Distributed Workforce Challenges – Identifying Risks and Enhancing Compliance

In recent years—and increasingly so since the start of the pandemic—the normalization of distributed teams and complex cross-border regulations have created serious compliance risks for companies across the world.

With remote workers and business travelers conducting business across local, state, and international borders, and the tightening of the regulatory environment (e.g., Brexit and Posted Workers Directive), compliance has become extremely difficult to manage. HR, Mobility, and other groups must take on new obstacles and navigate ever-changing regulations that can be challenging to track.

In order to identify high-risk situations, comply with laws and regulations, and protect against penalties from tax and payroll audits, it is critical to have a full picture of the organization and its employees’ obligations and impacts in key areas, including:

• Multi-jurisdiction tax
• Immigration filings
• Payroll reporting
• Regulatory compliance

What Organizations Want in Today’s Environment

In speaking with clients and prospects, Cartus has found that organizations often struggle with regard to:

• Monitoring the location of their employees
• Combing through “noise” to organize data from multiple sources
• Identifying how and where to start addressing compliance issues
• Taking action upon identifying areas of risk
• Implementing an end-to-end solution

Seeking to conquer these issues, clients often prefer a technology-based solution that is simple for employees to use and flexible to scale.

However, in order to address the needs of clients, it is important to make a commitment to providing meaningful, ongoing guidance. By focusing on service combined with thought leadership, Relocation Management Companies (RMCs) ensure the seamless support of clients’ distributed workforces. These days, it’s not enough to use leading technology—systems expertise must be paired with skilled analysis and guidance to make informed and timely compliance decisions. The interpretation and monitoring of data provides an opportunity to take action to alleviate risk on an ongoing basis.

Anticipating and Proactively Managing Risk

The first rule of managing compliance risks successfully is to stay ahead of the game. The best RMC partners deliver a holistic, wing-to-wing management solution using best-in-class technology in order to create a full picture of clients’ global compliance risk so they can recognize the exposure and take action to prevent it.

A successful strategy to mitigate compliance risks starts with a strong partnership between HR and talent mobility teams—as well as travel, legal, and tax teams—in order to complete a full review of employee location and assignment data. Another benefit to clients of working with a top RMC is access to dedicated experts who are at the core of collating and presenting data, which forms the basis for further analysis and project design. RMCs provide a comprehensive risk assessment based on a client’s specific risk factors, which identifies:

• Blind spots and data gaps
• Detailed potential risks to client and individuals
• Risk hotspots
• Recommended, RMC-coordinated global response

Following completion of a full risk assessment, RMCs should provide a high-level implementation plan detailing the proposed actions, measures, and integrations specific to a client’s unique populations. Process alignment—a fully guided course-mapping between an RMC, technology platforms, and client personnel—is key to establishing communication pathways, escalation and issue reporting, integrating payroll preferences, third-party supplier engagement, and more. Providing visibility and understanding to clients is of the utmost importance.

From data flow enablement to user support, communication is essential to addressing compliance issues. Providing support to clients in order to better communicate with both front-line employees, who may engage with the systems, and personnel managers, who may act upon and/or benefit from the output, is essential. City tax and immigration compliance are two areas in which clear communication is key to success.

For example, an employee’s time working in and out of different cities can create tax impacts in multiple jurisdictions. There is an opportunity to reduce city tax liabilities through proper tracking and reporting of employees in a team effort with payroll and tax departments. Concerning immigration compliance, early communication and a pre-travel assessment can better prepare stakeholders for seeking approval for downstream services (e.g., A1, work permit, visa) and other immigration needs. Prompt action benefits clients by providing:

• Better duty of care
• Compliance accuracy
• Seamless employee experience in obtaining required travel documentation
• Mitigation of risk

Creating an Ongoing Cycle of Support

As true as the idiom on death and taxes, compliance and tax risks are here to stay. That’s why Cartus believes in developing a program based on reporting outputs and actions driven over the course of the year to inform and drive continued improvement into the future. Where appropriate, based on the findings from analysis and review actions, Cartus deploys any aligned changes to reporting structures, data feeds, and risk parameters to provide expert guidance to clients. Clients can benefit from not only addressing current risks but also the peace of mind that comes from a compliance tracking program that remains agile and fit for purpose.

As regulations continue to change, a successful program must also evolve and remain relevant to the current landscape. Through data-supported recommendations and collaboration with internal stakeholders, Cartus empowers clients to continuously improve their internal processes now and into the future.