Managing your remote staff living abroad – cross-border issues for HR
Many Australian companies hire remote staff from overseas – both Australian citizens living abroad (expats) and international workers. Remote-hiring practices where Australian businesses were sourcing staff from overseas has accelerated before and during the COVID-19 pandemic. But of course, the pandemic has popularised the practice of remote and hybrid staff – working from home – in a location of their own choosing.
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HR departments across Australia have had to learn how to manage their remote/hybrid workforces including understanding what are the key legal rights and responsibilities of both employers and remote staff working across different legal jurisdictions.
International law firm, Baker & McKenzie in their report titled: “Australia: Working remotely overseas - Cross border issues” considered some of the key issues facing employers including the following:
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During and after the COVID-19 pandemic, there have been Australian employers seeking to recruit Australian citizens living abroad – particularly those currently based overseas but who were unable to travel to Australia in the short-term – after two years of closed borders.
In this article, we consider some of the key issues facing HR departments when engaging both Australian citizens (living abroad) and non-citizens in other countries – to work remotely.
Australian firms seeking to recruit remote workers overseas need to make sure that they are complying with the relevant workplace legislation in both Australia and the relevant jurisdiction where their staff are located.
These requirements may also vary depending on whether you engaged a freelancer who submits regular invoices (which may or may not include an Australian ABN number) or if you put a new starter directly onto your books via the Australian tax system (where they are engaged as if they are living in Australia). The latter group would be required to tell you their Australian tax file number and super fund details (if appropriate). These remote workers would be considered Australian workers (just working remotely overseas). It’s expected that their pay and conditions would mimic those of their Australian counterparts working directly in office locations in places like Sydney, Melbourne, Perth or Canberra.
If you are engaging a freelancer and paying them after they submit invoices (using Australian ABN or even possibly tax identification information relevant to their jurisdiction – that arrangement may be considered a contractual one between two companies): the employer in Australia and the employee (operating under a shelf company, ABN or similar). It’s always wise for HR hiring teams to do their research around their rights and obligations and seek independent legal advice if in doubt.
Before hiring your remote worker (whether an Australian citizen or non-citizen), HR should make sure that their new hire has a legal right to work in the country they are residing in. This could include asking your new candidates whether they are a legal resident of the country they are working from and whether they have a work permit – or ability to obtain one quickly. Baker & McKenzie’s report noted: “If they are not a citizen or permanent resident of the foreign country, or they do not otherwise hold a visa permitting them to work in that country, then an employer should not require or permit them to carry out work in that location. If an employer were to allow the employee to work in a country where they do not have legal rights to do so, both the employer and the employee may be subject to penalties.”
Hiring teams also need to make sure that their new candidates are complying with relevant local laws and making sure that their staff member is also getting the same types of employment benefits (under both jurisdictions). This is easier to achieve when there’s harmonious regulation between both countries – such as in Commonwealth countries.
Australia’s Fair Work Ombudsman also provides the following advice in relation to employees engaged overseas by an Australian employer – in each instance they recommend that companies seek their own independent legal advice during the hiring process: “Whether an employee working overseas is an Australian-based employee will depend on the particular circumstances including where the employment contract was formed. If this applies to you as an employer or employee, we recommend that you seek your own independent advice regarding your circumstances.”
The Fair Work Ombudsman also noted that Australian-based employees “who work overseas may have workplace entitlements under the laws of the countries where they work and where their employer is incorporated.” This is something that HR teams should be checking and simultaneously be seeking independent legal advice about the specifics of those entitlements.
Baker & McKenzie also raised an interesting point where they say that “where an employee is employed by an Australian company but working in a foreign country, it is likely that the employer will become an employer in the foreign country. This may have implications for the types of employment benefits (including leave) which accrue to the employee whilst working overseas, and other obligations (such as payroll tax or insurance requirements) of the employer.”
Firms wanting to understand how this last point operates in a practical sense should check with their in-house legal counsel. However, a flexible HR hiring team should also be confidently negotiating with their new staff member so that there’s no uncertainty about each party’s rights and responsibilities under the newly established employment contract.
Employers should also consider how the usual continuing employment benefits afforded to Australian workers such as health insurance, the Medicare levy, salary continuance insurance, or death or total permanent disablement (TPD) insurance can offer suitable coverage to remote workers living abroad. Some of these benefits may be captured under Australian citizens’ superannuation funds (most of which offer death and TPD benefits to members).
Some HR teams may even negotiate with their Australian worker living abroad and offer to pay local medical insurance or assist with this. If Australian health insurance coverage doesn’t extend to the foreign country, Baker & McKenzie noted that there “may also be questions around the employer's obligations to an employee who becomes ill or injured whilst working remotely overseas (subject to any local insurance requirements).” Getting clarity on legal obligations around these areas is recommended as part your standard recruitment process.
Australian companies who engage remote workers living abroad must be confident that any data or information shared between the parties is protected. This may involve the Australian employer requiring the new starter to sign a non-disclosure agreement (NDA) or confidentiality agreement.
Australian employers with remote workers using company laptops should also make sure that communications and files are adequately protected and encrypted if necessary. Many firms get their IT departments to remote into the new starter’s laptop to install security software and to configure their workstation in a way which delivers data integrity for all. Your employee’s working devices may include their laptop, mobile phone or tablet.
If you are providing your remote workers with company assets such as laptop, phone or tablet – it’s wise to make sure you have also organised appropriate insurance for those assets. You may also need to check that your insurance company will cover loss or damage to those assets in the jurisdiction where they are being used.
Finally, Australian employers are still required to comply with the usual Australian workers compensation laws and be making sure that their remote workers can work in accordance with Australian occupational, health and safety expectations. Its important to check all of this with your in-house legal team or consult an employment lawyer who is across multi-jurisdictional working arrangements. Australian employers also must meet their usual payroll and taxation obligations regardless of where their remote workers are based.
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