Remote working: the past, present and future

In a series of articles, we look at the factors driving the change in how we work, and the steps employers can take to benefit from this. Plus, we offer our insight into how employers can successfully navigate the regulatory compliance obligations that arise from remote working.

The history of remote working

There have always been remote workers, but the trend has been accelerated by Covid-19 as well as the change in mindset for many employees and employers seeing work as something we deliver rather than a place where we deliver.

The concept of employees collectively working from large offices in major cities under the supervision of their managers is a relatively modern concept driven by the industrial revolution and the increased globalisation of trade. Where you worked dictated where you lived, and there was a clear separation between home and the office.

Before then, people living in urban areas often worked and resided in their homes.

What is influencing people to move and work abroad?

We appear to be moving full circle, with many people working and living in countries far away from the country they spent their formative years in. However, what is driving this change?

There are several factors influencing people to move including:

• the unaffordability of housing in the world’s major cities,
• a desire to live and work overseas,
• a rejection of the societal convention of the nuclear family,
• a decline in social connections,
• technology platforms facilitating the ability to deliver work digitally from almost any location in the world,
• tax and immigration concessions offered by governments to digital nomads,
• the passing of peak globalisation, and
• the trend in making the workplace more accessible.

This shift of the power to the individual challenges the established social, political, and economic world order, and leaves us at a pivotal time in history where the future of remote work is unpredictable.

Where we move in the future depends on the changing dynamics of various external factors and the steps employers take to benefit from the consequent opportunities.

The benefits of working remotely abroad for employees

Conventional wisdom would be to travel on the basis that we will see an increase in employees working remotely overseas and digital nomads, and there is a win-win for both employees and employers from adopting this approach.

For employees, the benefits of remote work are:

• shorter commutes,
• more family and social time,
• an increased emphasis on deliverables as opposed to presenteeism,
•  the opportunity to work from locations with a more favourable climate and/or culture, and
• potentially cheaper living costs and lower taxes.

The benefits of global remote work for employers

For employers, the benefits of remote work are:

• lower overhead costs from needing less office space,
• access to a global workforce,
• a potentially more engaged and motivated workforce,
• access to a more diverse workforce who potentially challenge the status quo and
• a stronger climate for innovation, and
• potentially cheaper labour costs.

What are the challenges with a remote global workforce?

There are several factors that threaten to put the brakes on the acceleration of remote working.

1.    Brain drain and reduced tax take

At a macro level, there is the challenge to Western European governments of a potential brain drain of skilled young professionals moving overseas, reducing the tax take and leaving an older populace who need to be looked after. The obvious answer would be to encourage immigration and schemes to entice remote workers from overseas with immigration and tax relaxations. However, the current political climate does not support this solution, resulting in paralysis, with the choice of either shifting the tax burden to the population that stays home or reducing social welfare (or potentially a mixture of both).

To combat this, governments may take a more robust approach to taxing remote workers, moving away from the status quo where remote workers have created largely unchecked corporate income tax and payroll withholding obligations for their employers.

If this is the case, then the current largely relaxed “work from anywhere” stance adopted by many employers may come to an end. This is already being challenged, Amazon asking its employees to work at least three days a week in the office and Zoom (the firm that benefited from remote working during the pandemic), asking its employees to work at least two days a week in the office.

2.    Regulatory compliance obligations for employers

Having to deal with the regulatory compliance obligations arising from remote working has meant that employers have needed to design and implement frameworks, and apply technology solutions to identify and manage tax, legal, immigration, and data protection risks.

Implementing policies and processes to manage this can be administratively burdensome for employers, incurs professional costs, results in them having to accept a degree of risk, and the challenge of either varying pay, or creating friction between remote workers and those that work in the same country where their employer is based.

With inflationary pressures and redundancies potentially on the horizon, the power dynamic between the employer and employee may shift back to the employer. Consequently, employers may take a harder line on remote working and may not entertain the risk associated with devising policies and processes to facilitate this.

What’s the solution for employers to manage their workforce?

The move to remote work is not a zero-sum game, and if employers are prepared to embrace more flexible forms of working they are likely to benefit financially.

This is the case even in a recession. The reason is that there will be a greater focus on return on investment, engagement, and retention.

The impact of remote working on recruitment and retention

Findings suggest that remote workers are:-

• more productive than in-office workers; and
• are prepared to work for less money if offered remote positions.

Additionally, there are benefits to employers of lower overhead costs, a more diverse workforce, and a wider talent pool.

To take advantage of the benefits, employers will need to devise best practices for collaboration and innovation in remote settings and build a technology-driven framework that manages regulatory compliance risks.

This is what will set employers apart in the war for talent and the future of how we work.

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