by Deborah Soye, VP Consumer & Digital Tech, IDA Ireland
The Covid-19 pandemic necessitated an almost-overnight transition to remote work, causing Time Magazine to describe the Coronavirus outbreak as “the world’s largest work-from-home experiment.”
The experiment is broadly successful thanks to existing off-the-shelf technologies that allows people to communicate and collaborate in real-time. For example, many of IDA Ireland’s clients in the consumer and digital technology industry were able to transition from an office-based working model to fully remote in a number of days and have maintained this operating model successfully throughout the pandemic.
However, remote work is anything but an aberration. According to the World Economic Forum, the number of permanent remote workers will double in 2021, meaning more than a third of all employees will work from coffee shops and kitchen tables rather than in-office cubicles.
Simply put, successfully integrating a remote workforce without compromise is an operational necessity for most organizations. During this time, human resources professionals are under significant strain. As the Society for Human Resources Management notes, “HR managers are trying to keep their workers productive, motivated, engaged and connected—all factors that are moving targets in the new normal.”
This is especially challenging for US companies with a global staff who are now grappling with the legal and HR implications of a remote workforce across foreign jurisdictions.
In this environment, here are three key considerations for HR leaders that can help foster success in organizations in the year ahead.
While much of our modern workflows are digital-first endeavors, physical files continue to be the primary documentation and storage method for many HR departments. Not only is this less efficient and effective than digital records, but it’s especially problematic for a remote workforce that can’t access this information.
Cloud storage solutions provide a compelling alternative, offering HR departments a way to improve their overall workflows, including:
● Making information easier to search and find
● Empowering collaboration
● Reducing costs & operational disruptions
● Enabling scalability
A survey on the future of work found that 95% of employees see room for improvement in handling documents in a digital environment. For HR departments striving to keep teams productive in a remote setting, digitalization is a natural first step.
Few technologies have garnered more enthusiasm in the past several years than AI and automation. It’s time to put these innovations to work. To support thriving remote teams, HR leaders can leverage digitalization, automation, and cloud computing to facilitate IT cost savings, accommodate scalability, ensure security, and promote collaboration.
In a remote environment, these technologies hinge on cloud computing. A recent Condeco Software survey found that CTOs see cloud computing as the most important technological change in the year ahead, identifying it as “very important” to their company’s success.
That’s why, despite facing shrinking budgets and an uncertain economic outlook, more than 40% of businesses are investing in technologies to support remote teams. CeADAR, Ireland’s Centre for Applied Data Analytics & AI is seeing new waves of industry using AI and its Director, Edward McDonnell, predicts that one of the biggest users of AI in the coming year will be the legal profession, which until this time, has been paper based with little reliance on cloud-based documents.
Louise Kelly, a Tax Partner with Deloitte Ireland LLP works with US companies who have teams in Ireland. “When remote teams work from different jurisdictions, there can be significant tax consequences that need to be top-of-mind for HR leaders,” she told us. “For example, when employees work in different locations than their employers, they can create a taxable presence of permanent establishment (PE), potentially incurring unique tax liabilities or value-added tax (VAT) registrations. It may also undermine the transfer pricing strategy of the group and lead to more profits being allocated to multiple jurisdictions.” In IDA’s experience, companies are becoming global earlier in their growth so employee mobility must be considered in tandem with finances.
What’s more, for US companies with operations in Europe, payroll tax obligations may vary by country. “Payroll obligations are separate from employees’ residency rules,” commented Kelly. “For example, when international companies have say ten employees in ten countries, payroll taxes and social security contributions increase alongside financial complexity and accounting workload.”
Whether companies are accommodating newly appointed remote employees as they work abroad or expanding operations overseas, HR leaders need to prepare for shifting tax scenarios to accompany these realities.
For many businesses, the past year was an unplanned crash course in disruption. Long-established workflows went out the window, successful companies began to stumble, and agility received renewed importance.
While the pandemic will eventually subside, HR leaders need to continue to be agile, responding to shifting realities to support remote teams. This might include reducing salaries to account for new living scenarios – as Silicon Valley-based VMware announced this fall, or providing stipends to employees who move away from high-cost cities, which Stripe did for employees willing to leave New York and San Francisco.
Whatever the scenario, one thing is certain, HR leaders will have to innovate to keep their workers productive, motivated, engaged, and connected. By pursuing the right priorities, they can effectively rewrite the playbook to develop and oversee their organizations as they enter the new normal.
"This article originally posted in Toolbox at the following link: https://www.toolbox.com/hr/hr-strategy/guest-article/digitalization-automation-and-tax-liabilities-3-priorities-for-hr-departments-leading-remote-teams/"
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