International HR Adviser Autumn 2022

International Adviser INCLUDE: PANEL FOR THIS ISSUE:

In This Issue

The 2022 Global HR Conference

How Cost Estimates Will Help You Get The Best Out Of Your GM Georgia Wilson, ECA International

Shaping Your Global Payroll Model To Align With Strategic Objectives Hayley McKelvey & Lee-Ann Kilroy, Deloitte Payroll & Workforce

Global Tax Update Andrew Bailey, BDO LLP

Tax Risks Within The Assignment Life Andrew Bailey, BDO LLP

EU Migration Law Updates Hugo Vijge, Vialto Partners

Global Immigration Raj Mann, Vialto Partners

Global The

The 2022 Global HR Conference

On Monday 17th October 2022

at The Adelphi Building, 1-11 John Adam Street, London from 12.30pm – 4.45pm

For Senior Global HR Professionals only, this one day event will cover issues and topics specifically aimed at those managing their company or organisation’s global mobility.

Seminar Programme

Aligning GM Policies With Wider Business Objectives Concerning Sustainability And Inclusivity Agendas

ECA International will discuss how GM teams can adapt and modify mobility policies to:

• Broaden the succession talent pool

• Build more sustainable work practices for internationally mobile employees

Tax & Mobility Update

Update from BDO regarding tax changes and topical mobility issues & trends

Immigration Update

Vialto Partners' global advisory team will discuss the latest global immigration updates, trends and predictions pertinent to Senior Global HR Professionals and Global Mobility teams

Buying Mobility Software – Are you Horizontal or Vertical?

Replacing outdated vertical vendor and systems relationships with a horizontally integrated platform will save you time, improve the UX for your employees and improve data security for your company. Building on our latest article in the International HR Advisor, Tracker Software Technologies (TST) will explain how to achieve efficiencies and break down this topic into a manageable project and one that can be implemented in all organisations. Hosted by TST International

Remote Work - A Competitive Advantage In The Fight For Talent

With talent more willing than ever to leave for fresh opportunities, physical and virtual, is it time to take decisive action to attract and retain our global workforce in a human centric, purposeful and sustainable way? And if so, what can we do? Hear how we took a multi-faceted approach to implement remote working to transform our business, and how we hold our own experiences at the core as we continue to partner with our clients to reimagine their global workforce of tomorrow, covering the risks and opportunities of managing a remote working workforce across international borders.

Hosted by Deloitte LLP

To register your free place at this event that is organised by International HR Adviser, please email helen@internationalhradviser.com with the name/s of those who would like to attend, along with your/their job title and company name.

We look forward to seeing you there!

How Cost Estimates Will Help You Get The Best Out Of Your GM programme

It is no secret that international assignments and even permanent transfers can be very expensive, but does your organisation know just how much they are costing?

Monitoring and controlling the costs of assignments are both consistently a major concern for global mobility (GM) teams and their organisations –in fact, more than half of companies participating in ECA International’s latest Managing Mobility Survey reported that these are currently significant challenges for them. This is where cost estimates come in; they enable companies to determine how much potential international moves will likely cost before they begin. This insight is indispensable to different stakeholders across the business and is used for a range of purposes:

• Decision makers use cost estimates to assess whether a given assignment or permanent relocation is worth the significant investment, and to reduce the chance of unpleasant surprises further down the line. Companies may therefore choose to incorporate the preparation and sign-off of a cost estimate in their standard assignment process

• For the business unit bearing the expense, knowing the expected cost of an assignment means that it can be incorporated into its budget

• Companies are more likely than ever before to use a greater variety of international move types, and GM teams can use cost estimates to evaluate and compare different scenarios.

Traditional long-term assignments remain popular, but in some cases short-term assignments and permanent relocations are attractive alternatives. Even for longterm assignments, there are different types when it comes to pay – it can be calculated based on a home salary starting point (i.e. the salary for the equivalent job in the home country) or a host salary (i.e. the local market rate in the host

country). Some use the cost estimates to make comparisons between the cost of continued employment in the home location and the cost of an assignment. With many organisations having a stronger focus on the bottom line, looking at the different possible scenarios in advance can be a useful tool when GM is seeking management buy-in

• One of the key purposes of a GM programme is business enablement. Being able to accurately project costs to support the business in their daily operations will help GM managers demonstrate the value of their programme

• Many companies, particularly those in the construction and energy sectors, need to tender for projects that will require international assignments. Estimating labour costs is usually an important part of how companies’ bid teams calculate rates and safeguard margins.

The Building Blocks Of A Cost Estimate

Typically, costs are split into four components: salary, annual benefits, oneoff relocation costs, and tax and social security liabilities:

• For any type of assignment, salary and bonus payments make up a large part of the total costs. Where the assignee is entitled to additional allowances and pay adjustments as part of their assignment salary, these amounts are taken into account. Cost of living adjustments (i.e. COLAs) are usually provided for long-term assignments where the package is homebased, whereas an allowance to cover daily essentials is typical for a short-term assignment. Assignment allowances and location allowances are also often given. When the salary is host-based – and this could be the case for either a longterm assignment or a permanent transfer – then the gross salary to be paid in the host location is usually all that needs to be considered (and any bonus payments)

• On top of salary, other annual costs need to be considered as well. These are made up of ongoing benefits provided during the assignment (or, for permanent transfers, benefits provided during the first year).

Accommodation is usually the largest expense; in some locations, this can even exceed the cost of the salary. Other benefits that may be included are utilities, education for children, a company car, home leave, medical insurance and annual tax return preparation – and the costs incurred will depend on the assignee’s destination and the size of the relocating family. While the benefits provided will vary from one move type to another, this component still increases the package significantly

• Most companies also factor in the one-time costs incurred at the start of a move (and at repatriation in the case of assignments). Some of the more significant costs relate to the physical act of relocating an employee and their family to another location. As with the annual costs, costs for flights, shipment of personal effects, temporary accommodation, and other similar expenditure will vary considerably depending on the circumstances of the assignee and the locations between which they will travel. The relocation costs of repatriating should also be considered for assignments, though these will of course not apply for permanent transfers

• Finally, on top of salary payments, benefits and relocation costs, the thorny issues of tax and social security must be considered. Together these have the potential to make up a substantial proportion of the overall cost of a move. The elements of the package that are taxable and the rates at which they are taxed will vary depending on each host location’s fiscal law. When an assignee’s pay is home-based – for either a long-term or short-term assignment – their package is normally tax equalised. Their salary, benefits and relocation costs are quoted net and the company meets the income tax and social security contributions (employee and employer) incurred on these. When an employee is quoted a gross host salary for a long-term assignment, the employer usually still pays any tax that arises on move-related allowances, benefits, and relocation support. In permanent transfer cases, normally the employee is quoted a

gross host salary and is required to pay any tax that arises on the additional benefits and relocation support provided, with the employer required to pay social security contributions due on the package.

The Benefits Of Knowing What Assignments Will Cost

Making cost estimates an integral part of the mobility process improves cost awareness and control. Often the only part of the business with a good idea of the total costs of an assignment is the GM team. Cost estimates allow better communication of these costs to relevant stakeholders in a clear and accessible way. This greater awareness inevitably improves cost control; faced with information on the significant outlay, the business unit bearing the cost will see it needs to be justified by a clear business rationale if the assignment is to go ahead.

Going further than cost control, if cost reduction is a priority, then demonstrating the full costs to the business can encourage the implementation of more stringent approval requirements for assignments. Being able to compare various scenarios will also enable the business to select the most cost-efficient move type. Where a choice of the assignment location is an option, a cost estimate will provide clarity on where to base the assignee.

Unlocking The Full Benefits Of Cost Estimates By Using Software

While cost estimates come with many advantages, creating them manually comes with challenges. It is typically timeconsuming to gather data from HR teams and a vast range of different vendors, not to mention that running the calculations themselves is intricate work and requires a certain amount of in-house GM knowledge. Mobility teams, especially those under significant time and workload pressures, may therefore not be in a position to run cost estimates regularly or consistently.

Software specifically designed for running cost estimate calculations removes such obstacles. ECA’s 2022 Global Mobility Now Survey found that 4 in 10 companies are already using software to automate calculations like cost estimates, whereas 5 in 10 say they are not currently automating these yet believe that doing so would add value for them – and for good reason. Cost estimate calculators already configured with mobility and tax data save considerable time and reduce the risk of human error. Clear and attractive outputs from a specialist system are also quick to share, and are much easier for other parts of the business to review and understand than large and detailed spreadsheet files full of

manual workings. Ultimately, transparency and easy communication is at the heart of why using cost estimates encourages better decisions and helps to hone businesses’ mobility programmes.

Key Account Manager, ECA International Georgia is part of ECA’s Client Services team and is responsible for some of ECA’s key accounts in northern Europe. She advises major multinational companies on current practices in global mobility, and supports the use and development of software solutions. To discuss cost estimates or other mobility-related issues: georgia.wilson@eca-international.com www.eca-international.com

GEORGIA WILSON

Shaping Your Global Payroll Model To Align With Strategic Objectives

What is a ‘Global Payroll Model’? It can mean different things to different organisations; and for some, the desired Global Payroll Model is a distant dream. Employees are essential to all organisations, yet payroll, which connects the employee to the company, and which is often a material cost in the P&L has historically been construed as an overhead.

Now, with the ever-increasing role of technology and the growing complexity of global workforces, Global Payroll Models are at the forefront of HR and Payroll professionals’ minds.

A Global Payroll Model is a strategic framework typically developed to realise a desire for a single global payroll process, provider or system. An organisation’s payroll model should reflect its strategy, governance stance and the wider organisational operating model. On average, 80% of payroll processes should be the same regardless of location, with the remainder linked to specific country requirements. However, many organisations lack a consistent payroll model that underpins a global strategy, which, particularly post-pandemic, needs to support agile hybrid working scenarios.

There is no singular correct approach for operational payroll management, but organisations need to be confident that the model they select delivers a high-quality payroll

output across the workforce. Employees expect to be paid on a consistent basis, and delays can create workforce challenges (60% of employees have identified mistakes on their payslips and 21% of UK workers have changed jobs after being paid late(1)). Suboptimal payroll processes can impact both reputation and employee morale, often leading to longer-term consequences(2)

This article considers some of the options available to organisations that are reviewing their own Global Payroll Model or looking to establish one for the first time.

What Is A Global Payroll Model, And What Are The Options?

To echo an oft-cited phrase, ‘no one-size fits all’. There are numerous payroll models to accommodate a range of specific requirements. Organisations will be able to plot their operational model on a graph (Figure 1), showing:

• Y Axis – where the global payroll sits on the trajectory of being fully outsourced to a Business Process Owner (BPO) or managed internally (In-House Payroll)

• X Axis - the level of harmonisation of the global payroll itself, for example, are multiple countries’ data operated separately (Aggregated) or is there a unified global payroll model (Unified)?

There is no absolute correct model, but it is important to first understand the status quo and why this is the case.

The pros and cons of in-house versus outsourced have long been debated. For example, it may be argued that an in-house

team preserves flexibility and allows for shorter payroll turnaround times. Conversely, an advocate of outsourcing may say that this gives the organisation access to the latest technologies and removes the perceived key-person risk of an in-house environment.

The pros and cons of an aggregated model versus a unified global model are equally debated. For example, being able to view all data in one system under an aggregated model is powerful, but this does not allow the user to effect change for local payments. On the converse side, a unified system will give access to the local calculation, but this may be in a different report format meaning different gross to nets in different languages.

It’s horses for courses in determining the optimal position on the Operational Model graph. However, what is critical in assessing a change to a global model or, indeed, the inception of a new global model, is knowing the drivers for that change.

Features of the various model approaches are summarised in Figure 2.

Why Is Change Needed And How Will This Fit In The Organisation?

Driving Change In Your Global Payroll Model

There are three key considerations when deciding on a revamp of your Global Payroll Model:

1. Design and governance

2. Drivers and triggers for change

3. Global payroll maturity.

1. Design And Governance

The design and governance of the payroll model must reflect the organisation’s general corporate vision:

• The payroll strategy should have strong objectives, a purpose statement with clear goals and a team that can support delivery.

It is essential that all employees are guided by common principles to ensure global objectives are met

• GDPR and compliance obligations must be placed at the forefront of all operations.

The payroll governance model must be robust and enable high standards (it is 2.71x more costly to be non-compliant rather than compliant with mandates(3)). There must be a clear understanding of the difference between processes and controls

• Compliance regulations are ever-changing, and companies must adopt different

methods to prevent data breaches. This can be supported with rigorous controls that are updated and tested regularly to ensure processes are compliant

• The payroll operating model is pivotal to the efficient and accurate delivery of payroll. Companies should use technology, via use of data-driven analytics, to enable efficient and accurate payroll delivery. This will allow organisations to create an integrated payroll operations system which can deliver a high-class payroll process, for both employees and the organisation.

2. Drivers And Triggers

In order to trigger a global payroll change, there are several hurdles to overcome. Addressing clear pain points such as a lack of integration between existing organisational technologies is a good start. Utilising shared services and common tools across teams will allow tasks to be streamlined and enable uniform output.

Three of the biggest triggers for companies are (i) standardisation, (ii) allowing for organic headcount increase, and (iii) expansion into new territories. These drivers can be catalysts to propel an average payroll process into one that can be representative of a truly global payroll model.

In addition, the following four drivers have developed in recent years.

• Organisational Agility - organisations

are often in need of a payroll system that can be readily available to respond to ever-changing requirements. As the world changes, as seen with the COVID pandemic, the payroll department is required to make fast actioned changes to accommodate new legislation such as furlough pay or winter energy support

• Query Management - the existence of an effective and integrated query management system is pivotal, especially in a period of change when there is the need for real-time information and innovative solutions to business challenges. As illustrated in Image 1, having a traditional multi-tiered query system simply doesn’t

suffice for many organisations, as this reduces the employee experience by leaving their query between the tiers for days or even weeks

• Technology - if your chosen methodology is an outsourced payroll model, it is imperative that there is an agile technology platform underpinning service. Equally important is the expertise and knowledge of the supporting team, helping drive real change in employee experience and looking towards future technology provision for both employees and the business - such as on-demand pay, app single sign-on or direct communication, when GDPR and other privacy rules allow Global Payroll Model approaches

• Analytics - the need to have uniform reporting has become increasingly important. As organisations seek to globalise their payroll systems, output must also be consistent and harmonised. Having a global data management and analytical system will allow for more detailed and robust reporting of payroll activity, enabling real-time reporting of not just employee level information but also organisational finance data, providing items such as gender gap information or trends on resignations of the employee base.

3. Global Payroll Maturity

Many existing payroll models sit between ‘Immature’ and ‘Reactive’ (see Image 2: Payroll Maturity Level). These two typically lack automation (say, between the HR and payroll systems) and therefore the ability to integrate data and effect change is limited. This is a common feature of payroll model failures, as teams often become overwhelmed with the volume of work, and the level of manual intervention leads to an overall higher risk profile. In order to mature, the payroll model must evolve to reflect the strategic vision of the organisation. Subject to that vision, this might be achieved in numerous ways:

• Creating and implementing a robust operating framework, whether in-house or outsourced

• Deploying high-capability technology and integrations through the vendor and technology ecosystem

• Developing highly skilled teams, and

• Enabling smart data reporting back into the organisation.

Driving Value

Payroll is an often undervalued, yet critical function. There are many ways in which to achieve a highly functioning Global Payroll

Model. At the core is the baseline need for payroll to be efficient, accurate and compliant. Those charged with leading the Global Payroll Model must achieve these three objectives at a minimum, and then progress onto defining and finessing a function that delivers in line with organisational strategic objectives, thus driving added value back into the business.

References:

(1) UK employees switch jobs due to poor payroll experience HR review

(2) www.economicjournal.co.uk/2020/ 07/poor-payroll-management-canharm-your-company-in-more-waysthan-one/

(3)www.corporatecomplianceinsights. com/true-cost-compliance

Global Tax Update

BELGIUM

Cross-border teleworking after COVID-19 (i.e., after 30 June 2022)

Are you an employee who has been teleworking cross-border because of the COVID-19 measures and who will continue to do so after COVID-19, or do you as an employer have employees in that situation? If so, 30 June 2022, was an important date. This is specifically the case for employees who are teleworking in Belgium, the Netherlands, France, Luxembourg, or Germany.

During COVID, Belgium had concluded mutual COVID-19 agreements with its neighbouring countries (the Netherlands, France, Luxembourg, and Germany) implementing a fiction for the homeworking days exercised by the employee. As a result of this, homeworking days were deemed to be executed by the employee in the state where they would have exercised their employment in a regular situation.

These COVID-19 agreements, and with that the fiction, ended on 30 June 2022. This implies that homeworking days exercised outside the state of the employer will be taxable in the home country of the employee. As a result, taxation will shift from the state where the employer is located to the home country of the employee.

30 June 2022, marked the end of the fiction in terms of taxation, and initially marked the end in terms of social security. However, during the European Administrative Commission meeting in mid-June, an agreement was reached to establish a new transitional period up until 21 December 2022, for social security purposes.

The objective of this transitional period is to allow all parties concerned to adapt to the changed working patterns and to allow Member States as well as the Administrative Commission to investigate specific situations to see whether a structural change of the applicable rules is necessary. Consequently, until that date, teleworking days will not be considered when determining the employee’s applicable social security legislation. Cross-border teleworking will only imply a change of your applicable social security legislation, or the legislation of your employees, as from 1 January 2023.

However, a Limosa notification (if applicable) is again mandatory as from 1 July 2022 (this notification was not due during the Covid-neutralisation period).

Working from home or teleworking as part of the ‘new normal’ does not only have consequences in terms of applicable taxation and social security. It may also have an impact on the following:

• Applicable labour legislation and existing labour agreements (annex needed)

• Teleworking policies (that will need to be established or updated)

• Compliance (specific formalities apply such as the request of an A1-declaration or Limosa)

• Current payroll administration (that will need to be adjusted), and possibly the need to process a payroll in the home country of the employee

• The employer’s remuneration policy

• The employee’s additional pension build-up

• Etc.

BDO Comment

Clearly, the above is a major change that requires your attention. If you have questions, or if you need any assistance in this respect, do not hesitate to contact your Belgian adviser. They can discuss with you the implications that teleworking as from 1 July 2022 (or as from 1 January 2023), may have on your situation or that of your employees, and talk you through the steps to be taken to ensure you remain compliant.

CANADA Tax Related Hoiusing Proposals From The 2022 Federal Budget

Real estate prices in Canada have escalated significantly over the past two years, but even before that, Canadian housing prices had been steadily rising at a rate higher than wage increases. While affordable housing is a complex matter with no easy solution, new tax initiatives proposed by the federal government could offer some relief.

In this article we discuss the five income tax proposals related to housing and what they mean for taxpayers.

New Tax-Free First Home Savings Account

The boldest of these initiatives is the introduction of a new registered account, the Tax-Free First Home Savings Account (FHSA). First-time homeowners would be able to contribute a maximum of C$40,000 over their lifetime to this account, at a maximum of C$8,000 per year, starting in 2023.

Similar to a tax-free savings account (TFSA), the funds contributed into an FHSA will be able to earn investment returns taxfree. Unlike the TFSA, the contributions into an FHSA would be tax-deductible. Further, unlike a TFSA, any unused annual contribution cannot be carried forward.

When a withdrawal is made from the FHSA to purchase a qualifying home, the withdrawal will be tax-free. However, if a withdrawal (rather than a transfer) is made for any other purpose, it will be taxable.

The proposals also provide for flexibility for moving funds between an RRSP and an FHSA. For example, if there are funds in an RRSP, they could be transferred to an FHSA over five years to provide C$40,000 tax-free to purchase a home.

However, funds in an RRSP could also be used to buy a first home under the Home Buyers’ Plan (HBP). The HBP has been in existence for many years and allows a homebuyer to take a loan of up to C$35,000 from their RRSP to use for purchasing a home. This loan must be repaid to the RRSP over 15 years or be taxed as a withdrawal over 15 years.

There may be situations where a transfer from an RRSP to an FHSA to buy a home makes sense because the FHSA funds can be withdrawn tax-free with no need to repay the funds. However, while funds from an RRSP to create a Home Buyers’ Plan can be withdrawn all at once, funds can only be transferred from an RRSP to a FHSA at a rate of C$8,000 per year.

Real estate prices in Canada have escalated significantly over the past two years, but even before that, Canadian housing prices had been steadily rising at a rate higher than wage increases

Each individual will need to assess how the FHSA could benefit them. This new plan also represents an opportunity for a parent to help their adult child save for a first home.

Multigenerational Home Renovation Tax Credit

Many older adults would like to stay in their own home and live as independently as possible. For some families, a home may be renovated to create an area within the home of adult children where an elderly parent can live. This is one type of situation where the proposed Multigenerational Home Renovation Tax Credit (MHRTC) could help.

The proposed MHRTC will be a refundable credit calculated as 15% of eligible expenses to an upper limit of C$50,000. Although the final details are not yet available in legislation, eligible expenses would be defined as those used to create a secondary unit within the main unit. The secondary unit would need to be a self-contained unit with a private entrance, kitchen, bathroom facilities, and sleeping area. The secondary unit could be newly constructed or created from an existing living space that did not already meet the requirements to be a secondary unit.

It is proposed that this credit would apply for the 2023 and subsequent taxation years, for work performed and paid for and/or goods acquired on or after 1 January 2023. If your family is thinking about creating a secondary unit for an eligible person, it might make sense to wait until 2023, as this new credit could provide up to C$7,500 in tax relief.

Home Buyers’ Tax Credit

There is currently a non-refundable tax credit available to first-time home buyers of C$5,000, which provides tax relief at 15% or C$750. The budget proposed to double this credit to C$10,000, which would provide up to C$1,500 in tax relief. This proposal will apply on the purchase of a qualifying home made on or after 1 January 2022.

Home Accessibility Tax Credit

The budget also proposed that another of the current housing tax credits be doubled. The Home Accessibility Tax Credit (HATC) provides a 15% non-refundable tax credit on eligible home renovation expenses up to C$10,000.

Eligible expenses for this credit are incurred when the expenses are for the renovation or alteration of a home to allow an adult age 65 and over to have greater accessibility in the home, or to have a reduced risk of harm within the home. An adult individual who is eligible to claim the disability tax credit, or a supporting person of such an individual, can also claim the credit for these types of renovations.

The budget proposed to double the annual expense limit to C$20,000, which would then provide up to C$3,000 in tax

relief. This enhanced measure would apply when the expenses are incurred in the 2022 or subsequent taxation years.

Residential Property Flipping Rule

The Canadian tax rules distinguish between a capital gain, which is currently only 50% taxable, and income gains, which are fully taxable. The principal residence exemption is a provision in the Canadian tax legislation that provides a tax-free gain on the sale of a residence that meets the definition of a principal residence.

The government is concerned that individuals who purchase real property, including rental property, with the intention of reselling within a short period of time (“property flippers”) are incorrectly reporting their gain on resale as a capital gain, or in some cases as a tax-free gain from the disposition of a principal residence, rather than as fully taxable business income.

To address this, the federal budget proposed to treat the disposition of any real property held for less than 12 months as business income, except in limited circumstances that would be beyond a taxpayer’s control (such as death, marital breakdown, addition of family members, disability, change of place of work, and insolvency).

It is proposed that this measure would take effect in respect of residential properties sold on, or after, 1 January 2023. The government has yet to issue draft legislation with respect to this measure.

BDO Comment

It is positive to know that governments and tax authorities are aware of the everyday concerns of taxpayers and then take steps to proactively help. Do speak with your Canadian tax adviser for regular updates regarding progress with these Budget proposals.

CHINA

Preferential Tax Policy introduced for residents of Hong Kong and Macau working in Nansha, Guangzhou

New rules have recently been introduced for residents of Hong Kong and Macao who are working in Nansha, Guangzhou. These rules effectively limit the Chinese individual income tax burden liability to what the individuals would have paid had they remained tax resident in and working in Hong Kong and Macao respectively.

IRELAND

Updated Revenue Guidance on SARP Requires Preplanning for Assignments/ Transfers to Ireland

In June 2022, the Irish Revenue published updated guidance on the qualifying conditions to avail of the Special Assignee Relief Programme (SARP). The new guidance

includes clarifications on some practical issues encountered by employers in determining employees' eligibility for SARP.

This is helpful in clarifying scenarios where the conditions for SARP would be deemed to be met, or not as the case may be.

However, a new interpretation by the Irish Revenue of a pre-existing requirement, to perform duties in Ireland in each of the 12 consecutive months following the employee’s arrival into Ireland, will be of concern to employers and their relevant employees. It should also require careful planning of periods of leave/vacation and hybrid working arrangements throughout the 12-month period following the employee’s arrival in Ireland, so that this potentially very valuable income tax relief is not inadvertently lost.

The guidance also provides clarity on scenarios in the 6 months prior to the employee’s arrival in Ireland, where another condition for SARP relief outlined below could be deemed not to be met, that will also require advance consideration.

Background

Firstly, as a brief overview, SARP is an Irish income tax relief aimed at encouraging the relocation and assignment of key talent within organisations to Ireland.

Where conditions for SARP are met, it allows for 30% of an individual’s taxable employment income over € 75,000 to be disregarded for Irish income tax purposes. This is subject to a current upper income threshold of € 1 million.

SARP relief is available for individuals arriving in Ireland from 2012 to 2022. It is expected this year’s Finance Act will further extend the relief beyond 2022. Once an individual qualifies for relief under SARP, they can avail of it for up to 5 consecutive tax years, provided the qualifying conditions continue to be met for each year of claim.

For example, an individual arriving in Ireland in 2022, and who qualifies for SARP in that year, could potentially claim SARP for tax years 2022 to 2026 inclusive, where they continue to meet the conditions for SARP in each of those years.

For more information on the qualifying conditions for SARP please speak to your adviser or request a copy of BDO’s SARP bulletin.

What’s New?

One existing condition to qualify for SARP is that for the whole of 6 months immediately before the relevant employee arrives in Ireland, they must be a full-time employee of the non-Irish “relevant employer”. This is defined as a company located in a country with which Ireland has a Double Taxation Agreement or Tax Information Exchange Agreement.

In their recent guidance, the Irish Revenue clarify that the above condition for SARP would NOT be met in the following circumstances:

• Where an individual takes up their employment with an associated company in Ireland before they arrive in Ireland. However, a limited exception is provided by the Revenue where the individual intends to take up employment with the associated company but is prevented from travelling to Ireland to commence their duties due to unforeseen circumstances outside of their control. In such cases, the performance of pre-arrival duties outside Ireland for the Irish company may be permitted if these do not exceed 5 workdays in total in this 6-month period

• Where an individual carries out work duties in Ireland in the 6 months immediately prior to commencing their Irish assignment/employment. A limited exception is also made here to allow for up to a total of 5 workdays in Ireland working for the foreign (relevant) employer during this 6-month period. The Revenue also clarify that brief trips to Ireland on holiday/look-see visits in the 6 months immediately before arrival will not prevent the employee from meeting the above condition for SARP, if all of the other qualifying conditions are met.

As already referenced above, a significant update in the recent guidance is the suggested denial of the availability of SARP

relief where an individual does not perform duties in Ireland in each of the 12 consecutive months following their arrival to Ireland. An example is provided of an employee who arrives in Ireland in January 2022, and spends all of August 2022 on vacation outside of Ireland. In that case, the Revenue's stated view is that the individual, who would otherwise have been entitled to claim the relief, is ineligible for SARP.

BDO Comment

For any pre-arrival Irish tax consultations with employees, who are relocating to Ireland on assignment or to take up an employment with an associated company in Ireland, we strongly recommend those take place at the earliest opportunity and before the employee commences their Irish role or arrives in Ireland to take up those duties. This should allow the adviser to identify and clarify to the employer and employee their requirements so that an opportunity to avail of SARP is not lost, and to ensure that the relevant parties are aware of their responsibilities in this regard.

It should also be noted that where the above criteria for SARP is not met, the impact for the employee is not limited to the loss of the tax relief under SARP for just the first year of claim, but will result in

losing the tax relief for every year in which the employee may otherwise have met the criteria to qualify for SARP (up to a maximum of 5 years).

Prepared by BDO LLP. For further information please contact Andrew Bailey on 0207 893 2946 or at andrew.bailey@bdo.co.uk

ANDREW BAILEY

Tax Risks Within The Assignment Life Cycle

As we come out of ‘Covid restricted mobility’ and businesses again expand globally, so comes the challenge of moving people. In this article we explore the tax risks arising at various points in the assignment life cycle.

Pre-Assignment

Who Is Going, Where And What Will It Cost? Could You Structure It Differently?

In general, projects start with a potential business opportunity where it is necessary to move people to a different location.

Given that staffing is amongst the biggest expense, it is amazing how few businesses consider the tax cost of any assignment/ project. For example, many businesses express surprise some 18 months after the assignment has ended once the final tax bills come in, saying that if they had known that it would be that expensive then they never would have sent the individual/s on assignment. Some businesses resort solely to basic internet research that often throws up outdated figures and rules and omits practical, on the ground, local experience. A properly considered upfront analysis of the assignment, the applicable rules and projected tax cost, can assist greatly with budgeting and managing cost expectations for all.

Planning can also help reduce the cost of an assignment. In many instances there are tax breaks for short-term assignees, e.g. UK, the Netherlands, Sweden and Denmark all have such reliefs. These reliefs may have conditions attached, for example, to the length of the assignment, the employer’s location or the level of salary and allowances. Such tax breaks can be considerable, for example, the Dutch ‘30% facility’. Additionally, paying certain benefits through the employer or having the employer provide them directly can result in reduced tax and social security liabilities. By considering available tax breaks in conjunction with the aims of the project, assignments can be planned and structured in the most tax efficient manner, potentially significantly reducing the costs of an assignment.

Work Permits/Immigration

Clearly you do need to obtain the right work permits and visas to ensure that an individual can legally work in the country.

The applicable rules may dictate whether an individual can/cannot be employed locally and has to be on an assignment. Do check such rules, as they may restrict the ability of the business regarding employment structuring and tax planning.

Tax Policies

With few assignees, arguably, a tax policy is not needed, as this permits maximum flexibility to reduce tax costs, however, when the numbers accumulate the advantage of a structured approach becomes more apparent. By setting out the approach of a business to international mobility this provides a ready template as to how to deal with assignments and sets out the tax and social security philosophy (e.g. tax equalisation, home social security, assisted

tax returns, host based etc.). A policy can help to reduce tax risks by addressing clearly the approach to be adopted for international assignments and localisations.

Do You Know Who Your Assignees Are And Do You Know Where They Are?

Surprisingly, many businesses are still unable to correctly identify all of their assignees and their locations. Apart from the obvious security and duty of care risks that arise, tax risks abound. The issue of short-term business visitors (and remote workers) is on the rise post-Covid, and will again be a major topic and revenue generator for tax authorities around the world. This will lead to a potential high risk tax exposure for businesses. It is important that businesses can track where their assignees and remote workers are, can identify the potential tax trigger points and proactively manage these. Don’t assume that tax treaty exemption will always apply (or that no action needs to be taken), the conditions for such exemption all need to be met – not just the 183-day test – and remember that tax treaty exemption applies to the individual, and does not necessarily remove the reporting and withholding obligation for the employer. Be aware that authorities are becoming increasingly sophisticated when it comes to tracking and sharing data between different government departments. For example, the Australian tax and immigration authorities proactively share data.

Departure Meetings In Home Country And Arrival Meeting In Host Country

These meetings can be invaluable in assisting both the employee and employer to understand what tax forms and procedures need to be completed and followed, and what records needs to be kept for the duration of the assignment. Failure to hold such meetings can result in assignees missing out on opportunities through ignorance, such as failing to keep relocation receipts, workday and travel records or registering for expatriate concessions (e.g. please read the update Irish SARP rules in our Global Tax Update).

During The Assignment

Withholding Taxes - Is The Company Paying Withholding? Are They Paying The Right Withholding?

Frequently the biggest tax risk that arises with assignees (and remote workers) is the failure by the employer to deduct

With few assignees, arguably, a tax policy is not needed, as this permits maximum flexibility to reduce tax costs, however, when the numbers accumulate the advantage of a structured approach becomes more apparent

withholding taxes. Withholding taxes such as Pay As You Earn (UK), Pay As you Go (Australia) should often be deducted by the employer. Employees can be fickle and with many moves resulting in early cessation of assignments and possible termination of employment on, or shortly after completion, it can be difficult or impossible to recover taxes from former employees. Where there is a failure to deduct withholding, tax authorities will generally look to the employer to rectify the position and may insist on a grossing up of any resulting tax liabilities, thus increasing the tax cost. Always deduct withholding taxes and do this on a timely basis: after all, you can usually get this refunded if excess withholding is paid. Where variations to withholding are appropriate (e.g. UK’s nil tax codes and reduced s690 overseas workday relief withholding directions or tax treaty exemption), do ensure you get the appropriate documentation from the tax authority evidencing their approval.

Are You Picking Up Split Payments And Pre-Assignment Payments?

Assuming withholding taxes are being deducted, do ensure it is being operated on the correct basis. For example, are split payroll amounts being taken into account?

It is very easy to overlook home country/ third country payments that remain in existence. Additionally, payments that relate to the assignment but are paid before the assignment commences, could be liable to withholding in the host country. All may need to be reflected in the payroll calculation, and even if there is no actual payroll or entity in the host location, withholding taxes may need to be operated on a shadow or ghost payroll basis. Payments will of course also need to reported, as appropriate, in the individual’s tax returns.

Is The Company Picking Up All The Benefits – Home And Host Paid Or PreAssignment Paid?

Another issue that is frequently overlooked for business or individual reporting is that of benefits. Again, it is important that both home/ third country benefit provision is considered when assessing host (and home) country tax liabilities. It is very easy to overlook their provision, for example, continuing home country long-term storage or medical insurance costs. Additionally, where benefits such as relocation expenses are paid pre-assignment, these can often be forgotten when it comes to assessing host country liabilities. Host country rules will need to be examined to determine what needs to be reported and taxed.

Is Social Security Being Paid In The Right Location – On Home And Host Payments?

Part of the initial assignment structuring should be to determine where social security

will be paid. This may be in the home country, the host country, both or neither, or in a third country depending on the circumstances. Bear in mind that social security costs can sometimes outweigh the tax costs, with employer contributions in locations such as France and Italy being approximately 40% on an uncapped basis. Contributions in other countries such as Germany, may appear high at face value, but capping limits the costs for high earners and employers. In other countries such as Hong Kong and Singapore, it may not be possible for foreigners to join the local social security system. Planning can help to reduce any social security liability but the impact on future benefits does need to be considered. This is of course extremely difficult with ever changing rules.

Once the right location for payment has been determined and the individual is on assignment, it is important to ensure that social security liabilities are calculated on the correct amount. For example, are all cash payments being recorded? Payments through split payrolls are often overlooked as are benefits provided in home or host countries. Do gather all details on a timely basis so that liabilities for both the employee and employer can be correctly calculated and paid. As with withholding tax, failure to deduct by the employer can result in additional liabilities for them if the employee becomes an ex-employee. Always deduct where you need to, and do ensure you have the right, up-to-date certificates of coverage in place, to demonstrate why liabilities are being or are not being deducted as appropriate.

Are Tax Returns Being Filed By The Individual – On What Basis?

Completion of personal tax returns whilst an individual is on assignment can often be overlooked or dismissed as an easy compliance task. This is particularly risky when one considers there will be added complexities, interactions between differing tax systems and the unfamiliarity of foreign implications and foreign tax regimes to deal with. Failing to provide tax assistance can lead to missing and incorrect tax returns – whether innocent or otherwise. This could affect the corporate reputation of the business entity and possibly even its ability to continue to undertake business in a location. Providing professional assistance with this task can help both the employee and the employer to ensure correct and timely filings, and leave both parties to focus on the success of the assignment.

Have Any Tax Reconciliations Been Undertaken?

Where there are tax equalisation commitments by the employer to meet certain or all elements of an assignee’s

foreign tax liability, it is important to ensure that not only is the correct liability paid, but that relevant steps are taken to recover hypothetical tax underpayments or real home country tax refunds from the employee. Tax leakage may occur for the employer where this does not take place promptly or at all.

Recharges And Bearing The Cost/Transfer Pricing

From a business perspective, cost and benefit typically go together and should be located in the same place. However, this relatively simple business rule can have far reaching consequences. Recharges can jeopardise potential treaty exemption for the individual. The failure to consider people issues and the resulting costs can create problems with tax authorities when transfer pricing rules are overlooked. Changes introduced following the introduction of Base Erosion and Profit Shifting (BEPS) rules need to be considered from an international mobility context. In certain circumstances recharges can also trigger a non-recoverable VAT liability.

Corporate Residence And Permanent Establishments

Although your company is located in, and is a resident of a certain country, sending people to another country may create a local presence to such an extent that the company also will be subject to local corporate taxation. Whether or not this is the case will depend on their purpose of being there, their numbers and seniority, their activities and value creation. Does their presence create a ‘fixed place of business’ or ‘permanent establishment’? This whole area is currently under scrutiny by tax authorities, particularly in a postCovid world of hybrid working and remote workers, so do look out for future changes.

Post-Assignment

Tax Equalisation Reconciliations And Loans

On cessation of the assignment it will be necessary to unwind any tax loans and deal with final tax equalisation reconciliations. Do remember to undertake these tasks, especially as so many individuals leave their employer after an assignment and memories of tax arrangements agreed at the outset of an assignment quickly fade.

Trailing Liabilities – Stock And Bonuses.

Are You Taking These Into Account?

Naturally you have been correctly reporting stock awards and bonuses during the assignment itself, but do you continue to track and map those relating to the assignment once the individuals cease their assignment? How long do you track for? Tax authorities around the world

are increasingly aware of the potential for tax to be overlooked and not paid in such circumstances. They will pursue such liabilities, so do ensure you withhold and file as appropriate, and remember to collect any contribution towards tax and social security liabilities from the employee.

Use Of Carry Forward Foreign Tax Credits

In certain circumstances, payment of taxes by the employer, whilst an individual is on assignment, may result in excess foreign tax credits, which may be unusable during the course of the assignment but available thereafter. As the taxes giving rise to these credits were paid by the employer, arguably they belong to the employer not the employee. How long does your business track such foreign tax credits to ensure any tax refunds generated go to you?

Tax Clearance Certificates, Tax Payments And Post-Assignment Individual Tax Returns

Relevant departure forms should be submitted to record the individual’s tax departure from the host country and return to their home or next country. Do remember that certain countries, for example Singapore, require tax matters to be settled and liabilities paid before a departure clearance certificate can be

obtained. Don’t forget that final year tax returns may still need to be filed and the existence of post-departure bonuses and stock may necessitate filings beyond the actual year of departure.

Forgotten Bank Accounts And Host Country Investments

In the rush to move to the next location, or return from assignment, it can be relatively easy to forget to shut foreign bank accounts or report their or other host country investments ongoing existence in future tax returns. Don’t forget to do so, otherwise tax authority enquiries will probably ensue. The volume of information reported between tax authorities is seeing a massive surge and this can easily trap the forgetful. Do seek to get it right from the outset.

I have only briefly touched on the tax risks that can arise from international assignments during the assignment life cycle. Careful tax planning, a structured approach to tax, and implementation of a tax process, can help both employers and employees alike to mitigate tax liabilities and minimise tax risks. All department teams (HR, Tax, Finance, etc.) should work together with the assignee and the tax adviser to achieve this goal.

If you would like to discuss any of the issues raised in this article or any other expatriate matters, please do not hesitate to contact Andrew Bailey on +44 (0) 20 7893 2946, email Andrew.bailey@bdo.co.uk

ANDREW BAILEY

Andrew Bailey is Head of Global Employer Services at BDO LLP. He has over 30 years’ experience in the field of expatriate taxation. BDO can provide global assistance for all your international assignments.

EU Migration Law Updates 2022

Immigration law is often viewed as an area where nation-states are free to legislate independently and at their own discretion based purely on national interests. However, as the European Community evolved and became the European Union (EU), and in line with the bloc’s deepening integration, member states gradually agreed on minimum standards and harmonisation on immigration. For example, at the start of the Covid-19 pandemic, member states decided to close their internal borders based on national interests, while subsequent agreement at EU level led to a gradual reopening of internal borders and common entry requirements at least for the Schengen area(1). Another more recent example is the unanimous decision made by EU member states to use the Temporary Protection Directive as a means to create a common legal residence status for Ukrainian refugees fleeing the war in Ukraine.

While the existence and impact of EU asylum legislation on national immigration policy is well known and often subject to public debate, EU legislation on labour migration is generally subject to less scrutiny. However, this does not mean that the impact of EU laws on labour migration is less significant. In particular, over the past two decades, the EU has steadily increased legislative measures in an effort to make the bloc an attractive place of employment for global talent and in turn drive the economies of its constituent member states.

The EU’s executive body, the European Commission, generally proposes legislation that fosters harmonisation in specific areas of labour migration and these are then discussed and negotiated in detail by EU member states. As a result some laws end up being watered down as member states fail to agree on certain contentious issues, such as labour market testing and salary thresholds. However, the European Commission’s efforts will always continue, following a trend of further harmonisation that can be expected to continue in future.

In 2020, the European Commission published its plans in the field of immigration in its New Pact on Asylum and Migration. A key pillar of the plans is the Skills and Talent Package, which is specifically intended to address key labour market issues across the EU. Among other measures, this package contained a commitment by the European Commission to revamp existing legislation on labour migration to tackle the skills shortage in the EU.

under the leadership of the European Commission and, following agreement by member states, the review Directive entered into force on 17 November 2021. Member states have until 17 November 2023 to implement the amended Directive into national legislation.

The aim of the new Directive is to simplify the procedures and qualifying criteria, widen the scope and to strengthen the rights of EU Blue Card holders.

The most important changes are:

• Facilitated possibility for EU Blue Card holders to undertake business activities in other member states

• Minimum duration of an employment contract reduced from 12 months to 6 months

• Currently Blue Card holders are allowed to move to another member state after a continuous stay of 18 months. This will be reduced to 12 months

• Recognition of professional experience in addition to or instead of educational qualifications

• Standard validity of the Blue Card to be increased from 12 months to 24 months, or the length of the contract plus three months

• Reduction of processing time from 90 days to 60 days (or 30 days for employers included in a national trusted employer scheme)

EU Blue Card

In late 2021, a first key step was taken as the amendment of the EU Blue Card Directive was rubber stamped by EU member states. The EU Blue Card was originally introduced in 2009 in order to address talent shortages across the EU as the European equivalent to the US Green Card. The purpose was to make it easier for non-EU/EEA/Swiss nationals to work freely in multiple EU member states within the European Union. However, studies over several years showed that use of the EU Blue Card category was generally low across member states, and therefore a revision was proposed by the European Commission in 2016. However, the negotiations between member states on some key aspects of the revision ended in a deadlock. It is under the Skills and Talent Package that the negotiations were revived

• Greater flexibility in respect of the salary threshold, which can be between 1 and 1.6 times the average gross salary of the member state, instead of 1.5. Employers and non-EU/EEA/Swiss employees will likely welcome this increased flexibility and simplified qualifying criteria. Yet it remains to be seen how EU member states will implement the revised Directive for EU Blue Card holders and their family members. This is despite the fact that the final text was watered down in order to break the deadlock. For example, the scope of activities that EU Blue Card holders can perform in other member states without a work permit for up to 90 days are generally already permitted for all business visitors based on national law regardless of nationality.

On 27 April 2022, another important milestone was reached in the EU’s efforts to attract key talent to its labour market when the European Commission published its proposals to amend two further pieces of EU legislation on labour migration: the Single Permit Directive and the Long-term Residence Directive.

The EU Blue Card was originally introduced in 2009 in order to address talent shortages across the EU as the European equivalent to the US Green Card

Single Permit Directive

The Single Permit Directive entered into force in 2011, and ensured that individuals and employers applying for residence and work authorisation in a member state would be able to benefit from more simplified and efficient processes. For example, applicants would only need to submit a single application for combined entry, residence and work authorisation and, after approval, a single approval should be issued.

The European Commission has now submitted proposals aimed at making those rules and processes more efficient.

The main proposed changes are:

• The possibility for individuals to apply from their home country outside the EU as well as in-country

• A maximum of 4 months processing time, including labour market testing and issuance of an entry visa (if applicable)

• The possibility for the employee to change employer during the permit's validity

• The possibility for the employee to keep the permit for at least another 3 months in the event of unemployment

• New provisions on penalties against employers in case of violations of working conditions, freedom of association and access to social security benefits and to introduce complaints mechanisms. These would be welcome changes, as shorter processing times, simplified requirements and increased employee flexibility ensure that non-EU nationals can be hired more easily for positions in the EU. Nevertheless, it remains to be seen whether EU member states will agree with these proposals or whether the negotiations will be as complex as for the revised EU Blue Card.

Long-Term Residence Directive

The EU’s Long-term Residence (LTR) Directive entered into force in 2003, and in essence ensured harmonisation of requirements and processes for issuance of long-term residence status for non-EU/EEA/Swiss nationals. For example, the Directive specifies that LTR status must be granted after continuous and legal residence of at least 5 years in the territory of the member state, a maximum processing time of 4 months from date of submission, and common standards for loss of the status as a result of residence outside the member state of issuance or the territory of the EU. In addition, the Directive sets out general conditions for holders of LTR status in one member state to apply for residence in another member state.

However, the Directive is somewhat limited in its effect given that most member states require individuals to pass civic integration and language tests in order to obtain LTR status. In addition, the Directive allows member states to apply labour market tests to those seeking to work and

reside in another member state. As a result, the Directive is not widely used in member states, who are still permitted to issue LTR permits on national grounds, and does not promote intra-EU mobility effectively.

The EU Commission has therefore submitted proposals for an amended LTR Directive.

The main proposed changes are as follows:

• Periods of residence in other member states will be able to be counted towards the cumulative 5 years required to obtain LTR status

• No labour market testing required for persons with an LTR status in one member state who wish to reside and work in another member state

• No labour market testing required for family members of LTR status holders in the member state where the main applicant holds that status

• Facilitated family reunification requirements, and family members of an LTR permit holder that were born in the member state of issuance automatically acquire LTR status

• Reduction of processing time from 4 months to 90 days

• Possibility to apply for LTR status in a member state other than where the status was issued after 3 years residence (instead of 5 years)

• Permitted absence from the EU without losing LTR status increased from 1 year to 2 years.

If these changes are adopted by EU member states, it will provide additional grounds for intra-EU mobility for holders of LTR status. It will also ensure potential applicants will not be limited in their movement within the EU due to a fear of losing accumulated periods of residence in different member states. However, civic integration and language requirements will still generally apply for applicants, which means that it is likely potential applicants will seek to stay within a particular language region, if not a particular member state, for a significant period of time before applying for LTR status.

Interestingly, a new provision has been added, which specifies that periods of residence in a member state on the grounds of investment will not count towards the cumulative period required to obtain LTR status. This is clearly aimed at certain member states’ investor and ‘golden’ visa schemes that have been subject to criticism amid reports of abuse. It is likely that many member states will welcome this change.

As with the proposals on the Single Permit Directive, it also remains to be seen whether member states will adopt the proposals. In this respect there may be some additional challenges as individual member states may seek to protect their existing national immigration policies on long-term residence.

ETIAS And EES

While not specifically related to labour migration, the EU’s plans to implement new systems to regulate entry and exit from the Schengen area by non-EU nationals are well documented. Specifically, in late 2022 and early 2023 the EU will implement the European Travel Information and Authorisation System (ETIAS) and the new Entry and Exit System (EES). These measures are the outcome of initial proposals from 2016 by the European Commission under the Agendas on Security and on Migration.

Travellers who are visa-exempt for short stays (up to 90 days in a rolling 180 day period) may currently simply enter the Schengen area on the basis of their passports and will be stamped upon entry and exit. However, once ETIAS goes live, those nationals will generally be required to complete an online registration form prior to travel. The authorisation will be valid for 3 years and will allow them to enter and exit the Schengen area freely as long as the 90 days’ stay in 180 days is not exceeded.

Travellers will be required to include personal details on the form, including education, occupation, travel history and criminal antecedents (if applicable), and pay a fee of EUR 7 per person.

While there are some exceptions, such as for holders of an EU entry visa or residence permit and for British citizens with a valid residence permit issued under the EU-UK Withdrawal Agreement, ETIAS will generally apply to all visa exempted non-EU nationals travelling to the Schengen area.

In addition to ETIAS, the EU will also implement the new Entry and Exit System (EES), which is an IT system that will digitally register the entry and exit of most EU nationals travelling to the Schengen area, replacing the current manual process of passport stamping. While holders of an EU entry visa or residence permit and some other specific groups will not be subject to the EES, it will otherwise apply to all non-EU nationals travelling to the Schengen area.

The main aim of ETIAS and EES is to more efficiently and diligently manage cross -border movement to and from the EU and prevent cross-border crime and terrorism. While it will practically impact many travellers who are currently permitted to enter the Schengen area simply on the basis of their passports without prior registrations being required, it is not expected that it will restrict travel for any particular group.

Closing Remarks

The EU’s Skills and Talent Package aims to make the EU more attractive for high-, medium- and low-skilled talent across a variety of sectors. In general, the measures that amend the Directives discussed in detail above include increasing harmonisation across

EU member states, simplifying procedures and promoting intra-EU mobility. Given that recent reports have shown that the EU is facing significant challenges in attracting key skills that are needed across different regions and industries, it is likely that such changes will be welcomed by businesses and employers operating across the EU.

Conversely the implementation of ETIAS and EES will likely be viewed as increasing the administrative burden for persons travelling to the EU. However, the argument can be made that this burden is necessary and acceptable in order to control the EU’s borders and tackle crime and terrorism. Whether this will

indeed be successful remains to be seen. In the meantime, employers should ensure their short-term and business travellers are aware of the new requirements so that they can continue to travel without disruption.

Reference:

(1) The Schengen area comprises Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland.

The 2022 Global HR Conference

IMMIGRATION UPDATE hosted by Vialto Partners

To register a place for yourself and your colleagues on Monday 17th October, please email helen@internationalhradviser.com with the names and job titles of those who wish to attend.

HUGO VIJGE

Europe Advisory Lead, Vialto Partners. Email: hugo.vijge@vialto.com

Global Immigration Update

Introduction

From the new Prime Minister and Home Secretary in the UK; to changes in the EU approach to Russian nationals; and an increased focus on attracting and retaining skilled talent in Asia-Pacific, there have been significant changes to immigration policy and legislation over the last 3 months. Please do read on for further details.

Australia - Outcomes From Australia's Jobs And Skills Summit

The Australian government's Jobs and Skills Summit has lifted the permanent migration cap to 195,000 places effective immediately. $36.1 million in additional funding has been pledged to accelerate visa processing and resolve the current backlog. This includes a surge capacity of 500 staff over the next nine months. Ideas from the Summit will be used to rebuild Australia's migration program in the national interest.

The long-awaited Jobs and Skills Summit was held in Canberra last week bringing together Australian businesses, governments, unions and individuals to address the challenges facing the Australian labour market and economy today.

A key area of focus was Australia’s migration programme. A snapshot of key initiatives agreed to during the Summit include:

• Increasing the permanent Migration Programme ceiling to 195,000 in 2022-23 to help ease widespread, critical workforce shortages. These increased caps are effective immediately

• Providing $36.1 million in additional funding to accelerate visa processing and resolve the visa backlog. This includes a surge capacity of 500 staff over the next nine months

• Increasing the duration of post study work rights by allowing two additional years of stay for recent graduates with select degrees in areas of verified skills shortages to strengthen the pipeline of skilled labour in Australia

• Extending the relaxation of work restrictions for student and training visa holders until 30 June, 2023 to help ease skills and labour shortages.

Within the overall planning level of 195,000 places, allocations have been made to various visa streams as follows:

• 142,400 places allocated to the Skill visa stream

• 52,500 places allocated to the Family visa stream; and

• 100 places allocated to the Special Eligibility stream.

The Summit also laid out priorities for further work, with a focus on reviewing the purpose, structure and objectives of Australia’s migration system to ensure it meets the challenges of the next decade. The following items have been flagged for consideration:

• Assessing the effectiveness of the skilled migration occupation lists

• Expanding pathways to permanent residency for temporary skilled sponsored workers

• Raising the Temporary Skilled Migration Income Threshold (‘TSMIT’). The current TSMIT of $53,900 has not increased since 2013

• Reforming the current labour market testing process following consultation with unions and business

• Examining the potential for industry sponsorship of skilled migrants

• Embedding a role for Jobs and Skills Australia, a newly formed statutory body providing independent advice on workforce, skill and training needs. Jobs and Skills Australia’s analysis of skills shortages will set priorities for the skilled migration programme

• Policies to address critical labour shortages across regional centres and how to improve access to skilled migration by small business.

In the coming weeks, the government will task three eminent Australians to consider how Australia’s migration program can be rebuilt in the national interest. Submissions from the wider community will be sought over the next 12 months to contribute to a national white paper on employment.

What This Means

We welcome the wholesale review of Australia's migration programme with the view to tackling the critical skills shortage being experienced across the country. Attention to long-term solutions and simplification of the migration programme will help to address the key concerns expressed to us by businesses and individuals. As an independent immigration and global mobility business, we are actively involved in the national debate and will be contributing to the national white paper later this year.

Contact: Vialto Partners Australia: Stacey Tsui, Partner, stacey.tsui@vialto.com

Brazil - Temporary Visa And Residence Permit For Ukrainian Nationals And Stateless Persons

On 30 August, 2022, an Inter-ministerial Ordinance (number 30) was issued by the Brazilian Ministry of Justice and Public

Security and Ministry of Foreign Affairs, which detailed the conditions for granting temporary visas and residence permits for the humanitarian reception of Ukrainian nationals and stateless persons, who have been displaced by the war in Ukraine.

As a result of the conflict in Ukraine, the Brazilian government had already positioned itself on the humanitarian reception and consequent granting of residence permits to Ukrainian nationals and other immigrants impacted by resulting security conditions causing their displacement. This latest interministerial ordinance details the conditions for obtaining a residence permit, which will come into force on the date of its publication.

It is important to mention that the provisions of this Ordinance will be in force until March 3, 2023, and do not rule out the possibility of other measures that may be adopted by the Brazilian State for the protection of Ukrainian nationals and stateless persons impacted by the war in Ukraine.

The temporary visa provided for in the Ordinance, will be issued for 180 days. In addition, the immigrant holder of the visa must register at one of the Federal Police units within 90 days after entering the national territory. The period of temporary residence following this registration will be for a period of 2 years.

Further, Ukrainian nationals in Brazilian territory, regardless of the migratory condition in which they have entered the country, may apply for a residence permit for humanitarian reception before one of the Federal Police units, with the period of residence also granted for 2 years.

The immigration status granted under the Ordinance also permits productive work activities in Brazil, under the terms of the current legislation.

What This Means

With the inter-ministerial ordinance coming into force on the date of its publication, 30 August, 2022, the temporary visa and the residence permit for the purpose of humanitarian reception, is already active as an option for Ukrainian nationals and stateless persons who have been impacted and displaced by the war in Ukraine.

Our immigration team in Brazil remains available to provide migratory assistance to those who find themselves in these conditions.

Contact: Vialto Partners Brazil: Carolina Carnaúba – Immigration Director, carolina.c.carnauba@vialto.com

European Union To Make Visa Applications Stricter For Russian Nationals

In August, EU member states decided to stop applying a 2007 agreement that facilitated entry visa requirements for Russian nationals. This means that applications for shortstay visas for up to 90 days will be subject to stricter requirements, longer processing times and increased fees.

In response to the war in Ukraine and following calls from certain member states, EU foreign ministers have agreed to disapply an agreement made with Russia in 2007 that made it easier for Russian nationals to apply for entry visas to the EU. While this falls short of the calls by some member states for an outright entry ban, it is viewed as a significant step towards restricting the entry of Russian nationals to the EU.

Especially countries bordering on Russia, such as Finland, Estonia, Latvia and Lithuania, have seen an increased influx of Russian nationals. Many of those entering the EU in the past months have done so for leisure and/or holidays, which has been seen as problematic in light of the conflict in Ukraine. The new measures will not change the policy in such a way as to impact this group of travellers, however, member states have the discretion to implement measures that further restrict visa issuance.

For example, the Finnish foreign affairs minister has announced that they will be restricting visa issuance to 10% of normal volumes, citing "normal tourism should not continue as business as usual". Meanwhile, Estonia had already announced its ban on entry for Russian nationals holding valid Schengen visas (in addition to their wider visa restrictions). It is likely that other member states in the region will follow suit with similar measures that will go further than what has now been agreed at EU level.

On the other hand, countries like Germany and France have called for a more moderate approach, arguing that students, journalists and family members of EU residents should be able to continue to travel to the EU. Jointly they stated "while understanding the concerns of some member states in this context we should not underestimate the transformative power of experiencing life in democratic systems at first hand, especially for future generations."

Meanwhile, Belgium advises member states to ensure some form of harmonisation in order to avoid a situation where "Russians could do a kind of visa shopping among the countries of the European Union”. Whether this will mean Belgium will implement additional restions is not yet clear.

The measures agreed by EU foreign ministers will now go through the legislative process and are expected to enter into force in the coming days.

What This Means

Russian nationals will be subject to stricter requirements, longer processing times and increased fees when applying for short-stay entry visas to the EU. In addition, it may be that they will be subject to additional restrictions depending on which EU country is processing the application or they will be travelling to.

While the current approach highlights the differences in approach between EU member states, it also shows their willingness to work together to implement certain measures against Russia and Russian nationals.

Contact: Vialto Partners Europe: Hugo Vijge, Europe Advisory Lead, Hugo.vijge@vialto.com

Malaysia - Introduction Of Premium Visa Programme (PVIP)

The Malaysian Ministry of Home Affairs (MOHA) has recently announced the introduction of a new programme called the Premium Visa Programme (PVIP), to attract foreign businessmen and high income individuals to invest and reside in Malaysia for a period of up to 20 years.

This ‘Residency Through Investment’ programme, the first of its kind introduced by the Malaysian government to drive the country’s economic growth, will be open for applications beginning 1 October, 2022.

Holders of PVIP are granted a longterm pass on a 5+5+5+5 year basis and are permitted to reside, work, study, invest, open and run businesses, as well as purchase real estate, subject to other prevailing laws and rules. The rationale behind the 5+5+5+5 year method is based on the following factors:

• The validity period of passports issued by most countries is limited to 5 years only

• Allows the immigration authorities to monitor and assess the PVIP whereby the PVIP holders are required to update their latest information to the authorities every 5 years

• Allows continuous engagement with PVIP holders and applicants to ensure their concerns and feedback are recorded and considered.

The PVIP is a self-sponsored programme which is not tied to any employer, university, etc., hence the holder may change employers, universities, etc. without any immigration restrictions so long as the PVIP remains valid. Spouses, children under 21, parents and parents-in-law, and domestic helpers of the principal PVIP holder are also eligible for the PVIP. Children 21 years old and above will need to apply as a principal PVIP holder in their own right or obtain other relevant visa or pass in Malaysia.

The PVIP is renewable 6 months prior to the end of the 20 year period.

Eligibility

Below are the key eligibility criteria for the PVIP:

• Individuals of all ages and nationalities, except nationals of Israel and other countries without a diplomatic relationship with Malaysia, are eligible for the PVIP

• The principal PVIP holder must have offshore income, i.e. income sourced from outside Malaysia of at least MYR40,000 a month or MYR480,000 a year

• The principal PVIP holder must deposit MYR1,000,000 in a fixed deposit account with a Malaysian bank and withdrawal on the principal sum is not allowed. After 1 year of holding the PVIP, he/she may withdraw up to 50% of the principal sum in the fixed deposit to purchase real estate in Malaysia or for medical and education expenses

• A one-off participation fee of MYR200,000 for the principal and MYR100,000 for each dependent is applicable. Additionally, a yearly fee of MYR2,000 is applicable for each PVIP holder

• Other requirements include submitting a Personal Bond and Certificate of Good Conduct, passing a background check by the Royal Malaysia Police, undergoing a medical examination by a registered clinic or hospital in Malaysia and having a valid medical insurance coverage in Malaysia. The complete checklist and detailed application process are only expected to be issued closer to the launch date of 1 October, 2022.

What This Means

The PVIP is an initiative by the Malaysian government as it seeks to attract high income individuals to reside and invest in Malaysia and a move which aims to ultimately strengthen the country’s economy and increase job opportunities among local talents. Eligible individuals will now have a new option for long-term residency in Malaysia which does not require a sponsorship by a local entity or individual. The PVIP is expected to garner more interest from high income individuals as compared to the Malaysia My Second Home (MM2H) programme which is a retirementbased programme that does not provide work and study rights in Malaysia.

While the Malaysian government encourages the participation of eligible individuals in the PVIP, the combined number of PVIP holders and MM2H holders is capped at 1% of the total number of Malaysian citizens, as part of MOHA’s policy in ensuring that the PVIP does not undermine national security and the country’s sovereignty. Furthermore, PVIP holders are not eligible to apply or change status to Malaysian citizens.

Contact: Vialto Partners Malaysia, Sasha Reddy, Partner, Malaysia: sasha.reddy@vialto.com

Singapore - Overseas Networks And Expertise (ONE) Pass And Updates To The Work Pass Framework

Effective 1 January 2023, global top talent from all sectors can apply for a new type of work pass - the Overseas Networks and Expertise (ONE) Pass.

The Ministry of Manpower also announced further updates to the Work Pass Framework:

1. Fair Consideration Framework (“FCF”) job advertisement period for Employment Pass (EP) has also been shortened from the current 28 days to 14 days effective from 1 September, 2022;

2. Salary exemption to FCF advertisement and Compass will increase to S$22,500 from 1 September, 2023;

3. Pass application processing time to be shortened to 10 business days with immediate effect;

4. New 5-year Employment Pass (EP) for experienced tech professionals with skills in shortage.

The ONE pass, together with further enhancements to the existing work pass framework, underscore Singapore’s commitment to remain open to the world and strengthen Singapore's position as a Global Hub for Talent.

How The ONE Pass Will Work Applicants can apply for the ONE Pass from 1 January, 2023, under two criteria:

1. Salary: earning or will earn at least S$30,000 in fixed monthly salary in the last 1 year or with future Singapore employer respectively; Overseas candidates must work for established company with market cap of at least US$500 million or annual revenue of at least US$200 million;

2. Outstanding achievement: Further details to be released around 1 January, 2023 for individuals with outstanding achievements in arts and culture, sports, science and technology, and academia and research, who can also qualify for Overseas Networks & Expertise Pass, even if they do not meet the salary criterion.

The duration of the first ONE Pass is for up to 5 years and renewable for subsequent 5 years per extension. Reporting of professional activities and salary will be requested by MOM yearly to facilitate the renewal process.

The ONE Pass will also allow an accompanying spouse to obtain a Letter of Consent (LOC) to work without obtaining a work pass in their own capacity.

What This Means And Recommendations

Singapore is committed to welcoming talents from around the world, these changes send a strong signal to the world that Singapore remains open and a global hub for talent.

The shortening of application processing time to 10 business days will be much welcomed by the business community and is in line with the recent trend observed by us.

In order of effective date, employers are recommended to:

• Review existing FCF job advertisements period for current roles

• Revisit existing employee population and identify individuals below S$22,500 who may be subject to COMPASS rules for their renewal

• Review existing policy to align on company position to support new pass types and identify key talents who may be eligible for these passes

• Establish downstream reporting and processes to ensure ongoing pass compliance.

Contact: Vialto Partners Singapore, Yang Li, Partner, APAC: yang.l.li@vialto.com

South Africa - Centralised Adjudication And ZEP Extension

The Department of Home Affairs in South Africa has revoked the centralised adjudication process implemented early this year such that all visa applications submitted abroad will now be adjudicated at the relevant South African mission abroad.

Moreover, the grace period granted to Zimbabwean Exemption Permit holders to obtain a mainstream visa has been extended until 30 June, 2023.

The Department of Home Affairs made the following two important announcements late last week:

1. Centralised Adjudication: Withdrawn Following significant business stakeholder interaction with the Department of Home Affairs and Department of Trade & Industry, including recent media reports, the decision to centralise the adjudication of long-term visa applications to the Head Office in South Africa, since January 2022, has been rescinded with immediate effect due to the needs of the South African economy and detrimental impact thereof to employers and foreign national applicants.

It is understood that pending long-term visa applications submitted from abroad between 12 January, 2022 and 1 September, 2022 will not be returned to the South African Consulate of submission and will continue to be adjudicated under the previous centralised process in South Africa.

Accordingly, the ongoing business and personal impact of the current 8+ month adjudication delays will not be immediately resolved through this reversal as a significant adjudication backlog

remains within temporary residence, permanent residence and appeals with no communication around the measures to be taken to resolve the same - the ongoing inability of new foreign national skills to receive visas to address urgent needs of our local economy thus remains.

A positive impact should be realised for new applications submitted abroad (from 2 September, 2022) which could return to the standard processing times, however, the implementation of a new checklist to be adhered to by the adjudicators abroad could result in short-term uncertainty.

While the Department of Home Affairs may extend the current concession (expiring 30 September, 2022) to enable ongoing legality and ability to reside/ work/study in the country for applicants whose visas expired while awaiting adjudication (submitted in South Africa), this provides minimal relief to impacted foreign nationals when travelling or being exposed to potential challenges as to status in the country.

It is hoped that a decision around the extension of the concession will be made timeously to remove additional uncertainty for foreign nationals and employers around continuity of services and potential travel arrangements given the risk of being declared undesirable.

2. Zimbabwean Exemption Permit ("ZEP"): Extension Until 30 June, 2023

The Department of Home Affairs has extended the current grace period afforded to expired ZEP visa holders until 30 June, 2023 (previously 31 December, 2022) to provide additional time for impacted individuals to lodge applications for standard temporary residence visas to remain in South Africa.

The Department's statement refers to receiving minimal applications from impacted ZEP visa holders for standard visas/waivers, however, the Department has provided limited guidance on the options available for applicants who do not qualify for a Critical Skills Work Visa.

The Department has previously advised that Waivers against the Department of Labour requirement in respect of General Work Visas will only be considered within the sporting, religious and art fields with all other disciplines mandated to follow the Department of Employment and Labour process.

We continue to engage with the Department as to whether there is an alternative Waiver solution for ZEP holders in line with the recent statement.

Contact: Stephen Marlin, Director, South Africa: stephen.marlin@vialto.com

United Kingdom - Liz Truss Becomes The New UK Prime Minister

On 6 September, 2022, Liz Truss won the Conservative Party leadership election, beating former Chancellor Rishi Sunak, in a contest spanning most of the summer and became the new Prime Minister of the United Kingdom. During her leadership campaign, she has promised tax cuts, including changes to National Insurance.

What Does This Mean For Employers And Employees?

Cost Of Living Crisis - the expectation is that we will imminently hear the government plans to assist with soaring energy bills. For employers and their employees, rising cost of living is clearly a huge concern and many employers are considering how to offer support to domestic and expat populations (particularly acute for expats to the UK as the UK's inflation rate is currently higher than any other G7 country). To make these decisions, it'll be crucial to understand what government support there may be and who it will impact.

General Election - in her acceptance speech, she mentioned the next general election being in 2024, so it seems that there are no current plans to call for an early general election.

Immigration Policy - There was little discussion about the mobility of migrant workers, in particular, those arriving in the UK as skilled workers or investors. The Prime Minister appointed a new Home Secretary, Suella Braverman. She has not said a great deal about business immigration so we do not expect any significant reforms in this area of corporate immigration policy, in the near future. That may change as the cost of living crisis bites, if the government moves towards a protectionist position.

More directly, as new policy announcements are made in the next few weeks, we will continue to review, analyse, and update you on all the latest developments.

Contact: Vialto Partners UK, Lyudmyla Davies, UK Partner and Solicitor: lyudmyla.davies@vialto.com

United States - Flexibility For RFEs And NOIDs Further Extended & Reproduced Signature Flexibility Becomes Permanent

On July 25, 2022, US Citizenship and Immigration Services (USCIS) announced that it will continue to extend certain flexibilities to assist applicants, petitioners and requestors. USCIS will continue to accept certain types of responses received

within sixty (60) calendar days after the due date. Further, in accordance with USCIS’ evaluation, it has determined that the reproduced signature flexibility announced in March 2020 will become a permanent policy on July 25, 2022.

USCIS announced that it has further extended the flexibilities announced in March 2020 due to the COVID-19 pandemic to applicants and petitioners when responding to certain requests and notices, including Requests for Evidence (RFE), Notices of Intent to Deny (NOID), Notices of Intent to Revoke (NOIR), and filing date requirements for Form I-290B, Notice of Appeal or Motion.

USCIS will consider a response to requests and notices as timely filed if received within 60 calendar days after the due date set out in the notice or request, or in the case of Form I-290B, 60 calendar days from the date of the decision. The extension deadline applies to requests and notices with an issuance date between March 1 2020, and October 23, 2022 inclusive.

On March 20, 2022, USCIS announced that it would accept all benefit forms and documents with reproduced original signatures, including the Form I-129, Petition for Nonimmigrant Worker, for submissions dated March 21, 2020, and beyond. For forms that require an original “wet” signature, USCIS would accept electronically reproduced original signatures for the duration of the National Emergency. This means that a document may be scanned, faxed, photocopied, or similarly reproduced provided that the copy must be of an original document containing an original handwritten signature. On July 25, 2022, after evaluation, USCIS announced that the reproduced signature flexibility announced on March 20, 2020 will become a permanent policy on July 25, 2022.

What This Means

Applicants, petitioners and requestors will have additional time to respond to agency requests as long as the issuance date listed on the request, notice or decision is between March 1, 2020, and October 23, 2022 inclusive. In addition, individuals and entities will now be permanently able to submit benefit forms and documents with an electronically reproduced original signature.

Contact, Vialto Partners US team, Manish Daftari, manish.daftari@vialto.com

Vialto Partners Global Advisory immigration team continues to monitor and share global immigration updates. Further information on Vialto Partners can be found here: www.vialtopartners.com

VIALTO PARTNERS

Vialto Partners ("Vialto") refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

© 2022 Vialto Partners. All rights reserved.

RAJ MANN Global Advisory Lead, raj.x.mann@vialto.com

Vialto Partners Global Advisory immigration team continues to monitor and share global immigration updates

Global Mobility In Times Of Conflict And Crisis

The RES Forum’s research focus on global mobility in times of conflict and crisis, as a resource for our member companies and mobility practitioners, could not be more relevant or timely.

As the year 2019 drew to a close, few could have imagined the outbreak of a global pandemic resulting in untold human suffering over the ensuing 2 years, along with vast economic disruption in the form of lockdowns, travel restrictions, consumer shortages, and supply chain breakage. Even harder to conceive would be the onset of a large-scale conventional war in Europe in 2022, before the COVID-19 pandemic had fully run its course.

In theory, the prospect of a major war or pandemic were not entirely unknown risks, and planning for such contingencies has long commanded the attention of governments around the world. Outside the realm of infectious disease experts or military planners, though, leaders in private sector industries and MNCs might have regarded the possibility of either a pandemic, or a Russian invasion of Ukraine, as highly unlikely. To envision that both exigencies would unfold over the space of 24 months would undoubtedly have struck many as the contrived plot of a Hollywood blockbuster or science fiction.

The ongoing Ukraine crisis, which is the focus of the present report, required organisations with employees or operations in the impacted region to dispense with existing plans and improvise in the face of novel challenges. Global mobility professionals, in particular, continue to be called upon to navigate this terrain through the fog of factual and legal uncertainty, where rapid decisions are essential, without the luxury of possessing perfect knowledge. There’s a difference between conceptualising risk as a purely intellectual exercise - such as business continuity planning or including a force majeure clause in a contract to excuse performance in the event of an act of war - versus the emotional impact when such a crisis actually materialises. The anxiety experienced by such professionals, under time-pressure, and dealing with life-or-death issues in some cases, is not trivial.

These relentless demands include the need to stay current with the proliferation of government sanctions imposed against

Russian interests, sometimes ambiguous, and educate key stakeholders as to how the company’s ability to conduct business, or repatriate employees from either Ukraine or Russia, has been impacted. Beyond sanctions are the logistical hurdles, including the grounding of civilian air traffic in Ukraine, the unprecedented flow of refugees, the exclusion of even non-sanctioned Russian banks from the SWIFT system, and the lack of insurance that would normally attend mobility services, such as household goods shipping.

The present report reflects how companies identified their biggest challenges in response to the crisis, how companies continue to evaluate the inherent risk, the need for employers to remain cognisant of the psychological toll on those people forced to flee their homes and face an uncertain future abroad, the imperative of information sharing within an organisation, and a detailed discussion of risk planning in light of the lessons being aggregated. We conclude with a self-assessment tool, that allows companies to reflect upon their preparedness.

On that latter point, the appearance of two world-historic crises in rapid succession may portend a future where even more turbulence lies ahead. Indeed, the long-term consequences and costs of the COVID19 pandemic may not yet have been fully reckoned with or quantified. Similarly, the outcome of Russia’s military action is unknown, and the prospect of escalation on a frightening scale is not an eventuality that can be ruled out. Nor can it be ruled out that we will encounter in the near future other “black swan” events, a phrase popularised by Nassim Nicholas Taleb, the former Wall Street trader and statistician, to describe unlikely events, that come as a surprise, and have a significant impact on society or the world.

If that is indeed our future - and I fervently wish otherwise - then the practical goal for mobility professionals and others should no longer be the prediction of events which are unpredictable, but to cultivate a robust and agile mindset across your organisation when confronting a novel crisis. A written plan based on a prophesised event provides overall directionality, but an organisation cannot be locked into a plan, when a more supple approach is needed. To the earlier quote of Bear Bryant in the Introduction, I would add a quote attributed to Dwight D. Eisenhower: “Plans are useless; but planning is indispensable.” The

implication of this somewhat paradoxical statement is that the best drafted plan can prove of limited value when future events move from speculation to reality, while the act of planning remains enormously valuable in terms of clarifying options and goals and inculcating the muscle memory of flexible problem solving in the face of rapidly moving, and previously unanticipated, events.

- Rich Ballot, General Counsel at BGRS

Introduction

“In a crisis, don’t hide behind anything or anybody. They’re going to find you anyway”.

- Paul William “Bear” Bryant

Our opening quote is not from a CEO or a politician. They may not even be a household name today, especially not in Europe. But many consider Bear Bryant the greatest American college football coach of all time. Mainly due to his 25-year tenure, leading the University of Alabama’s football team to six national and 13 conference championships. However, Bryant was man who, despite all the success, also dealt with his fair share of crises. What we can take from him, whether we are into American football or not, is that a time of crises is not a time to hide.

Right out of the COVID-19 pandemic, with the RES Forum research agenda focused on understanding how best to manage the New Normal, Global Mobility (GM) is confronted with another crisis. On February 24th, 2022, Russian forces headed West to invade Ukraine - a move that soon became the largest conventional military attack since the end of World War II. A few months later, military operations in Ukraine were in full force. Despite resistance in Kyiv and other parts of the country, which led to a temporary push back of the Russians, the situation is far from resolved. In fact, at the time of writing, there is no end in sight.

It is inevitable that this war also had an impact on business. Besides ceasing operations in the actual battle regions, many (Western) Multinational Companies (MNCs) also reconsidered their presence in the home of the aggressor, Russia. Partially, this is down to governmental sanctions from the West. But also, because a presence in a country that is engaging in war, violating international law, and tolerating (if not ordering) war crimes and genocide, is not acceptable for many MNCs. Western fast-food chains and coffee shops

have closed their doors. Major automakers and suppliers have suspended production in Russia and ceased exporting spare parts and final products. Other companies followed suit by ceasing operations in Russia.

The consequences are many and varied. From forfeited profits and logistical challenges to broader questions, such as a lasting strategic (re-)positioning of the value chain. And, of course, it affects people management and GM.

In the first days and weeks of the war, GM departments were challenged with helping their employees in Ukraine find safety. While international assignees could be evacuated relatively easily, the situation for local employees was more challenging. For instance, male Ukrainians between 18 and 60 were not allowed to leave the country. With the advance of the Russian forces, escape routes were closed, and communication with those who remained became more difficult.

Shortly after, MNCs faced another challenging scenario in response to shutting down operations in Russia - how should they deal with assignees and local employees based there? Suspension, or even termination, of assignments was a strong possibility, similar to laying off local employees. However, these decisions had to be made quickly, under pressure and with a lot of uncertainty attached.

To cut a long story short, GM must prove, yet again, that effective risk and crisis management pays off. In the RES Forum research report on Risk Management, we concluded that high quality risk management addresses all areas of the SAFE framework. And we believe that this has been proven by the war in Ukraine. In particular, strategic planning and operational execution, as well as risk management for the organisation and its global workers, were identified as key issues.

In this report, we investigate how the GM industry was - and still is - affected when the war in Ukraine began. To collect data for our research, we interviewed experts in GM, covering every role from current and former expatriates, GM managers and consultants, and other service providers in the industry. Interviews were semistructured. We approached participants with a rough idea of the topic and then we let the conversation flow.

Reactions Of Western MNCs

We began by asking our respondents where they see their organisations’ biggest challenges in response to Russia’s invasion of Ukraine. It is clear that there is a major difference between organisations with staff in Ukraine and those without.

Not surprisingly, the biggest challenge facing those who (at the time) had employees in Ukraine, was to get them out of the country. For employees that wanted or

needed to stay, safety was paramount. This challenge was stretched to include family members, which proved to be particularly challenging for Ukrainian nationals and their extended families.

It was a different challenge for organisations that did not have staff in Ukraine. In fact, we can summarise their challenge in terms of Reputation Management and People Management.

The first deals with how the organisation positions itself in public statements and in calling for or organising support for Ukraine, for example. Tied to this is the impact of their responses to the crisis on their brand and their Employer Value Proposition.

People Management concerns the global workforce who are indirectly affected by events in Ukraine. For instance, respondents shared that, while they were not doing any business in Ukraine, they did have operations in Russia, as well as Russian employees among their operations network. For them, the biggest challenge was to treat those people as individuals and not make them subject to collective punishment simply due to their nationality.

This is a valid point on a societal level. After all, where Russia’s public opinion may be portrayed as supporting the war, one must not forget that this “public opinion” is shaped by a mixture of propaganda and misinformation, as well as a brutal policy of the Russian regime to (violently) oppress any kind of opposition. As such, it is essential for any organisation to make sure their workforce differentiates between and respects individuals, while not condoning Russia’s action and the country’s leadership.

Another notable observation was that, while the strategic decision to leave the Russian market was made very quickly in many organisations, the operational side was often managed poorly. In other words, it is now up to GM to get non-Russian employees out of the country. Whether Russian employees will be given an opportunity to work abroad or simply laid off is another problem. Should the decision be made to retain them in the organisation, GM departments will face yet more logistical challenges.

Risk Analysis

Having analysed the initial reactions of GM, we turn our attention to risk analysis. We asked

respondents what they consider to be the biggest risks connected to the conflict, and how these risks would affect GM in the short- and long-term. Without doubt, those organisations with a solid risk management plan, were much better placed to deal with this new conflict.

Based on our initial research, we further explored the risk analysis component in a RES Forum Strategic Advisory Board meeting, applying elements from the design thinking process. Specifically, we asked the senior GM executives to anonymously share a risk they believe is linked to the conflict. This resulted in a broad list, covering things like wider escalation, issues around IT security, and risks concerning employment relations. All responses were clustered and presented to the group with the goal of ranking them via an anonymous dot voting system.

Below, we report the aggregated results from highest to lowest ranked risk.

1. Evacuation risks (how to get Ukrainian men out of the country)

2. Wider escalation of the conflict

3. IT security

4. Reputational risks

5. Supply chain risks

6. Worker rights (particularly concerning Russians working abroad)

7. Salary payment issues (practicalities of international money transfers)

8. Decreased willingness of employees to take international assignments.

It’s clear that our initial quote has a lot of truth in it – hiding is not an option here. GM must not only tackle these risks, it should lead the organisation’s crisis management response.

For each of the risk areas, GM – together with the appropriate stakeholders – must define boundaries that outline the appropriate level of risk aversion. It is important that the organisation is clear about what types and levels of risk it, and the individuals affected, are willing to be exposed to. It might be that an organisation is willing to accept substantial monetary risks with its investments abroad, but that it would only accept minor risks in terms of compliance or threats to the lives or health of its employees.

Interlinked with the risk boundary step is an analysis to identify risks and to assess their likely impact. One approach is to look at the likelihood and possible impact of a potential threat.

IMPACT

Trivial Minor Moderate Major Extreme

Rare Low Low Low Medium Medium

Unlikely Low Low Medium Medium Medium

Moderate Low Medium Medium Medium

Likely High

Very

After identifying risks and their impact, organisations must decide their risk management approach. In some scenarios risk can be transferred to other entities, such as hedging through specific insurance.

In addition, research in the Afghan conflict showed that, before the Taliban took over, organisations tried to avoid some conflict/ terrorism risk by establishing no-go/ no-travel zones. At times, it is useful to go beyond the probability/impact assessment to understand the wider nature of dangers. For example, if the organisation can deal with issues as they arise, and if that action is not inferior/more costly than taking steps in advance, then firms often simply wait for the event to occur. However, pre-crisis planning is essential where dangers are deemed too large or too fundamental, or if the event necessitates pre-planned, rapid reactions.

In addition, research in the Afghan conflict showed that, before the Taliban took over, organisations tried to avoid some conflict/ terrorism risk by establishing no-go/ no-travel zones. At times, it is useful to go beyond the probability/impact assessment to understand the wider nature of dangers. For example, if the organisation can deal with issues as they arise, and if that action is not inferior/more costly than taking steps in advance, then firms often simply wait for the event to occur. However, pre-crisis planning is essential where dangers are deemed too large or too fundamental, or if the event necessitates pre-planned, rapid reactions.

We expand our discussion of GM risk management in the implications section of this report.

Human And Ethical Angles

Finally, we thoroughly investigated the human and ethical side. While it is necessary, from a professional perspective, to think about this conflict on a rather abstract level, we must not forget that for the individual humans involved, this is an enormous tragedy. We are talking about severe injuries and the death of friends and family, brutal violence - both physical and emotional - and many other possible life-changing events.

For international assignees in this situation, the world will never be the same again, and nobody can foresee the long-term implications of this conflict on their mental wellbeing. Therefore, when deriving our implications, we do so with ethical considerations in mind.

KEY IMPLICATIONS

Effective Communication

Armed conflicts and other crises often unfold in highly unpredictable ways. This means that business continuity protocols and conflict responses should be implemented before the outset of the crisis and executed in an agile and rapid way. One of the key success ingredients for GM in such situations is

intensive communication with assignees and local employees. This includes sharing information through a crisis response centre that can be contacted at any time. In addition, it is critical to have an effective employee tracking system, providing an overview of how developments might affect different people.

Effective Risk Management

High quality risk management addresses all areas of the SAFE framework. Strategic planning, operational execution, and risk management for the organisation and its global workers are key. This also applies in the current situation.

Strategy - A stronger strategic position is made possible through analysis of the organisation’s global work needs and competitive landscape. Proactive GM strategies that guide the organisation through crises and conflicts are crucial. In this regard, scenario planning and reliable data, as well as excellent analytics, are key to unearthing evidence-based GM insights and drawing the right conclusions.

Operations - In addition to the strategic component, operational excellence is fundamental to a high-quality professional in the GM arena. Having the right data at the right time and delivering rapid response capability through data automation is crucial to designing and delivering good GM approaches. In dynamic situations, as we find in times of crisis and conflict, this can be a true differentiator. In this regard, it is also essential to plan, implement, and monitor rapid responses to various crises, thereby identifying and managing operational risks. This will often go beyond data automation to include a crisis response committee, with true operational decision powers, and strong links to external advice.

Individuals - The war in Ukraine has, once again, reiterated the importance of employee wellbeing and Duty of Care. Excellent risk management benefits should focus on the wellbeing of all employees working abroad. This includes planning responses to potential dangers and threats faced by assignees, business travellers and local staff and their families. Conflicts and hostilities always demonstrate how employees, and their loved ones, are affected as human beings. In this regard, a flawless planning and execution with a human touch by the GM department can, in the eyes of international workers, be a true game changer.

PREPARING FOR EXTENSIVE RISKS

Pre-Crisis, Acute Crisis And Post-Crisis Planning

We conclude with a detailed perspective on risk preparation, based on the temporal structure of crises, i.e., before, during, and after. For this report, we consider armed conflict as

a sub-form of crisis. Conflict sones are areas where the dangers to organisations, employees, and their families are particularly great, as can be seen in the Ukraine war. Many organisations resort to instant evacuation at the emergence of a large-scale conflict, but some decide to continue operating in the hostile environment. It is clear that the stakes are very high and, therefore, that the conflict reaction and risk management of organisations needs to be both sophisticated and rapid. It helps to plan and implement acute crisis activities, and to continually review crisis planning to capture lessons for the next conflict.

Pre-Crisis - In a pre-crisis phase, companies must gather information about potential terrorist or hostile nation / entity threats. In our interview, one risk expert shared that his organisation undertakes extensive geopolitical and, as a result of the Ukraine war, geo-economic risk analysis using PESTEL (political, economic, social, technological, ecological and legal) approaches. He stressed the importance of real-time information to adjust swiftly to changing situations.

Given this, organisations should provide training to executives and their families, and form a crisis management team who are prepared for the possibility of a terrorist attack or (civil) war. There are various ways in which MNCs can increase the safety and security of expatriates in hostile environments. For instance, it is argued that MNCs can guide expatriates during terrorist or war related incidents with formal HR policies covering employee safety and security, and with clear evacuation plans, laid out before hostilities begin.

“We need to acknowledge that even low risks events can happen. Before COVID-19 and the Ukraine war we did not pay enough attention to this in business continuity planning but now we do. This is shown in how we are planning for developments with respect to Estonia and Lithuania”.

- Senior GM Leader

MNCs can offer training and briefings to increase expatriates’ awareness of potential risks, and provide them with guidance on how to react if hostilities were to start. MNCs should, therefore, gather intelligence on potential hazards and risks by collecting and analysing information on possible crisis triggers. Interestingly, research shows that for-profit organisations have a lower organisational preparedness than public organisations. There is much to be learnt from the United Nations and government approaches.

Acute Crisis - In the acute-crisis phase, it is vital to have a crisis management team on hand. This team would implement safety and security plans on site, then guide and support expatriates during incidents. Studies amongst GM professionals have shown that many MNCs work with governments, insurance and risk management firms, and

private security forces, when executing crisis reaction plans and provisions. These organisations would often take care of operational issues in terms of evacuations or other physical security concerns.

It is interesting to note that some companies treat their expatriates differently from local partners and family when it comes to terrorism. Fortunately, this is not the norm in terms of actual war and armed conflict. Sometimes, MNCs – especially those with a small presence in host countries – do not have an elaborate crisis reaction approach, which indicates that much of the host country risk is borne by assignees themselves. What the recent major crises have shown – be it the pandemic, armed conflicts due to insurgents, or the Ukraine war – is that proper Duty of Care for MNCs includes crisis planning and a crisis response team (or specialist organisation) which monitor the situation and take decisive action.

Post-Crisis - Finally, in the post-crisis phase, MNCs must support international assignees through any psychological trauma and their readjustment to the work and social environment. Where employees are expatriated to avoid conflict in their home country, it is essential to give them heightened levels of support.

Brief Self-Assessment

As one interviewee put it: “You have to keep in touch for a while. I expect many traumatised people, and we will have to have the bandwidth to deal with many staff through our counselling services or through other professional, external help”.

Unfortunately, current research indicates that organisations are often ineffective in their simultaneous response to the material and psychological needs of individuals in the aftermath of a terrorist event.

Another important step in the post-crisis phase is for MNCs to reflect on the effectiveness of their crisis management and, critically, evaluate where improvements can be made.

“You need to plan early and act swiftly, otherwise your window of opportunity closes. Fuel shortages and curfews get imposed quickly in armed conflicts, you may need vehicles at your disposal which risk being requisitioned, free movement might be restricted if you hesitate too long. Therefore, organisations need to allocate a budget to their contingency plans in advance”.

- Matthew Judge, Anvil

A team comprising a cross-section of the organisation – HR, GM, operational business leaders – that can explore the broad business continuity implications and can work through a range of crisis scenarios in the aftermath of a

conflict, is vital to improving future responses.

One other implication from broader research is that firms reduce the number of their foreign subsidiaries in response to terrorism and armed conflict.

“We have learnt from Covid and now from Ukraine that we need more in-depth scenario planning at a much more granular level…. In case the conflict spreads to Lithuania and Estonia, we already have looked at accounts, locations and countries. This would mean that we have information to relocate our large employee populations from the Baltic countries to Spain. We know specific locations in Spain, have looked at office spaces and temporary employee accommodation”.

- Senior GM Leader

We conclude with a brief selfassessment of your organistion’s crisis preparedness. In this, we have listed a broad range of insights and examples from operating in dangerous environments.

We recommend taking some time to complete this assessment, then to take a step back to interpret your score. If you score predominantly ‘very low’ or ‘low/medium’ then it is time to assess the crisis response and business continuity planning for your organisation, considering the ever-shifting geopolitical situation.

To What Extent... Very Low Score Score Very High Score

... are you taking risk – even if they are minute in terms of likelihood of occurrence – seriously and have developed a response approach?

... have you undertaken in-depth/ granular crisis and armed conflict scenario planning?

... have you found ways to avoid major conflict risks?

... does your organisation proactively flag health & security risks to international assignees and local staff?

... have you entered into a formal arrangement with insurances / travel companies or crisis response firms which will actively take care of emergencies?

... is the incident response plan regularly reviewed, tested and known to the GM function?

... does your organisation provide emergency evacuation from major disasters / terrorism / war and provide hostage negotiation services?

... does your Company provide emergency medical evacuation?

... are security briefings offered to local staff and globally mobile employees in higher risk locations?

... are mental health and wellbeing resources and services in place for affected staff in or having been evacuated from a conflict area?

RES FORUM

This report has been provided by the RES Forum, and was compiled in association with Harmony Relocation, BGRS, WBN – Worldwide Brokers Network and Anvil Group. It was written by Professor Michael F. Dickmann, Professor of International Human Resource Management, Cranfield University, School of Management United Kingdom and Dr. Benjamin Bader, Senior Lecturer (Associate Professor) in International Human Resource Management & Deputy Head of Leadership, Work and Organisation Subject Group, Newcastle University Business School, United Kingdom.

The RES Forum is an independent, highly engaged and international community of senior in-house International Human Resources professionals with more than 1850 members in over 45 countries. We are not influenced by external parties or third-party vendors. We share information to make our working lives easier and to assist in solving difficult work challenges.

We collaborate on shared projects and initiatives, and we learn together. Our agenda, set entirely by our membership, is delivered through a spectrum of services including data analytics, Global Mobility and International HR thought leadership and advanced learning and accreditation programmes in the area of Global Mobility management.

Contact: T: +44 (0)20 7127 8075 E: office@theresforum.com www.theresforum.com

The Evolution Of Remote Work

As the COVID-19 pandemic rapidly gained ground around the world in late 2019 and early 2020, few could have foreseen just how much would change in terms of personal and professional circumstances. The pandemic upended the workplace, prompting companies to rethink their policies and operations to keep employees safe and healthy, while ensuring successful business continuity. The experience of operating during the pandemic, particularly with regard to working remotely, has influenced organisations’ responses to much discussed “Great Resignation” and resulting talent shortage. In order to retain and acquire scarce talent, organisations have embraced the possibility of remote work in a number of ways, from the widespread adoption of flexible, yet office and location tied, working patterns, to the widespread rollout of short-term, voluntary employee mobility programmes.

For the purposes of this report, full-time office, hybrid and full-time remote work were defined as follows:

• Full-Time Office The employee spends all of their time in the office or on site, with rare exceptions

• Hybrid The employee is tied to and located near a physical office, and spends part of their time working remotely or from home, and part of their time on site or in office. This also includes workers who would have been eligible for partial work from home arrangements

• Full-Time Remote The employee is not tied to a physical office, and spends all of their time working remotely or from home.

To illuminate how the confluence of remote work and mobility continues to evolve, Worldwide ERC has built upon its groundbreaking 2021 research, in “Remote Work: The Road To The Future,” with a new, in depth study that brings together the voices of over 500 CHROs and other senior HR leaders, as well nearly 100 corporate mobility leaders. Overall, we find that:

• Remote work is driving employee mobility

• Global Mobility’s role is more critical than ever

• Remote work is hybrid work

• Mobility is now for the entire workforce

• Core HR policies, including compensation and benefits, are staying the same. Within the following pages, we will explore each of these findings in more depth, examining the drivers and practical implications of this major shift in the human resources and mobility landscapes.

Remote Work Is Driving Employee Mobility

A little reported on, and underappreciated phenomenon, is the extent to which the experience of widespread remote work operations have actually increased organisations’ willingness to utilise travel and mobility for business purposes. Early in the pandemic period, many were predicting that the remote work experience and overnight adoption of teleconferencing technologies would permanently reduce travel and mobility as a business tool. While this seems intuitive as a cost-saving measure, most leaders have realised that teleconferencing is no substitute for in person interaction, whether that is for internal collaboration or finalising relationships with an important client. The logic then seems clear: meetings that are critical for the success of the organisation need to be in person, but day to day communications within the organisation can happen remotely. The typical employee can spend more time on the road, meeting with colleagues and clients while keeping in close contact with their leadership and wider organisations. And in fact, more than half of senior HR leaders (61%) are more likely to send employees to new locations, either for business travel or longer-term relocations and assignments. A preponderance of corporate mobility leaders (81%) reported that they were more likely, or about as likely, to utilise travel and mobility.

Global Mobility’s Role Is More Critical Than Ever Execution of varying policies - for full-time remote work, hybrid work, and full-time on-site work - incorporates the efforts of several HR specialist departments. Both senior HR leaders and corporate mobility leaders reported cross functional teams having a hand in the successful creation, direction and administration of remote work policies, with global mobility, tax, payroll, finance, total rewards, compensation

and benefits, immigration, and general human resources all contributing to the conversation. Study results indicated:

• For creation of policies, mobility and general HR play the greatest roles

• For directing policies, responsibility is mainly split between: mobility, tax, total rewards, compensation & benefits, payroll and general HR

• For administrative efforts, senior HR leaders see all human resources functions taking a role, while mobility leaders see mobility, payroll and general HR administering policies.

Function reported as being involved with creation, direction or administration of remote work policies:

Remote Work Is Hybrid Work

When COVID-19 appeared on the scene, remote work transitioned from an occasional option for a handful of individual employees to the new normal for many organisations. In recent months, however, the situation has once again evolved, with remote work becoming less common than employees working in a hybrid capacity. Senior HR leaders report a small minority of their workforce will be permanently, full-time remote in the future, with the average respondent saying 11% of their workforce will be remote. Most surprisingly, the median respondent said that 0% of their workforce will be remote, with slightly over half of respondents indicating they will have no fulltime remote employees. The vast majority of the workforce will be tied to a location and office, either as a full-time office or hybrid worker. This is a notable lowering of remote work expectations from just a year ago, when Worldwide ERC research of a similar audience (“Remote Work: The Road To The Future”) showed that senior HR leaders believed 96% of their workforce would be somewhat remote, down to ~5054% today.

With hybrid options becoming popular, organisations have had to devise flexible schedules to meet employee and employer needs. For those employees who work on a hybrid scheme, the most common option was two days in the office and three in a remote worksite.

Traditionally, organisations implemented “work-at-home” policies when specific individuals indicated a need to work from home due to personal or family circumstances. The pandemic offered employers an abundant opportunity to rise to the unexpected challenge of increased

remote work to demonstrate agility, innovation, and quick-thinking. To support the reality of a distributed workforce, human resources had to develop or rewrite policies, programmes, and approaches to ensure employee safety and tax compliance, determine appropriate individuals for remote work, and potentially adjust pay and benefits. While some of these considerations continue to exist, the move away from remote work requires another review, as indicated by participant responses.

The majority of senior HR leaders confirmed that they made a shift in corporate talent acquisition policies and practices (82%), as did 74% of corporate mobility leaders. Both senior HR leaders and corporate mobility leaders were consistent in agreeing on the priority of reasons for implementing any policy and practices changes. In order of priority, the rationale was:

1. Improve talent retention

2. Improve talent acquisition

3. Provide employee flexibility

4. Reward high-performing talent

5. Create a more globally aware and connected organisation.

The changes involved consideration of diverse hiring practices - most often, acquiring candidates from new locations where the company already has employees on site.

Along with alterations in talent acquisition approaches, leadership in most companies also reconsidered how they retain existing talent. As above, the majority of senior HR leaders replied affirmatively (78%), as well as 68% of corporate mobility leaders. The most popular change in methodology for both groups was to allow employees to have more flexibility and control over their individual work schedules.

When determining remote work decisions, whether pure remote or a hybrid option, company culture is a driving force. As one participant explained: “Our company stance and culture is live where you work and 100% in the office”. Beyond that, leadership evaluates a number of factors, such as the importance of the employee’s specific job responsibility and the function itself, the level of required teamwork, client interaction, training, and the impact on the employee’s current and future development. Corporate mobility leaders offered a number of additional perspectives as to how they made individual decisions, such as proximity to sales territory and the information handled by the employee (for example, if security is needed, the employee is required to mainly work in the office).

As cited above, the numerous factors that combine to determine optimal use of work scenarios are complex, generally referring either to the individual, the job, or the location. Respondents reported that the employee’s job function is often the primary determinant, with tenure and location the least significant.

“The great resignation has added another layer to the war of talents; therefore, we must be mindful about how to address the needs from employees wanting to work remotely from home to retain and attract talent. In the last two years, remote work has proven that it is not a bad work arrangement post-Covid-19 pandemic, so long as we have agreement for hybrid workers to meet and greet to discuss work matters when it is absolutely necessary”.

Mobility Is Now For The Entire Workforce

A strong majority of senior HR leaders reported a further major change in policy, in that they created, or were considering creating, major new mobility programmes. Such programmes would allow temporary voluntary mobilitywhereby employees could request a move to another location for short-term professional and personal experience.

A full 81% of senior HR leaders have created or are considering creating such programmes, with 39% having created them and 42% considering them. Corporate mobility leaders stated similar responses: 37% have implemented these programmes, with 33% thinking about their options. Most respondents - senior HR leaders (83%) and corporate mobility leaders (70%) - would typically consider the application if an office or permanent establishment was present in the requested location. Although a step down from the commonly discussed “work from anywhere” policies of a year ago, this still implies a major embrace of employee mobility.

These programmes commonly allow the employee to move to a new location where the organisation has an office or other presence for between 30 and 45 days. The most exciting aspect is that by and large, these programmes are open to the entire workforce that can perform their job from a different location, encompassing most all professional positions.

Anecdotally, Worldwide ERC has heard from organisations that have received thousands of employee applications for such programmes since their introduction. With up to 81% of organisations creating or considering creating such programmes, this suggests a massive increase in the number of mobile employees across the world. While these programmes are often bare bones in terms of traditional relocation benefits, there will still be risk and compliance factors, as well as administrative costs borne by the corporate mobility function.

Fundamentals Of Remote Work

The complexities of tax compliance for a distributed workforce creates specific challenges. To meet those challenges, expertise, whether in-house or external, is

a necessity for grasping the ins and outs of the tax implications for both the employer and employee. Further, a temporarily remote employee can cause tax reporting and withholding complications in various locations, some of which require non-resident employers to register and withhold tax for an individual working in that area. And finally, a review of the tax presence or nexus of a company is necessary to ensure consistent and comprehensive tax compliance.

Common business activities that can trigger international Permanent Establishment or US Nexus for taxation:

• A fixed place of business, address, bank account or other physical presence

• Activity by employees in country that directly relates to revenue creation

• A sufficient time frame to trigger PE under local law or a tax treaty

• Actual control and direction of the employees’ activity by the parent company in a location.

Some organisations allow employees to work in locations in which they do not have permanent establishment. In other words, they allow employees to work in places where the organisation itself is not established for tax and legal purposes. Corporate mobility leaders, well versed in cross jurisdiction compliance issues, are much less likely to report allowing current employees to work where the organisation does not have permanent establishment (5%) than their senior HR leaders (56%). It is likely that corporate mobility leaders are more familiar with the intricacies and risks of such a move, while senior HR leaders are more aware of the potential benefits in helping their business partners with such flexibility.

Legally administering employment when there is no permanent establishment creates its own set of difficulties. Many companies, therefore, seek ways to address the situation, including:

• A professional employer organisation provides HR solutions to small and midsize companies by directly employing staff and then leasing them back to the client organisation

• A new legal identity extends the entity’s type of business to a new location: corporation, partnership, sole proprietorship, and so on

• A global employment organisation centralises employment contracts in one jurisdiction and corporate owned entity

• An employer of record is a third-party legal entity that acts as an intermediary in an existing employer-employee relationship. The most common method for senior HR is to establish professional employer organisations, while corporate mobility leaders prefer using an employer of record.

When companies do implement any of these alternative entities, they use the

resources of either in-house staff, external experts, or a combination of the two resources to address the complexities inherent in these options. Senior HR leaders generally prefer the use of in-house resources when it comes to establishing a new legal entity. Corporate mobility leaders often request assistance from both in-house resources and external experts as they may be more connected to partners in this area owing to their broader mobility responsibilities. Managing and overseeing the employees in such locations - where no permanent establishment exists and companies have implemented alternative optionsrequires specific tools or technology. Most respondents utilise an internal system: Senior HR leaders (79%) vs. corporate mobility leaders (41%). Fewer respondents implement third-party tool/technology: Senior HR leaders (44%) vs. corporate mobility leaders (26%).

Core Human Resources Policies Continue

Earlier in the pandemic period, many organisations undertook substantial reviews of their total rewards frameworks and approaches, with a focus on: salary, variable compensation, and health and wellness benefits. If large portions of the workforce were going to be permanently remote and location no longer mattered, then a fundamental rethink of human resources policies was in order. With the emerging consensus that the vast majority of the workforce will continue to be location based, either full-time in office or hybrid, we observe that organisations are returning to previous practice. More specifically, both senior HR leaders and corporate mobility leaders reported core human resources policies, such as compensation and benefits approaches are not radically changing.

Compensation

The basis for pay structures can be global/ HQ, national, regional, or local - with participants reporting a national basis as the most common. When an employer decides to implement a pay structure with a different basis, the majority do so - 51% for senior HR leaders and 79% for corporate mobility leaders - as a result of having employees working in different countries and regions. Only one-fifth use the employee segment or level as the rationale.

A majority of senior HR leaders (57%) are considering changes to their compensation structure to meet the unique challenges and opportunities afforded by a remote and hybrid workforce, the same trend is evident for only 25% of corporate mobility leaders. That said, the changes considered fall well within standard compensation frameworks and methods. We speculate that the

disparity between senior HR leaders and corporate mobility leaders is that workforce wide compensation changes, particularly changes in strategy and approach, come at the highest levels of leadership, while corporate mobility more commonly has a hand in compensation and benefits for the smaller, mobile, portion of the workforce.

With regards to remote employees’ compensation, organisations are considering several options - with most participants, as expected, tying remote pay structures to the current pay model in use for other employees. A minority of organisations are making more radical changes, such as more forcefully embracing location-based pay with the creation of new compensation bands.

Compensation determinants:

• Cost of labour - the "going rate" for a position based on experience, responsibilities and skills

• Cost of living the rate for a position that takes into consideration local costs of goods and services, housing and taxation.

When determining compensation levels and changes, human resources professionals generally turn towards two pieces of data: the cost of labour and the cost of living. Both pieces of data are commonly combined in a compensation determination, as it is relevant to know both what a job typically pays in a market, as well as if that “going rate” will actually cover the living costs that an employee will face. Without careful consideration of each metric, organisations can generate increased employee turnover and acquisition costs through underpaying, or excessive costs through overpayment. Cost of labour continues to be the most commonly used piece of data, with 64-80% of senior HR leaders reporting using it to determine employees compensation levels for different workers. That said, cost of living is a close second, with 48-53% of senior HR leaders utilising such data.

Benefits

Beyond compensation, benefits play a significant role in total rewards, representing a key part of what makes the employee experience a positive one. With the increase in remote and hybrid workers, companies had to consider adapting benefits packages to fit a new landscape of employee needs. Changing benefits based on the employee’s locations is not, however, common: only 52% of senior HR leaders replied affirmatively, that they had changed benefits, compared to a mere 5% of corporate mobility leaders. The most common benefit that was delivered differently was professional development, as reported by 71% of senior HR leaders. For corporate mobility leaders, 67% made changes to wellness benefits and the same percentage did so for benefits related to an employee’s home office setup/equipment.

Methodology And Demographics

Worldwide ERC® launched a survey to better understand and gain insight into how senior HR leaders and corporate mobility leaders have handled remote and hybrid work practices and policies. The following data comes from a global panel of 516 senior HR leaders (CHROs, directors, and managers) and 92 corporate mobility leaders. We strove to represent the diverse, global group of professionals who have a direct role in the implementation and oversight of their organisations’ work programmes.

While senior HR leaders were distributed roughly evenly over all regions - North America, Latin America, Europe, and Asia Pacific - the majority of corporate mobility leaders represented North America.

Along with their geographic diversity, many serve medium to large-sized enterprises, bringing in as much revenue as $1 billion. The majority of senior HR leaders work for companies that have a workforce of 1,000-5,000 employees. Most corporate mobility leaders represent companies with a workforce greater than 10,000 employees.

Not only do respondents hail from diverse regions across the globe and serve successful organisations, they represent a variety of industries.

The top three industries represented by senior HR leaders were:

• Professional Services

• Technology

• Government Enterprises. The highest percentage represented by corporate mobility leaders was technology.

WORLDWIDE ERC®

Worldwide ERC is a relocation services industry trade group. Its membership of 12,000 relocation professionals, or global mobility specialists, are concerned with current issues and management practices for the movement of employees (by their employers) within the US and between all other countries.

www.worldwideerc.org

Not only do respondents hail from diverse regions across the globe and serve successful organisations, they represent a variety of industries

The Impact Of COVID-19 On Global Mobility

When the coronavirus pandemic hit, it impacted every industry, across the globe, but no sector felt the impact more greatly than human resources. Those working in international HR were left scrambling to manage talent across the globe and secure the safety of employees, before moving swiftly from crisis mode into planning for the long-term.

Now the policies and practices workforce management professionals have put in place have helped advance the industry – and all industries – in ways none of us could foresee just a few short years ago. The global mobility function has gained new status in multinational organisations and now we are ‘living with COVID’ the spotlight is on the sector, to see how these new policies and practices hold up and where ways of working will go from here.

So, Just How Did COVID-19 Shake Things Up?

The Employee Mobility Institute (TEMI) partnered with the highly experienced research teams from the University of Technology, Sydney and the University of Sydney late last year, on a research project to determine the impact of COVID-19 on global mobility within multinational organisations.

The research showed COVID-19 exposed patterns and magnified flaws in expatriate management. Policies and practices were rigid, and when it came to remote work, for the most part, not yet fully formed, and this made it difficult to respond quickly to fast-paced change in ways of working. Now we are ‘living with COVID’, a key feature of new policies and practices is controlled flexibility.

The research also highlighted that pre-pandemic there was a clear lack of customisation in safety and security protocols and not enough support for preventing and managing mental health issues, which were exacerbated during the pandemic. We are now seeing much more consideration of locational risks, cybersecurity and individuals’ personal situations, as well as greater support around employee wellbeing, grounded in the context of compliance.

While the number of expatriate assignments typically declined in the early stages of the pandemic, case numbers remained constant and the mobility practitioner’s role expanded and became more complex. With additional demands, workloads increased.

Requirements and expectations for remote work continue to change, and how practitioners attract and retain talent is inherently different in the ‘living with COVID’ landscape. Flexible work and virtual assignments are in high demand and employee wellbeing initiatives are increasingly important. Priorities and metrics remain in a state of flux as practitioners unfreeze, change and freeze again, and new technologies and equitable frameworks are playing critical roles in good workforce management. Having factors in place for determining suitability for remote work, and structures in place for effectively managing remote work so that it can function in a sustainable way, are also necessities.

In a huge positive, by forging new ways of working, new opportunities have arisen, including new 'niche' global mobility career opportunities. A ‘Chief Remote Work Officer’ role is emerging, alongside roles that focus on education and communication. These appear to aim to ensure there is common understanding across the organisation regarding the role of the global mobility department and the work it carries out, eradicating jargon and communicating clearly regarding policies and practices in a way all employees can understand. These roles might be more strategic than operational, recognise and act on issues of compliance to maintain the legitimacy and credibility of the department, and identify and communicate regarding potential personal and organisational risks involved in new ways of working.

The research by the University of Technology, Sydney and the University of Sydney, led by Dr Anthony Fee, Dr Mihajla Gavin and Hon Professor Susan McGrath-Champ, offered deep analysis that discerned both the work of global mobility and the broader ‘future of work’, providing unique lines of sight into the phenomenon of global work. The findings were revealed at a TEMI event last month, which can be viewed on TEMI’s YouTube channel.

ABOUT THE EMPLOYEE MOBILITY INSTITUTE

The Employee Mobility Institute (TEMI) is the Australasian talent mobility industry’s professional development body. TEMI delivers training, networking and educational resources for global workforce management professionals.

TEMI also produces the Australasian Mobile Workforce Awards program. The program sees involvement from local and multinational organisations from across Australasia each year.

DEBORAH DE CERFF

Deborah de Cerff is the Founder of The Employee Mobility Institute (TEMI). Her commitment and passion for supporting and strengthening individual and business mobile workforce capability has helped to create a connected, engaged and informed community of more than 2000 global talent mobility practitioners. Deborah has been instrumental in shaping the talent mobility industry in Australia throughout her career, introducing outsourced relocation management services and global mobility advisory services to the Australian business sector, providing strategic and operational global mobility support to major corporations for more than 30 years, launching the Global Mobility Professional (GMP1)® industry accreditation program for talent mobility professionals and the TEMI Australasian Mobile Workforce Awards Programme.

INTERNATIONAL HR CONSULTANTS

DELOITTE LLP

Stonecutter Court, 1 Stonecutter Street, London, EC4A 4TR

Contact: Danny Taggart Telephone: +44 (0) 20 7007 1832

Fax: +44 (0) 20 7007 1060

E-mail: dtaggart@deloitte.co.uk Website: www.deloitte.co.uk

Whether you are creating your first international mobility programme for employees or addressing fundamental changes to an existing programme, our International Human Resources team can help. Deloitte provides consulting support that has an appreciation for each company’s size, background and unique cultural environment, aligning your international programme goals with corporate business strategies. Our consultants have developed deep expertise in many fields based on first hand experience with many of the world’s leading organisations: international assignment policy and process design, benchmarking, service delivery modelling, improving vendor management and helping our clients become more compliant and their administration more cost-effective.

RELOCATION ASSOCIATIONS

ASSOCIATION OF RELOCATION

PROFESSIONALS (ARP)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND

Contact: Tad Zurlinden

Telephone: +44 (0)1379 651 671

Fax: +44 (0)1379 641 940

Email: enquiries@arp-relocation.com Website: www.arp-relocation.com

The ARP is the professional association for the relocation industry in the UK. The ARP’s activities include seminars throughout the year, an annual conference, the publication of an annual Directory of Members and a website, which is updated regularly.

THE EUROPEAN RELOCATION ASSOCIATION (EuRA)

9&10 Diss Business Centre, Dark Lane, Diss, Norfolk, IP21 4ND

Telephone +44 (0)1379 651 671

Fax: +44(0)1379 641 940

E-mail: enquiries@eura-relocation.com Website: www.eura-relocation.com

EuRA is an industry body for Relocation Professionals in both Europe and Worldwide. EuRa have launched The EuRA Quality Seal, the world’s first accreditation programme for relocation providers. This pioneering initiative provides a straight forward, cost effective audit to reflect your company’s excellence in providing relocation services.

SCHOOLS

ACS INTERNATIONAL SCHOOLS

ACS International School Cobham Heywood, Portsmouth Road, Cobham, Surrey, KT11 1BL, England

ACS International School Egham London Road (A30) Egham, Surrey, TW20 0HS, England

ACS International School Hillingdon Hillingdon Court, 108 Vine Lane Hillingdon, Middlesex UB10 0BE, England

ACS International School Doha Al Oyoun Street, Al Gharrafa PO Box 200568, Doha, Qatar

Telephone: 01932 869 744

Email: cobhamadmissions@acs-schools.com Website: www.acs-schools.com

Contact: Dean of Admissions

ACS International Schools were founded in 1967 to serve international and local communities. The schools are non-sectarian and co-educational (day and boarding), enrolling students aged 2 to 18 years. The UK based schools have over 30 years’ experience of teaching the International Baccalaureate, and ACS Doha offers an international and American curriculum.

TASIS THE AMERICAN SCHOOL IN ENGLAND

Coldharbour Lane, Thorpe, Surrey TW20 8TE

Contact: Sarah Travis Telephone: 01932 582316

Email: ukadmissions@tasisengland.org Website www.tasisengland.org

TASIS England's diverse student body includes over 50 nationalities and many in the school community have experienced the challenges of relocation. Along with well-established welcoming programs, families receive ongoing support as they cope with the practical and emotional aspects of their transition to life in the UK. Taught in small classes, students (ages 3–18) benefit from a balance of academics, arts, athletics, activities, and service leadership. Excellent exam results and oneto-one college counselling enable 97% of TASIS graduates to gain acceptance to their first- or second-choice university in the UK, the US, and worldwide.

SERVICED APARTMENTS

THE ASSOCIATION OF SERVICED APARTMENT PROVIDERS (ASAP)

Suite 3, The Business Centre, Innsworth Tech Park, Innsworth Lane, Gloucestershire GL3 1DL

Contact: ASAP Office Telephone: +44 (0)1452 730452

Email: admin@theasap.org.uk Website: www.theasap.org.uk Twitter: @ASAPThe LinkedIn: The Association of Serviced Apartment Providers

ASAP is in the industry association representing, promoting and improving the serviced apartment sector. Our 124 members including serviced apartment operators and agents represent in excess of 25,000 serviced apartments in the UK, Europe, USA and Canada. When booking your serviced apartment, look for our Quality Accreditation kitemark which confirms the operator is fully compliant with all the core legal, health and safety practices and means you can book with confidence.

TAXATION

BDO LLP 55 Baker Street, London, W1U 7EU

Contact: Andrew Bailey Telephone: 020 7893 2946

Fax: 020 7893 2418

E-mail: andrew.bailey@bdo.co.uk Website: www.bdo.co.uk

BDO LLP is the award-winning, UK Member Firm of BDO International, the world’s fifth largest accountancy network with more than 1500 offices in 162 countries.

We have a partner-led approach, which delivers the highest quality of service by using short, functional chains of communication to aid decision-making. Clients benefit from our fresh thinking, constructive challenge and practical understanding of the issues they face. Developing strong, personal relationships with our clients is at the forefront of our service approach.

Tax advice is just one of our award-winning services and our expatriate team give practical and direct advice, delivering solutions which suit your needs.

GLOBAL TAX NETWORK LTD

Salisbury House, 29 Finsbury Circus, London, EC2M 5QQ

Contact: Richard Watts-Joyce CTA, ATT Telephone: +44(0) 207 100 2126

Email: rwattsjoyce@gtn.uk

Website: www.gtn.uk

Twitter: @GTN_Tax

LinkedIn: www.linkedin.com/company/globaltax-network

Global Tax Network Ltd is the UK member of Global Tax Network (GTN), an international affiliation of professional firms in over 100 countries specialising in global mobility tax consulting. We provide assistance to employers with the tax administration of international assignment programs and private client services to high net worth individuals, non-domiciles, professional sportspersons and entertainers. Our consultants include members of the Association of Taxation Technicians, Chartered Institute of Taxation, and US Enrolled Agents.