The rise of Remote Working and its use for International Recruitment

The rise of Remote Working and its use for International Recruitment

While COVID-19 has brought much distress to the luxury retail and fashion industry, it has also opened up new opportunities. One of these opportunities is the rise of remote working. Remote working is widely favoured for reducing commercial rent costs, but it is also important to consider how this practice allows for international recruitment and why this can be of huge advantage to businesses.

International Recruitment and it’s advantages

International Recruitment involves the placement of candidates into offshore and international locations. This enables for a more extensive talent search, and also gives your company the opportunity to expand and operate at a global level.

Remote working offers an attractive solution to international recruitment as it saves the need to relocate your candidate (and the costs/logistics associated with this). This, in turn, also helps to secure acceptances and the long-term commitment of overseas employees.

It is therefore essential that HR professionals looking to attract, and retain, the very best talent look into the basic principles of international recruitment. This is especially the case now that Covid-19 has illustrated to us all the functionality of remote working.

Considerations to be made

There are, however, a number of considerations to make when recruiting internationally on a remote basis. The first of these is deciding which contractual relationship to make with the individual. There are several choices with regards to this:

1.       Contract of employment - this requires the business to have a legal entity in the country in which the individual is based.

2.       Contract of employment which accounts for the individual’s regular commuting to the country where the company is based.

3.       Consultancy contract - this requires compliance with the IR35 regulations (UK’s anti-avoidance tax legislation).

On the topic of tax legislation, we know that countries differ in their taxation laws and rates. Therefore, when an individual is to work remotely in a country different to that in which the company is based, tax considerations arise. One of the main considerations is that of an individual working abroad being liable to tax in two countries on the same income. This is known as double taxation. Where double taxation arises, it becomes necessary to address double taxation agreements. Double taxation agreements (also know as double tax treaties or double tax conventions) state which country has the right to collect tax on different types of income.

These double taxation agreements often adopt something called the ‘183 days rule’. The 183 days rule is the maximum number of days an individual can be physically present in a particular jurisdiction before an income tax liability exists. Double taxation agreements therefore use the 183 day rule to establish the tax liabilities which exist for the individual in question.

Where we come in

Following lockdown and the rise of remote working, it is likely that HR teams will face many requests to consider a globally based workforce. My next article shall therefore provide a more comprehensive guide to HR Managers on the basic principles and considerations of remote recruitment. Whilst international recruitment can be a difficult area to navigate, Four Seasons is able to offer complimentary professional advice on international recruitment best practices as part of our service.