PwC: Remote work policies- Why leading companies are opting in

Mobility programs have been the engine of multinational businesses to get the right talent in the right location for decades. But what constitutes ‘mobility’? The recent PwC studies answer to the question.

Nontraditional types of mobility that do not require a formal relocation to another city or country were already exponentially growing before the global pandemic. Enter COVID and the new generation of what it means to be ‘mobile’ − remote work arrangements.

COVID-19 has acutely accelerated and altered the mobile workforce, forcing individuals worldwide to work from home and harness virtual working on a full-time and sustained basis. Businesses must now reimagine the future of work for the post-COVID world, addressing productivity, operational realities, and a new employee ecosystem. They must reassess their capability to support remote working longer term, tapping into infrastructure and other cost savings, while at the same time delivering an enhanced employee experience.

Fortunately, accelerating advances in technology have provided employers
and employees with more choice around how they work, enabling greater
flexibility and agility to address this challenge.

Are these arrangements a ‘game changer’?

A crisis-driven imperative to quickly facilitate virtual working/working from home on a global scale has shown that working virtually at scale is achievable, and for many employees, desirable. Lockdown measures and travel restrictions will ease, but there has been a fundamental shift in our feelings towards virtual working and many will have lingering concerns on their wellbeing in a crowded office or commuting environment. 

The bottom line? Virtual working is becoming the ‘new normal’ and organisations need to embrace it.

A PwC survey* of 300+ companies indicates that.. 53% of companies have already set up international and domestic remote work arrangement policies. Of those companies that do not have a policy, 50% anticipate that they will implement one by the end of 2020.

Policy scope can span widely

Remote work arrangements are much broader than traditional mobility programs, and can be an alternative to them. Companies that implement remote work policies can define what ‘remote’ means by tailoring it to their specific needs and business. 

For example, companies should clarify specific criteria, including duration (is the remote work temporary and/or permanent?) as well as location, such as within the United States or within a certain number of miles away from a physical business location. Criteria also should include roles and responsibilities, i.e., specifying those that will fit effectively within remote work parameters.

Although there could be many employees that would want to take advantage of such an arrangement, its scope may be limited to those roles that can be successfully performed without a full-time company office/facility presence and/or do not present regulatory, licensing, or even intellectual property considerations. In addition, there will likely be employees, such as young employees new to the workforce, who will not want to utilize remote work and instead seek an in-person experience.

Work on the beach? Companies allowing work in another country may see employees opt for more exotic locales. Some countries are already loosening their immigration requirements in 2021 (e.g., Barbados, Bermuda, Estonia, Georgia) to encourage persons to work there so as to reduce the financial impact of tourism decline. Other countries could soon follow suit.

Multiple human capital challenges can be solved

Remote work arrangements can yield benefits that are overwhelmingly positive for both the business and the employee. Real estate costs are a frequent driver for the business, and companies can benefit from happier, healthier employees that have greater flexibility and less commuting time. Based on a recent PwC survey of 300 companies, employee health and safety topped the list of why a company wants such a policy, followed by enhancing employee experience, and the attraction and retention of key talent.

What could a typical policy look like?

PwC’s recent survey of over 300 companies provides a glimpse of what an effective remote work arrangement policy could offer. While every employer will have different business requirements, objectives, and risk profiles, the survey can help companies understand the latest market perspective and benchmark their decisions:

Where the employee could work

Mobility policies to date did not consider remote work (or may have addressed on an ad-hoc basis.) However, more companies are looking at a more robust definition of remote work to include cross-border arrangements. Here’s how survey respondents are shaping policies as to where remote work can occur:

28% allow remote work in another country (international)

24% allow remote work within the same country (including across state lines)

46% allow remote work with no cross-border movement

While more companies are defining remote work in a robust way, many organizations are setting operational guidelines in line with their risk profiles. Most notably, many employers are restricting certain roles and/or activities, 76% of employers will require the employee to have the right to work in that location. Respondents (60%) also restricted locations if the company does not have an entity in that jurisdiction. While some companies expected the company’s geographical footprint would increase, others noted a potential reduction of the number of corporate entities worldwide. Compliance requirements and corporate tax implications were noted as key considerations to operationalize any remote work program and policy.

Maximum duration of remote work

Companies that already implemented a policy for remote work are following governing authority recommendations for determining the allowable duration for temporary arrangements. A majority of survey participants (58%) are allowing both temporary and indefinite remote work arrangements, indicating that companies are aiming for more flexible infrastructures. A smaller number of companies were more restrictive:

During a remote work period, the question arises as to whether employees will need or want to have any physical presence at a company’s facility or office. Under PwC’s recent survey, respondents appear to lean towards a more hybrid methodology. A majority of participants anticipate remote workers to have access to an office, but may or may not be required to go in.

Compensation and benefits for the employee

Businesses likely are not looking to adjust compensation simply because an employee wishes to engage in a remote work arrangement. A whopping 85% of survey respondents do not make any salary adjustments for the remote work period. Compensation generally remains, based on home work location, regardless of physical work location; however, this area continues to be evaluated by employers both domestically and internationally for a longer-term approach. Mobility programs typically provide tax compliance services for employees that physically relocate to work in a different location, as well as allowances, reimbursements, or other mobility support. But many companies surveyed may not currently anticipate providing these benefits for remote work arrangements; this is another area that continues to be evaluated for a longer-term approach.

The approaches taken for 2020 – 66% of respondents did not expect to provide tax compliance services, 61% did not expect to provide any reimbursement for excess taxes, 59% did not adjust withholding during the remote work period – may not be the longer-term approach that companies will adopt. Companies should remain flexible as these elements may have a specific result for 2020, but may evolve for periods going forward as a formal, more steadfast policy is created.

Achieving a win-win for both the business and its talent base

For companies wanting to opt into remote work arrangements, swift implementation will be critical and they should expect a number of short-term challenges. Businesses likely will need to:

• Frame their overall strategy and benchmark what others in their industry are doing.
• Create applicable rules and procedures, including the processing of potentially a significant number of employee requests.
• Work across functions to address risk and compliance and other considerations noted above, so as to reflect broader perspectives across the enterprise. Various headquarter functions such as HR, Global Mobility, Corporate Tax, Legal, Employment Tax, and Total Reward teams likely will need to be involved.
• Establish a governance model for such arrangements, for example, what function or functions will serve as ‘owner’ of the process going forward? Cross functional representation during the creation stage may provide the optimal infrastructure for the future state.
• Communicate frequently to all relevant stakeholders to ensure transparency.

Only 24% of respondents provide reimbursement allowances for home office furniture and accessories. Will a company’s willingness to bear the cost of such items rise when employees realize they may not be able to address required work from the kitchen table or stool on a long-term basis? This percentage is expected to increase as more companies formalize their policies.

Only 29% of survey respondents are already set up for domestic and international remote working.

35% are still evaluating domestic and international remote work (i.e., is it a good fit for the business and is it possible?)

No ‘one size’ remote worker policy fits all companies, but the upfront effort to get a tailored fit could yield a win-win situation for the company and its talent base due to the strategic business advantages reaped for years and even decades to come. These policies could serve to differentiate those businesses that are agile enough to embrace change quickly and seamlessly.