Jake Thoren | Senior Business Development Manager, CloudPay
In years gone by, global mobility was limited to wealthier employees able and willing to move themselves and their lives from one country to another for work. But the COVID-19 pandemic, and the move towards remote and hybrid working, has changed all that: it’s now a viable proposition for millions more employees in almost every industry.
But why is global mobility so important for businesses? And what does it mean from a payroll perspective? This blog explores the key considerations of global mobility in the current business landscape.
What is global mobility?
At its most basic level, global mobility refers to multinational companies’ ability to transfer employees from working in one country to another.
In practice, of course, it’s a little bit more complex than that: businesses have to put in place a detailed plan that allows employees to move smoothly, with minimal disruption to business and without any complications around pay, tax or immigration. What this plan looks like will vary significantly, depending on the nature of the business, the type of work an employee does, and the culture of the company (and potentially, variations in this culture between countries and offices).
The importance of global mobility
Global mobility is important because it ensures that companies maximize the potential within their workforce. By ensuring that the right people are doing the right jobs in the right places, they can perform at their best and satisfy customer expectations.
The increasingly globalized and digitized world we live in has only served to heighten global mobility’s relevance to international businesses. No longer do companies have to compete at a national level: they must fight for market share with competitors all over the world. For that reason, every efficiency and advantage they can drive is critical, including increasing the effectiveness and productivity of employees.
The benefits of global mobility can also include:
- Talent: allowing employees the opportunity to explore new career opportunities by transferring to different offices can encourage them to stick with a business long-term, and can help companies recruit the brightest candidates around in a competitive job market
- Inclusion and diversity: breaking down geographical barriers through flexible working means that new ideas and ways of thinking can be introduced to different offices, boosting the diversity of operations and collaboration worldwide
- Flexibility: as flexible working has become the norm, transferring to a different office or country is now as simple as virtually connecting to a different group of co-workers, rather than having to physically emigrate
What global mobility means for payroll
Moving employees from working in one country to another – whether this move happens physically or virtually – has implications for payroll. When setting up a framework for the smooth transfer of staff cross-border, payroll should address the following questions:
- What are the varying tax and social security requirements between different countries?
- Are there different rules in place for incoming foreign workers (e.g. non-resident tax rates or tax treaties)?
- If an employee is primarily working in the new territory virtually, how often will they be traveling to the territory in person? And how does that affect their residency and tax status in that country?
- Which currency will the employee be paid in, which currency would they want to withdraw and use their salary in, and can a conversion between those currencies be facilitated?
- How does the transfer of an employee affect payroll reporting requirements, as laid out by each of the territories concerned?
A company that does not cover these questions will be exposed to significant complications when transferring an employee. Those complications can be operational (i.e. an employee is unable to resume work for a period of time), financial (caused by business disruption) or even legal (if payroll or tax laws in a particular territory are broken).
In summary
The above questions underline the fact that, although global mobility is a vital part of modern international business, it is also fraught with complexity from the standpoint of payroll. Indeed, it can be too much for an internal payroll team to take care of on their own, especially if large numbers of employees are being moved around on a regular basis.
This is where it can be so useful to partner with a specialist global payroll provider; ideally, one that can provide relevant expertise in all of the territories where a business operates. They can highlight where the potential stumbling blocks may be within the cross-border transfer, and ensure these are covered in the transfer framework as part of a smooth approach that works every time.
CloudPay has years of global payroll experience, helping companies just like yours manage cross-border transfers successfully and embrace global mobility. Learn more about how we can help you here.
Jake Thoren | Senior Business Development Manager, CloudPay