With Spain becoming the latest country to open its doors to digital nomads, 47 nations offer visas allowing remote workers to work from their countries. Out of estimated 35 million digital nomads worldwide, 35% are employed by a company. While it’s still friction of employees who chose to work from another country utilizing the digital nomad, global employers should be aware of the growing trend and its payroll and labor implications.
Digital nomad employees, or self-directed international telecommuters, or international wandering workers, refer to those who had originally worked for their employer in their home country but who later, for personal reasons, moved abroad, with a digital nomad visa. Most of them are well-educated and work in functions where consistently experiencing talent shortages. To have an explicit policy and a good culture which can successfully appeal to, manage, and retain these employees can be a key component of talent strategy. For example, 6% of Spotify’s 11,453 employees moved countries after the company introduced its Work From Anywhere policy, and as a direct result of the policy, the company announced that the turnover has reduced compared to pre-pandemic levels and the diversity of its workforce has increased.
For global employers who contemplate such a policy, a few considerations include:
- Identifying your digital nomads and knowing where they are and where they’re traveling to, and for how long.
- Drawing up an agreement that defines the terms of the arrangement. It should specify that the nomad is a telecommuter whose place of employment is and ideally remains in a location the multinational company currently operates in. Therefore, the local HR and legal team can put the employee on their payroll as well as ensure labor and employment law compliance.
- Other terms, such as limiting the amount of time nomads can spend in any one location and listing places that are off-limits because of their compliance rules and regulations, can greatly reduce the risks.
- In analyzing legal compliance in an international telecommuting situation, always focus primarily on the payroll mandates and employment law challenges of the international telecommuter’s overseas host-country, not the employer’s home country.
Outlook: Work-from-anywhere policies and digital nomad visas have created a wealth of opportunities for remote work and shifted immigration and mobility choices from the employer to employee. However, the lack of regulations on these international wandering workers pulls their employers into cross-border employment relationships and their nuanced legal challenges. As companies are more willing to provide flexibility to their employees, they should be on the lookout for such a trend.
Published on: October 26, 2022
Authors: Wenchao Dong
Topics: Global, Technology
Director, Global Affairs, HR Policy AssociationContact Wenchao Dong LinkedIn