The New Zealand I.T. sector was already significantly skill constrained before the Covid-19 pandemic, and this has been magnified at least threefold since the borders closed, highlighting that mobilising offshore resources is one of the biggest opportunities and challenges in the technology and digital space.
Lockdowns and border closures created a situation where not only NZ-based employees were able to work from home effectively, but businesses found solutions for employees that ended up stuck halfway across the world as well.
Scenarios that saw people employed by NZ companies trapped overseas for extended periods included employees on work visas that were overseas for business, holiday or family reasons that were unable to return; new employees who had been due to start work in NZ but have been unable to do so (as they are not citizens or permanent residents); and more recently, employees who need to travel for urgent family reasons, and risk being trapped overseas due to outbreaks or unexpected changes to border restrictions.
Many businesses have put solutions in place to support employees in these situations, which poses the question – if remote offshore work was successful in these cases, why can’t it work now as a model to get around our inability to bring talented people into the country?
Even if the government responds to increasing pressure to provide border exemptions to skilled workers, the fear of lengthy separation from family and friends due to ongoing restrictions could be a barrier to them taking up this opportunity – despite the potentially lucrative salaries on offer.
Due to the relative ease that many businesses could transition to a remote workforce, many employees are requesting more flexibility around this. Overseas remote working arrangements (sometimes referred to as ‘satellite’ working arrangements) are a great way of hiring and retaining the talent required in our skills-short market. Many more businesses could be taking advantage of such opportunities.
However, there are some important factors to plan for when looking at onboarding a candidate who is based offshore, as having just a single employee based overseas can create significant employment obligations.
An overseas employee can create income tax issues for their employer in the country they are based in due to triggering a ‘permanent establishment’, which is a type of tax connection that means profits may need to be taxed in that country.
Each country has its own definition of a permanent establishment. Whether one is triggered depends on many factors, including length of stay, visa status, workplace, employment status, employee role, where the employer is based, and any tax agreements between the two countries involved.
Employers should get good advice, have a clear understanding of the tax and employment laws of the nation the remote worker will be in, and continuously monitor changes to tax laws as countries update their legislation to keep pace with a move towards remote working.
Employment laws differ between countries, so you need to understand country-specific laws and rights and how they will apply to an employee’s terms and conditions.
Your remote worker may be subject to different rules for health insurance, superannuation, sick leave, overtime pay, work hours, benefits and more, even if your company is not incorporated there.
Immigration law will also come into play – potentially that of NZ and the country the employee will work in – depending on their visa status and the arrangement you are making with the employee.
While working outside of NZ, you will need to ensure that the employee will be allowed to reside in and work remotely from their chosen country and hold any required visa.
Some NZ employers have been onboarding overseas candidates with the intention of sponsoring them into New Zealand once the borders open, and if this is the case, you will need agreements in place if there are issues obtaining the required visas to enter New Zealand when that time comes; and once they enter New Zealand, regularly review work conditions and expiry dates to ensure that the employee is still legally allowed to work for you.
Experienced tax, immigration, and employment specialists can advise on the logistics of setting up employees to work overseas, guiding you through any permanent establishment scenarios, suggesting workaround solutions like employing remote workers as independent contractors rather than permanent employees, and recommending other strategies to manage risk.
Employees want flexibility, and employers want to maintain their talent and expand their hiring pool, so implementing a successful remote working program can be a win-win solution for employers and employees alike.
We have seen some of our clients step up as innovators to lead the way in this space, supported by our consultants to identify, source and onboard offshore talent to meet their resource requirements.
We would love to see more businesses consider alternative working arrangements when extreme talent shortages exist and filling a role within NZ is proving difficult. We are happy to work with our clients to find solutions that will meet both client and candidate needs.
Ourexperienced team can step in and work alongside you to identify, source and onboard the specific talent you require and assist with negotiating a remote working solution that will be beneficial for both your organisation and your new employee.
With border restrictions significantly impacting the skill shortage in NZ, we recommend that clients take an innovative approach to remote working, and as recruiters, we will continue to focus on finding and attracting skilled talent wanting and eligible to return to New Zealand.