Grow your skills, your network, your career. Worldwide ERC membership is the key
This article originally appeared in the February 2019 edition of Mobility magazine.
Compliance has become a big thing, whether we like it or not. Although the world appears to be getting smaller and more interconnected, relocations are becoming more and more difficult, with increased regulatory and compliance matters forming a significant part of the process. Countries band together, and “improvements” are made to cross-border regulations and passenger tracking, but the changes rarely better the working lives of global mobility professionals.
Instinctively, one might expect countries with more developed processes and systems to be easier to work with. But we have all encountered the real truth: More development means more regulation or better enforcement of pre-existing laws. A nation that is open for worldwide business must protect itself, and it generally does that in the form of more nuanced laws and statutes. Unfortunately, two of the areas that are of primary concern to relocations—immigration and taxation—are profoundly affected.
These often stricter rules aim to better regulate and control countries’ economic structures, but they inevitably cause issues for relocation professionals, no matter where within the industry they find themselves.
It’s not just the rapidly increasing compliance requirements from around the globe that are the issue, though; it’s that the goal posts are all constantly shifting, both dependently and independently of one another.
Putting yourself into a position where you can efficiently handle these changes with assignment intelligence (a holistic and data-centric approach to relocations) is not a simple process when your activities regularly involve more than a small handful of countries.
When considering the main points of global mobility compliance, there are three significant areas to which we can assign matters of risk. I mentioned immigration and taxation earlier, as they have historically been the two most significant areas when it comes to compliance in relocations. These are hugely complex issues that we must grapple with effectively, but another sector is now becoming a vital point of confusion and contention across the globe.
Although not necessarily new, privacy—and particularly personal data privacy—is now a hugely significant factor in global mobility compliance around the world. With the European Union’s General Data Protection Regulation (GDPR) having come into force last year, the spotlight is indeed on this newly emerged area of risk.
Related: GDPR Impact: 3 Months After Enforcement Date
The need for personal data privacy is, of course, not new, and the increased focus on this issue is much-needed, no matter the negative implications for many businesses across the globe. However, one of the critical problems for those tackling data protection at the moment is how open to interpretation many of the data privacy laws are, including GDPR. Until the international community has reached a solid consensus on how we should read all of these laws, there will continue to be some level of compliance confusion throughout the industry.
Historically, companies were able to have what we would now consider extremely lax attitudes when it comes to obeying immigration laws to the letter with their clients. They would choose to focus most of their effort on conforming to regulations in their native countries. Post-9/11, of course, this changed rapidly. Laws that were once considered poorly defined were quickly rethought and reinforced for the modern world. Businesses are now obligated to give these issues the respect they deserve, especially as global employee relocations and business travelers have become essential for effective operations.
The global immigration regulations in question, however, have continually evolved and shifted, especially as governments realize that these laws do not just protect their borders and workforces, but can also provide significant assistance in the monitoring of economic matters such as taxation and social security. Therefore, immigration is tied not only to the hot topic of national security, but also to the generation of government revenue. It is, of course, these two significant factors that drive policy and penalties.
With other external factors such as Brexit and opposition to globalization from some nations, there is even more pressure for governments and lawmakers to get a grip on immigration matters. It is essential, then, that global mobility professionals ensure compliance in these crucial areas, for both our clients and assignees.
In an attempt to circumvent these regulations in part, some businesses have been moving more of their transferees more toward short-term assignment or extended business traveler roles. Although most of these cases are handled reasonably, many border on causing their companies severe compliance issues, as managers can be ignorant of the immigration and tax status of their employees, greatly exacerbating any potential risk.
It may seem obvious, but it is crucial that we ensure the correct business visa is used in every staff relocation case, no matter the paperwork and difficulty involved. The penalties for breaching immigration laws can be severe and can have huge indirect effects for the company as a whole.
Unfortunately, straightforward and clear tax regulations, whether for personal or corporate income, are not the norm for most countries anymore. We must be aware of and appropriately handle the many tax rate bands, caveats, exceptions, and loopholes found across the globe. Working within these compliance issues can be a problem in any case, but in relocations, employees often split their time between nations, making the process all the trickier.
The point at which the risk becomes challenging to manage for many global mobility professionals is where the various taxation laws, totalization agreements, requirements, and benefits between states converge. It is important that each of these separate issues be appropriately tracked for each of your relocations to ensure compliance. This web of legislation can, of course, be a nightmare for organizations of any size. Small businesses tend to lack specialized knowledge, whereas larger ones can have complicated webs of workforces located across the globe. Therefore, seeking outside help in these matters is often preferable.
Although the previous two points of compliance risk have classically been a more significant consideration, data privacy and security has rapidly become one of the most significant areas of issue. Consider for a moment the giant web of colleagues, clients, service partners, and assignees that each global mobility professional deals with throughout a year. The potential—and requirement—for personal data sharing is enormous.
It is important to note that although many industries have looked at ways to stop the influx of personal data from individuals, this cannot, of course, be the case for the relocation industry.
As previously mentioned, new data protection laws will be springing up across the globe, and it’s vital that we as an industry get ahead of the curve. These new regulations put a great deal of emphasis on maintaining accountability for the data flow into, through, and out of the business. It’s therefore imperative that you have the systems in place to effectively handle all of the necessary documentation, paperwork, and logging to ensure compliance.
Speaking of documentation, by our estimations, GDPR compliance necessitates around 50 documents, ranging from policies and procedures to consent and reporting forms. When you add up the necessary time to prepare these documents along with meetings and staff training, you’re looking at more than 250 work hours of investment before you even begin to work within a compliant framework.
It is indeed worth noting that with the GDPR spurring rapid global change to data privacy laws, you should certainly not think, “I don’t deal with the EU, so it doesn’t matter.” These laws are going to proliferate and be strengthened across the globe within the next decade. It’s vital that these matters of compliance be assessed, and met, now.
All of the above, of course, begs the question: How do we respond to a regulatory environment of ever-increasing complexity? The key is to find assignment intelligence by recognizing which processes should be simplified and streamlined, and which should have more time and effort dedicated to them.
Let’s take data privacy and GDPR, for example. There are many policy and procedure documents that, once ready, can be distributed and collected in a structured and automated manner. Employing a system that automates these processes for assignees can lift a significant amount of the compliance weight from your shoulders if done correctly.
Read the rest of this article in the February 2019 issue of Mobility magazine.
Mobility can bring new growth opportunities to diverse supplier programs.
Four steps will help you become a more effective communicator with non-native speakers.
Military veterans and industry professionals provide great advice for facilitating a successful PCS move.
Sign up and receive the latest mobility news, articles, education and more as soon as it’s published.
Mobility is Worldwide ERC®’s monthly magazine, delivering industry and business news and updates, as well as insights on global talent mobility programs, tips and trends.
The Worldwide ERC community is the largest and most engaged group of mobility experts on the planet.