logged in in Spain vs. the U.K. or Canada vs. the U.S.,” said Rick Hammell, founder and executive chairman of flexible workforce management solution Atlas, who has nearly 20 years of HR and employee management experience. “It’s important to do. Although employers want to give that flexibility, it does create nuances and a possible taxable event.”
Relying on manual processes can create friction and decrease productivity for everyone involved. It’s important to get it right though, whether you do it manually or with the help of technology, because there are serious compliance issues that need to be addressed like tax and immigration, which are potentially significant.
“People can go and live in a different country, but from a tax perspective, they are still paying taxes for their home country,” said Hammell. “It creates messes for the employer. The employer now has people on the ground in different countries, possibly creating revenue, and it becomes a risk.”
Even just in the U.S., employment laws vary between the states. When it comes to workers’ compensation, for example, the employer needs to know the state law to ensure proper coverage. And for payroll, some states require that the final paycheck be provided on the last day of employment while others allow the last check to be paid on the regular payroll date. “It’s the employers’ responsibility to know that,” said Hammell.
Employers need to be clear with what their remote policies are, ensuring that there is no misinterpretation and that it is being enforced to avoid issues with payroll and tax. “You have to start with clearer expectations and policies,” said Harrison. “It’s not about control. This is about care. Create an environment where people feel confident to share where they are working.”
Richa Gupta, CHRO at HR tech company G-P agrees that clear policies and language can go far. For example, is the company remote first or work from anywhere?
“One of the first things that our CEO did was that she reiterated we are a remote first company, not a work from anywhere company,” said Gupta. “You’ve been hired to do work from a certain jurisdiction, so you can work from there remotely, not anywhere. You are not a digital nomad.”
G-P published a policy that clearly describes what it means to be a remote first company and what issues can arise if it’s not followed. G-P has a guiding principle that says 20 days out of the year employees can work from anywhere, but beyond that, it can put them in tax compliance hot water. However, its policies rely heavily on trust and the company doesn’t track its employees.
“Remote work is anchored in a lot of trust,” said Gupta. “The trust element goes both ways. It’s putting the policy out there, but also trusting your employees to do the right thing.”