Dee Coakley of Boundless discusses the many challenges that face global remote working and how they can be overcome.
As the CEO of an HR tech company operating in the global employment space, I have witnessed first-hand the shift from in-office to global remote work. The freedom to work from anywhere has provided employees with unprecedented flexibility and employers with access to a global talent pool, breathing new life into the concept of diversity and inclusion.
Yet, the widespread adoption of remote work arrangements, particularly across borders, has also highlighted the significant differences in local employment and tax laws – differences that were once easily ignored.
Today’s new breed of remote-and-global-first companies face a unique challenge. With employees spread across far more countries but collaborating closely, these differences become more noticeable. Two people holding the exact job title may have a vastly different pay package determined by postal code – rather than skills or abilities. Such discrepancies in treatment can generate a sense of unease among team members and potentially undermine company culture.
Notable differences in employer taxes and take-home pay
Pay disparities present one of the more significant challenges. The tax systems in different countries vary greatly in terms of the costs imposed on companies employing individuals. For instance, employer taxes in Denmark hover around 2pc, while in France, employers pay social security contributions of up to 45pc. Some countries fall in the middle, such as the US (under 10pc), Ireland (11.05pc), the Netherlands (up to 25pc), and Mexico (approximately 30pc).
Additionally, the take-home pay that employees receive can significantly differ even if a company implements an “equal pay for equal work” approach, where individuals in the same role earn the same gross salary. Let’s consider a role with a €60,000 salary. In Bulgaria the net salary would be approximately €51,419, in Ireland €43,054, while in Portugal it would only amount to around €32,967.
Not to mention that the varying cost of living across countries and the purchasing power of salaries further contribute to inadvertent pay gaps among employees performing identical roles.
Notable differences in leave entitlements
Leave entitlements, such as holiday allowances, parental leave, and sick leave policies, can also significantly differ across jurisdictions, creating challenges for remote-first companies. What’s affected here are both the number of days but also the resulting pay that an employee receives while on some of these leaves.
While most European countries offer four weeks of paid holiday, France extends it to five weeks. In sharp contrast, the US lacks a federal law mandating paid vacation time for private employers.
Regarding parental leave, Scandinavian countries offer generous policies, while the US lags behind with a total of 12 weeks of unpaid maternity leave for eligible employees. European countries, in contrast, are more generous, with Bulgaria topping the charts at 58.6 weeks. However, maternity leave can be as low as 14 weeks in Switzerland and 15 weeks in Belgium, with relatively low weekly allowances, such as Ireland’s €245 per week or the UK’s £151.97 for the 33 weeks following the initial six weeks.
Sick leave entitlements pose an additional hurdle for remote-first companies. The US, for instance, lacks sick leave entitlements in federal law, while Ireland recently introduced paid sick leave, beginning at three days. On the other end of the spectrum, the Netherlands guarantees employees a minimum of two years of sick leave, during which they receive at least 70pc of their salary.
Notable differences in worker rights and benefits
Statutory benefits and rights extended to full-time employees can vary significantly from country to country. These benefits encompass not only paid leaves but also healthcare benefits, retirement benefits, and worker protection laws.
Access to healthcare and the level of coverage provided by the government vary across countries. The disparity in access to healthcare by law creates different expectations regarding employer involvement through contributions or private healthcare insurance provisions.
For instance, in the United States, employers are not mandated to contribute to the public system (but are however expected by employees to offer health insurance as part of the compensation package), whereas in France, Germany, and the UK, employers have a statutory obligation to participate in funding the public healthcare system. In countries like Canada and the Netherlands, where citizens are required to contribute to the system, employers may provide health insurance benefits to employees as part of their compensation packages.
Pension contributions exemplify the differences in how governments view the role of employers in providing this common employment benefit. In the UK, Australia, Germany, the Netherlands, and many other countries, employers are obligated to make contributions to retirement plans alongside employees. In the US, Canada, and Ireland, employers are generally expected to at least match the contributions made by employees. Conversely, in certain countries, there is no government requirement or employee expectation for employers to make pension contributions. Examples of such countries include Sweden, Singapore, and New Zealand.
Worker protection laws are a fundamental part of full-time employment. And it’s yet another element of the employment experience that varies significantly worldwide due to differences in legal systems, cultural norms, and socioeconomic factors. Some countries, such as Germany, France, and the Nordics, place a strong emphasis on worker rights and comprehensive protection. These countries typically have laws that regulate working hours, a right to disconnect, provide protection against unfair dismissal, and ensure workplace safety.
How can these realities be addressed?
So, what is the solution to these challenges? How can companies ensure equitable treatment of employees in this era of remote work? Based on our experience at Boundless and those of our clients, a few insights emerge.
Firstly, transparency is crucial. Companies need to be clear about how they determine pay scales, contract types, holiday entitlements, and parental leave policies. This involves being open about the impact of local laws on these issues and how they are trying to address any inequalities.
Secondly, where possible or feasible, companies should aim to standardise policies across all regions. A uniform parental leave policy or a standard number of annual leave days can go a long way in promoting fairness. For example, at Boundless, we benchmark annual leave against France, the country with the highest entitlements, ensuring that everyone receives 41 days off.
Lastly, it is critical to engage local legal and HR experts to ensure compliance with local laws and identify potential areas of inequity. Investing in expert advice can not only prevent legal pitfalls but also help create a fair and inclusive workplace.
In some cases, it may be necessary to put pressure on governments to enact labour reforms that address fundamental worker rights. Advocacy efforts can strengthen worker protection and promote fair and safe working conditions for all.
By adopting these strategies, companies can navigate the complexities of global remote work, promote equality, and create a positive working environment for their diverse teams.
By Dee Coakley
Dee Coakley is the CEO and co-founder of Boundless, a cloud-based employer of record platform that simplifies international HR compliance, payroll and employee benefits. Before founding Boundless, Dee was a three-time COO. In those roles she experienced first-hand the operational challenges of cross-border employment, and so set about building a solution. Dee will be speaking on a panel at the Grow Remote Summit on Day 1, June 8 at 9.40 am.
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