The talent market is more volatile than ever. One in five workers worldwide plan to leave their current roles this year.

With maximising employee retention in mind, any business would be foolish not to consider implementing a flexible work policy. Ample survey data from the past 2 years demonstrates that flexible work opportunities – in particular, opportunities for location flexibility – are among the most desired employee perks right now.

For this reason, more and more big names are leveraging “Work From Anywhere” (WFA) policies for attracting talent. And it’s clearly working. In the week following Airbnb’s announcement of its ‘Live and Work Anywhere’ policy in April – enabling nearly all employees to work from anywhere within their country of residence on the same salary – over 800,000 job seekers flocked to its careers page.

Work From Anywhere sounds fantastic in theory. But unless you clearly define what “anywhere” means to your employees, you risk non-compliance with your Health & Safety (H&S) and tax requirements.

WFA: Expectations vs reality

Undefined, Work From Anywhere implies total location flexibility. An employee could reasonably assume that they could work from any venue (coworking space, coffee shop, bar, beach etc.), in whatever city or country they pleased, and that they could relocate as often as they liked, on their own terms.

However, employment law relating to remote work specifies that a “remote worker” – a worker whose place of work is outside of an organisation’s registered office – must have a fixed place of work.

The reason? To ensure that organisations do not leverage the remote worker status to evade their H&S and tax duties.

H&S duties

Irrespective of where your employees work (in the office, at home, or between the two), you have the same duty of care to provide them with a safe working environment.

Each country has its own set of requirements – in the UK, for example, you are required to routinely administer Display Screen Equipment (DSE) assessments (workstation risk assessments).

But across jurisdictions, employment law requires the place of work to be fixed so that you can, and do, carry out these duties.

If employees were not location-bound, you would be forced to reassess their workstations with every location change (e.g. with every hotel change while travelling – intra-country, cross-border). It would simply be impossible to ensure that every possible work location met H&S standards.

Exception – Mobile working

Some countries differentiate remote workers from “mobile workers” to encompass roles that require location changes – e.g. consultants who regularly travel to client sites which cannot be assessed.

Germany, for instance, differentiates “home office working” (when the employee has a fixed place of work outside of the company premise) from “mobile working” (no fixed place of work). Other jurisdictions may introduce such distinctions in due course.

Tax duties

Tax-wise, it’s problematic for employees to assume that they can work from any country.

As with H&S, each country has its own set of tax rules. If an employee exceeds the maximum number of working days permitted by the local tax authorities (which may only be a few weeks), the employee may be deemed to be employed in that country.

If that happens, there are (a) payroll and tax implications for both the employee and the business, and (b) corporation tax implications for the business.

Payroll and employment tax implications

If your employee, while working remotely overseas, is deemed to be employed in that country:

• The employee may have to pay local taxes, and may have social security or other payroll-related obligations.
• You (the employer) may be required to comply with local employment laws, withhold tax from the employees’ payroll on behalf of the local tax authorities, and be liable for employee social security, in addition to being liable to the employee for all statutory allowances.

Corporation tax implications

You may also be liable to corporation tax.

Any activity that your business conducts in another country that generates revenue (e.g. having employees or an office) may cause the local tax authority to conclude that your business has a Permanent Establishment (PE) in that country.

So if your employee works remotely in another country for more than a few weeks, you risk creating a PE for your business.

If you are deemed to have a PE, you may be required to pay corporation tax on any revenue generated through your presence in that country.

So allowing your employees total, unrestricted location flexibility comes with legal administration and financial consequences that (presumably) outweigh the benefits of allowing this freedom.

Advice: set clear employee expectations to avoid compliance risk

Implementing a WFA policy is a fantastic idea for improving desirability to talent, employee retention and satisfaction. But unless you are transparent about the scope of the policy, you risk non-compliance with your H&S and tax duties.

Take a leaf out of Airbnb’s book and publicise the details of your policy, so prospective job seekers and employees alike understand their opportunities.

And when it comes to facilitating compliant remote working, you do not have to do it alone. There are ample tools out there to simplify the process – from payroll platforms to equipment management solutions.