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Optimising Value from Virtual Assignments

Over recent years, virtual assignments have seen growth in use due primarily to advancements in technology and to the escalating costs associated with physically deploying and relocating employees overseas to perform roles.

While this development had been emerging progressively, the global pandemic of 2020 and resulting travel restrictions and social distancing regulations precipitated a cataclysmic shift in how organisations operate and manage multinational teams, leading to widespread adoption of virtual assignments as a substitute for overseas assignments within global mobility programmes.

But for employers, virtual assignments bring both solutions and risks.

 

What is a virtual assignment?

A virtual assignment is the appointment of an employee to work and perform tasks remotely for a location other than their country of residence or home country. This can also apply to an employee working from a third country other than their existing home or country of residence, or the country to which they are providing services. For example, an Italian national could be responsible for business development in Brazil but resides in Mexico.

Virtual assignments can be created and then implemented if they make business sense to companies and mesh with its long-term business strategy, as well as being beneficial for employees who may not be able to relocate because of family or other commitments, or due to other factors such as travel restrictions.

 

The growth in virtual assignments

This working model has increased in popularity in recent years, predominately because it can save business costs when balanced against physical relocation of employees. It helps to optimise resources by assigning key personnel to specific locations and is assisted by implementing new and efficient technology. Beyond its recent popularity, virtual assignments have seen considerable growth during the Covid-19 pandemic because of:

  • Travel and immigration restrictions – countries’ borders are closed because of the pandemic, which has seen a huge reduction in global business travel.
  • Employer’s desire to preserve their employee’s wellbeing – employers are offering location flexibility and new responsibilities to their employees to enhance morale and maintain wellbeing.
  • Evacuation from virus-hit countries – employers have taken safety measures leading to the redistribution of employee’s locations whilst allowing them to perform their roles.
  • Family/home life responsibilities – allows working from a different location in order to care for ill family members or homeschool children.
  • Cost or resource constraints – employees taking over the role of furloughed or redundant colleagues bridges any staffing gaps, even when they are not living in the same location.

 

The business case for virtual assignments

While traditional barriers to employee mobility assignments remain a significant cost burden for business, virtual mobility addresses some of those issues.

Resilience and risk management – traditional expatriates can be a source of risk in the event of an emergency or crisis in the location where they are on assignment, such as during the Covid crisis when worker either had to evacuate assignment countries at short notice or where ‘stranded’ at their overseas location. A more agile workforce that includes virtual assignees can reduce this source of risk, increase resilience and maintain business continuity.

Assignment costs – virtual assignments can be a way to reduce costs by removing parts or all of the traditional assignment package.

Competing dual career and family issues – these issues amount to one of the top reasons for refusing assignments. However, there are ways to ease familial concerns, for example, by providing assistance with the employee’s partner’s job search, coaching, or by contributing to their training or education costs. Aside from dual career issues, questions concerning other family members – such as children’s schooling, can cause enormous costs for the business and force families to make tough decisions about the future of their children. Virtual assignments eradicate this situation.

Immigration issues – even if a business has a pool of employees willing to relocate to another country, limitations due to visa issues, work permit restrictions, quotas, and other legal restrictions continue to impede employee mobility.

Widening the talent pool – employees who would not consider relocating to another country might be more willing to accept a position if it does not involve moving outside their country of residence.

Widening the organisation’s reach – leveraging virtual assignments may open up opportunities for the organisation in locations that were previously inaccessible.

 

The challenges of virtual assignments

Virtual assignments are not, however, a silver bullet, and they can present their own set of challenges.

First, this working model only really suits roles where the employee does not need to be present, ‘on the ground’ and face to face.

Not all businesses have the tools in place to implement or sustain virtual assignments. It is likely there will be different payroll arrangements, employment law considerations, changes or additions to HR processes.

Certain elements of a role or business might need to undergo some adjustment to accommodate a virtually assigned worker. For example, if the employee will manage staff in a third country, the employer may need to bring in software, technology, or adjust HR processes to ensure smooth open lines of communication across the team.

Further risks of virtual assignments can include tax and compliance issues. There may be local tax liabilities for both the employee and the business, or issues surrounding the permanent establishment of the business in the host location.

Checks should be made with the host country as to whether the employee requires any special registrations for their employment and taxation. Businesses will also need to look into how the worker is employed and in what capacity. These may differ from the business’s usual standing.

The longevity of the assignment should also be gauged. Is this arrangement beneficial for the business on a continuing basis. Is it what the employee wants in the long-term? Although the current situation may be in response to the pandemic, business owners should still ask themselves how it fits into its long-term plans. Is a virtual assignment a reflex reaction, as a short-term solution?  Does it make mutual financial sense to both the employee and the business?

Care needs to be taken that virtual mobility does not mean an absence of real mobility. Business owners should think carefully about allowing employees to undertake short-term assignments or extended business trips (Covid regulations permitting) to the proposed working destination, prior to giving them a virtual assignment. This helps employees create and build up relationships with their colleagues in the host location, and therefore avoids issues of lack of connection, and facilitates the subsequent success of the virtual assignment.

Other pitfalls of virtual assignments surround ensuring employees not feeling isolated from their colleagues or detached from the workplace while they are aware from their main country of employment, as this can impact morale and productivity. Many companies have learnt during the pandemic, it takes careful consideration to manage physical separations and ensure continuation of business performance.

 

Considerations before implementing a virtual assignment

While each assignment will be individual in its requirements and circumstances, taking a proactive approach to assignment management and having an infrastructure in place to support the worker and reduce risk can help to deliver a successful virtual assignment. Considerations could include:

Policies & procedures

Success could be hindered when a business fails to include virtual assignments in their global mobility plans and policies, because it is essential these are in place to provide enough support for the employee. Does it need revision? Is the proposed working arrangement in another country actually viable? What expenses can be claimed – technology, travel, etc? Who should sign-off or approve on a virtual assignment?

Immigration compliance 

Does the employee have the right to work in the host country? Are any associated work permits or visas required, or if there is a visa in place, when does it expire? Have registration requirements been properly considered?

Tax & payroll 

Review any possible tax reporting requirements and liabilities relating to the host country to avoid non-compliance. Does the organisation’s tax policy need reviewing and revising to allow for this new form of working arrangement?

Consider if your company could be expected to make monthly employee tax payments in the host country. Not addressing these obligations can result in exposure to non-compliance, penalties, and interest. And result in cash-flow difficulties from dual payroll obligations.

 

Assignment contracts – do they require revision?

Healthcare insurance 

Does the employee have access to public healthcare or will they require supplemental private healthcare insurances. It is important to check the local provision and local access criterion. Does the employee qualify?

Employment law

Has the business considered employment law regulations (minimum wage, social security coverage, pension and healthcare rules)? Also, in a virtual mobility situation, an employee may hold a contract of employment in country A, and reside in country B. The employee can acquire rights or give rise to mandatory employer obligations under employment law of country B. This would need to be assessed and can be a complex and costly area of law to get wrong.

Duty of care

Can the business adequately support a virtual employee based in a location where limited support is available and where the business does not have a base or office?

Cross-cultural differences

Virtual assignments can aggravate cross-cultural differences, create misunderstandings, and impede productivity. Business owners should devise support policies to equip the employee with ways to handle this. Remote virtual workers need cultural training as much as traditional expatriates relocated to a host location.

Corporate structure

If you have no formal corporate presence in the host country, a number of consequences can arise. The nature of the work can create a permanent establishment (whether this was intended or not) resulting in corporate sales and VAT tax obligations and compliance.

Technology

Do you have appropriate technology and software to support with delivery of the assignment? Ensure cyber risks have been assessed and the worker trained to reduce the security risks of virtual working.

Time zone management

Consider if and how differences in time zones may impact the employee’s working hours and their work/life balance.

Training

Employees may be working in a new cultural and work culture without really being a part of it. Assess what skills and knowledge they need to assist them in working in virtual teams across cultures.

Virtual performance measures 

As with physical overseas assignments, virtual assignments should entail set deliverables or targets, agreed with the worker in advance, which can be measured and assessed both during and after the assignment. Measures should be used to track progress and to identify if the worker requires additional support to meet the set target.

 

Need assistance? 

While travel restrictions continue to act as a barrier to global mobility, virtual assignments can offer businesses a solution to minimise operational disruption and pursue opportunities overseas. Looking long-term, businesses may look to retain virtual assignments within the global mobility programme given the agility, flexibility and cost-savings associate with virtual assignments. DavidsonMorris advises organisations on all aspects of global mobility strategy and talent management. To discuss the legal and HR implications of virtual assignments for your organisation, contact our specialist consultants.

 

Virtual assignment FAQs

What is a virtual assignment?

A virtual assignment is an arrangement whereby an employee works and performs tasks remotely other than their current home country or their country of residence.

Are virtual international assignments feasible?

The digitisation and technological advances surrounding many aspects of work make it possible for roles to be performed remotely amid the current coronavirus restrictions where employee mobility is constrained. Correctly implemented, international virtual assignments are perfectly feasible.

Last updated: 21 April 2021

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