Global mobility
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Reducing compliance risk for remote workers in the financial services sector
Published 10 Jul 2024
Employees, who work remotely in a different country to where their employer is based, can give rise to a multitude of regulatory compliance obligations that employers need to understand and have a policy and process to manage.
In the financial services industry, where attracting and retaining top talent is increasingly crucial, offering employees the ability to work remotely can be a key part of the employer value proposition.
With businesses in the sector operating across numerous jurisdictions compliance with Remote Working can become complex and failure to address compliance obligations correctly could lead to penalties, reputational loss, staff retention issues, management by exception and employee dissatisfaction.
What are the key questions that financial services organisations should be addressing to minimise compliance risk?
- Immigration – Can the employee live and work in the country they are based?
- Corporate tax – will the employee create a corporate tax presence for the employer in the country they work in?
- Licence requirements – will the employee working remotely result in a licensing requirement in that country, e.g. brokerage and banking licences?
- Payroll withholding – will the employer be required to withhold taxes in the host country?
- Social security – in which country will social contributions be due?
- Data protection – Are controls needed to mitigate data transfer risks? Particularly relevant to the FS sector given the financial data being transferred.
- Legal – is the employment contract valid and effective? Are bankers bonus caps applicable in the country the employee is working remotely in?
- Health & Safety – Are any actions required to comply with local rules?
- Pension provision – Are there any mandatory pension rules and what is the impact of continuing contributions to the Company’s pension scheme?
- Benefit provision –Is the employee benefits package still appropriate and effective?
Remote worker policies place thresholds on the number of days the employee can work remotely overseas per year, the countries that are “in scope” and restrictions on the activities that can be undertaken overseas.
Managing Remote Working compliance risk in practice |
Our client was struggling to manage and track its remote workers and asked us to help them reduce their tax, social security, and other regulatory compliance risks related to these employees. Our approach was first to provide a high-level overview of the tax, social security contribution and immigration trigger points for countries in Europe, the Americas and South-East Asia. From the assessment we were able to advise our client on how to manage the delicate balance between compliance and employee retention. This then allowed us to draft a remote worker policy and process based on day count and substance thresholds to manage their remote workers across the organisation. We also provided guidance on how to implement the policy, introduce appropriate processes as well as providing a workshop and process map. Following this project the client has more control over its remote workers with a robust policy and has mitigated the risk of penalties for non-compliance. |
Financial services employers are keen to offer remote working as a benefit to employees and to attract and retain talent from across the globe.
However, employers need to balance this with a commercial solution to manage the regulatory compliance risks associated with remote working.
Failure to do this could lead to penalties and reputational damage.
How can we help?
Forvis Mazars provides a range of services to help employers in the financial services sector manage their regulatory compliance risks arising from employing remote workers:
- Policy and process design and implementation.
- Our technology tool TRACK GLOBAL helps employers implement and automate remote worker policy and processes.
- Remote worker assessments.
- Home and host country payroll Employment tax and payroll compliance, including operating and managing global payrolls.
- Immigration support and planning.
If you want to discuss more, please contact us and a member of the team will be in touch.
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