Investing in international talent mobility can deliver organisational objectives and drive competitive advantage. However, it also presents global mobility compliance risks, requiring ongoing management and mitigation.
Non-compliance with employer duties can result in wasted expenditure, loss of revenue, damage to reputation, decline in employee morale and significant financial penalties.
The potential benefits of global mobility can only be derived where the programme is efficient, cost-effective and compliant across immigration, regulation and tax in both the home location of the employee, and any overseas jurisdictions where the employee has travelled to for work.
Global mobility compliance risks
Integral to achieving an effective global mobility compliance strategy is a real understanding of the regulatory framework within the industry sectors and geographical areas in which your organisation and overseas assignees will be operating.
Immigration compliance
While organisations continue to utilise traditional relocations and long-term assignments, there are an increasing number of short-term assignments and business travellers in response to a demand for more flexibility and agility in mobility programmes.
This has been driven by a need for perceived cost-containment in the company, and employee reluctance to accept longer-term arrangements for family reasons such as a reluctant spouse or to avoid upheaval for children.
Business travellers in particular raise compliance risks as they typically travel under the radar of any mobility policy or guidelines, despite being subject to the same immigration and regulatory obligations as long-term assignees.
Governments across the globe are pursuing increasingly protectionist immigration policies, increasing enforcement action against non-compliance and improving cooperation and data sharing between institutions and jurisdictions. This is impacting the availability of work visas internationally and causing issues and delays when business travellers attempt to gain entry at the border but are faced with immigration officials with extensive discretionary powers to refuse entry. Local rules are also subject to frequent change, which travellers have to keep pace with.
Employee expectations may also need to be managed in relation to immigration issues and timescales for delivery.
Employers should also be clear and unequivocal about the employee’s responsibilities in any visa application.
Clear and accurate advice should be given on the immigration options available and the requirements on the employee to provide information, evidence or to attend a visa appointment.
It is crucial that both the employer and employees understand the local regulatory environment from an immigration point of view, for example, what permissions are required from the relevant authorities for travel to and leave to remain in the country in question, as well as to undertake work there.
Effective immigration compliance goes beyond visa processing. Taking a strategic and proactive approach can help to identify future changes in target countries and regions, to help reduce overall immigration risk exposure and facilitate unimpeded business travel and streamlined operations.
Tax compliance
As well as meeting the immigration requirements, the organisation will also have to comply with the relevant national and regional tax regulations, taking account of both the direct implications for both outbound and inbound assignees, and for your business.
You will need to assess whether you are adhering to both individual and corporate tax rules, as well as compensation and payroll reporting requirements and meeting the full tax liabilities so as to minimise any tax authority challenges and the risk of serious penalty.
In particular, many countries have non-resident tax filing requirements for expatriates who may not be paid in the current country in which they are working but are still employed there, for example, in the USA.
Moreover, the actual presence of an overseas assignee in a foreign jurisdiction can create an unintended taxable presence. Employees may become accidental expats because they have involuntarily triggered legal or tax rules that re-classify them as resident in the host country.
The challenge is for corporate tax departments to not only need to understand the nature and structure of international work assignments, from the activities that will be carried out to the long-term plan for operations in that location, but also how each part of that assignment and overall plan will legally impact on the individual assignee and the organisation.
Managing global mobility compliance
The global mobility programme should be underpinned by guidelines for different types of assignment.
Employee engagement will be critical to promoting best practice in mobility compliance. Identifying frequent travellers and supporting through training and signposting them to internal policies and procedures can help to address specific compliance risks within specific regions.
Global mobility policies and processes should be reviewed on a regular basis to identify areas of risk and improvement for full compliance.
Technology adoption has become critical in global mobility compliance and reducing and eliminating risks, offering employee tracking, real time data, integration with other organisational systems and reporting functionality to support in meeting compliance needs efficiently and effectively. For example, systems can be used to monitor employee travel and expenses, so that potential tax and visa issues can be automatically flagged for attention.
Risk management also demands a sustained commitment to keeping up to date with changes to the legal and regulatory framework in regions your employees operate.
Regulations are constantly changing and becoming increasingly complex. As such, it is important from a global mobility compliance perspective to understand the changes occurring within each country, and to assess the implications for assignees and your mobility processes and policies.
Key questions could include:
- What regulatory changes are pending?
- Are these regulatory changes going to impact the policy, processes and structure of your business?
- Is the local regulatory change in one country going to block the global policy, processes and structure of your business?
- What are the risks involved for your business?
- What are the risks involved for individual overseas assignees?
- How will this affect your clients?
- Who needs to be communicated to?
- Which outsourced third parties need to be advised?
- What are the likely costs involved in adapting to any changes?
- What are the likely benefits involved in making these changes?
Implications of non-compliance
Where an employee, and their family, or attempt to enter a country without the required permission or paperwork, they could face refusal at port of entry or deportation. For more serious breaches there might be fines for the employee and the employer, or and even imprisonment.
Where tax is due on income under domestic legislation and this income is either not declared, or not paid in a timely manner, there may be potential tax penalties. It is likely that the “missing” taxes may have to be paid with interest.
Need assistance?
For many employers, the HR function is either overstretched or without the internal expertise to drive mobility compliance effectively.
DavidsonMorris supports employers will all aspects of global mobility, including guidance on mobility compliance, combining strategic insight and industry benchmarking with technology and implementation expertise.
Mobility Compliance FAQs
What is global mobility compliance?
Global mobility compliance refers to the adherence to laws and regulations governing the movement of employees across international borders. This includes compliance with tax laws, immigration regulations, employment contracts, and data protection standards.
Why is global mobility compliance important for UK employers?
For UK employers, global mobility compliance is crucial to avoid legal penalties, protect their business reputation, and ensure the safety and well-being of their employees abroad. Non-compliance can lead to fines, legal disputes, and even bans on employing foreign workers.
What are the key areas of global mobility compliance?
The key areas include immigration and visa requirements, tax obligations, social security contributions, employment law compliance, and data protection. Employers must also consider local labour laws and cultural differences when managing employees abroad.
How can UK employers ensure they are compliant with global mobility regulations?
UK employers can ensure compliance by staying informed of international regulations, conducting regular audits, providing training for HR staff, and using specialised compliance management software. Working with legal and tax advisors who specialise in global mobility is also recommended.
What are the common challenges in global mobility compliance?
Common challenges include navigating complex visa and immigration laws, managing tax liabilities across multiple jurisdictions, and ensuring consistent employment practices in different countries. Data protection, especially when transferring personal data across borders, is another significant challenge.
How does Brexit impact global mobility compliance for UK employers?
Brexit has introduced additional complexities in global mobility compliance, particularly regarding immigration and visa requirements for UK employees working in EU countries. UK employers must now navigate new regulations and bilateral agreements when managing cross-border employment within Europe.
Are there specific tools that can help with global mobility compliance?
Yes, there are several tools available, including global mobility management software, tax calculators, and immigration management platforms. These tools can help streamline processes, track compliance, and manage the complexities of international employee mobility.
What should UK employers do if they are unsure about their compliance status?
If unsure about their compliance status, UK employers should seek advice from legal experts in global mobility or consult with specialists in tax and immigration law. Conducting a compliance audit can also help identify any gaps and mitigate potential risks.
Glossary
| Term | Definition |
|---|---|
| Global Mobility | The movement of employees across international borders for work purposes, either temporarily or permanently. |
| Compliance | Adherence to laws, regulations, and policies, particularly those governing employee mobility and business practices. |
| Immigration Law | The set of legal requirements governing the entry, stay, and work of foreign nationals in a country. |
| Taxation | The process of imposing financial charges or levies on an individual or entity by a government. |
| Social Security Contributions | Payments made to a social insurance system that provides benefits for retirees, the unemployed, or those unable to work. |
| Data Protection | Legal practices and policies designed to safeguard personal information from misuse, especially during cross-border data transfers. |
| Visa Requirements | Legal stipulations that determine the conditions under which a person can enter, stay, and work in a foreign country. |
| Employment Contracts | Legal agreements between an employer and employee outlining the terms of employment, including duties, salary, and duration. |
| Labour Law | A body of law concerning the rights and responsibilities of workers, employers, and labour organisations. |
| Brexit | The withdrawal of the United Kingdom from the European Union, impacting laws, regulations, and agreements related to global mobility. |
| Cross-Border Employment | Employment arrangements where employees work in a different country from where their employer is based. |
| Compliance Management Software | Tools designed to help businesses manage and ensure compliance with legal regulations across multiple jurisdictions. |
| Audit | A systematic review or assessment of a company’s compliance with laws and regulations, often conducted periodically. |
| Permanent Establishment (PE) | A fixed place of business in another country that may trigger tax obligations under international tax treaties. |
| Double Taxation | The imposition of tax by two or more countries on the same income, usually mitigated by tax treaties. |
| Secondment | The temporary transfer of an employee to another role or location, often in a different country, while retaining their original employment terms. |
| Bilateral Agreement | An agreement between two countries, often related to trade, taxation, or mobility, that affects global mobility compliance. |
| Expatriate (Expat) | An individual who lives and works outside their native country, often under a temporary work arrangement. |
| Host Country | The country where an expatriate or mobile employee is working temporarily or permanently. |
| Home Country | The country of origin or permanent residence for an employee who is temporarily working abroad. |
Author
Founder and Managing Director Anne Morris is a fully qualified solicitor and trusted adviser to large corporates through to SMEs, providing strategic immigration and global mobility advice to support employers with UK operations to meet their workforce needs through corporate immigration.
She is a recognised by Legal 500and Chambers as a legal expert and delivers Board-level advice on business migration and compliance risk management as well as overseeing the firm’s development of new client propositions and delivery of cost and time efficient processing of applications.
Anne is an active public speaker, immigration commentator, and immigration policy contributor and regularly hosts training sessions for employers and HR professionals
