Your Workcation is Probably Harmless
Rigid travel policies with vague justifications push travel underground, exposing employees and their employers to legal and tax risks.
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Anna*, a journalist at a large multinational media company, spent January working from an island. (She asked for anonymity to avoid drawing attention.) This was her third “workcation” of the pandemic; previous trips included a family visit and another tropical getaway.
Speaking from the pool, Anna shared her team’s unspoken policy: Don’t ask, don’t tell. “I don’t exactly flaunt where I’m at, but I’m not doing anything purposely deceptive,” she said, before adding, "But I have taken down anything behind me that was very, like, ‘beach house.’”
Work has left the building, and it’s not coming back. As of last year, a full 16% of companies worldwide were already location-agnostic, according to Aon’s May 2021 survey of HR leaders. For tech, that number was even higher, with 24% letting employees choose how much time to spend in-office.
Much like the pandemic blurred the personal and professional, long-term remote work is blurring work and leisure. As Bloomberg reported this week, newly-relaxed policies are driving longer and more frequent trips to farther-flung destinations. A March 2021 Harris Poll reported by Axios found 74% of U.S. remote workers would consider a workcation. And Google searches for “digital nomad” are up 33% in the past year and 600% over 2014, according to data from Glimpse.
Even Airbnb CEO Brian Chesky recently announced his own plan to leave San Francisco and work “in a different town or city every couple [of] weeks.”
Still, the move to remote has left employers in a bind: while many require permission to relocate (even temporarily), the policies are a challenge to communicate and enforce. Even though employers can monitor locations through Zoom, few are aware. And managers often err on the side of employees’ autonomy: while Anna hasn’t told her new boss about working from the tropics, her last boss was sympathetic.
Asked why HR might object, Anna mentioned “some sort of tax limitation,” but was unable to elaborate, saying “I've never really gotten a good reason.”
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The legal limbo of “Don’t ask, don’t tell”
Much of the buzz over working from anywhere glosses over one critical detail: informal or poorly-communicated policies leave employees in a kind of legal limbo. Without understanding the legal and tax implications, they can unwittingly expose their employers to local labor laws in a new state or country, and even subject themselves to double taxation.
In fact, there are many legal and tax pitfalls that HR has good reason to fear. Even though most workcations are too short to trigger any serious legal issues, an extended stay can create serious tax implications for the employer and the employee. In the worst case, it can trigger a permanent establishment, or new legal place of business, in a state or country where the business has no headquarters.
Cross-border employment has complex legal ramifications, including new labor laws. In Spain, France, and Brazil, for example, anyone can sue an employer for moral harassment, or a pattern of abusive behavior. Interstate or international payroll issues are even more serious, since they’re more likely to be treated as criminal violations.
The case for supporting workcations
With flexible work here to stay, companies will need to choose between cracking down on workcations, or adapting their policies to support them.
Employees with aging parents often end up in a uniquely hellish bind, forced to choose between seeing them or enjoying the same vacation time as coworkers with more proximate families.
Creating policies that support workcations is about more than just allowing employees to lounge by the pool between meetings. It can mean the difference between a burned-out employee and a happy, productive one.
With the focus on leisure, it’s easy to overlook the biggest beneficiaries of work-from-anywhere policies: immigrants and others with family in far-away locations. Employees with aging parents often end up in a uniquely hellish bind, forced to choose between seeing them or enjoying the same vacation time as coworkers with more proximate families.
Employees in long-distance relationships face a similar dilemma: how can anyone be expected to limit their time with a partner to a few weeks of annual vacation? An entire cottage industry of legal and immigration services has emerged to serve “trailing spouses” who choose to move abroad rather than be separated from their partner for professional reasons.
So how long is too long?
While the idea of running afoul of foreign employment law is scary, most employees never stay long enough for this to become an issue. “If somebody’s switching countries every week, they'll never be in one country long enough to say their employment law applies,” says Don Dowling, an attorney at Littler Mendelson, an employment law firm.
Like most legal questions, however, the answer varies with the circumstances. According to Littler’s report, working from China for six months can trigger a permanent establishment on its own. Other countries have different laws, though in general, says Dowling, most companies treat a workcation of two or three months, excluding vacation time, as low-risk.
Most companies treat a workcation of two or three months—excluding vacation time—as low-risk. The problem is when a short trip becomes indefinite.
The problem, Dowling explained, is when a short trip becomes an indefinite stay, which can easily happen when an employee visits a parent with a chronic illness. He advises employers to set a hard return date, and to warn that missing it can legally be considered job abandonment.
For an employee who needs more permanent flexibility, one option is to re-engage them as an independent contractor. If enough employees share this need, it might be time to consider an international payroll provider like Remote, Deel, or Oyster. These work similarly to companies like Justworks, acting as the official employer in the country where the employee resides.
While many tech companies religiously avoid red tape, Dowling warned against sweeping workcations under the rug instead of creating policies to support them. “With the Great Resignation, a lot of companies don't want to come across like, ‘Hey, it's my way or the highway,’” he said, leaving workers with a false sense of security. Now that anyone can hide their location behind a virtual background or a blank wall, a more thoughtful, transparent approach to travel is easier for everyone.
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