Since the global coronavirus pandemic prompted a move to remote working, white-collar employees are looking at jurisdictions from Nova Scotia to Bermuda, enticed by a work location that truly fits their lifestyle.
And many employers are allowing the option, even post-pandemic, with companies planning out what return to work looks like and how remote work policies will fit into that plan. According to Statistics Canada, 22 per cent of Canadians were teleworking as of June 2020. And a December 2020 survey from Aon found 45 per cent of North American companies had expanded the population of employees eligible for remote work post-pandemic with a further 25 per cent actively considering it. But some companies are taking remote working a step further, allowing employees to be based outside of the company’s home city or even country.
“The global workforce has shifted,” says Yara Khankan, director of international and partnership programs and vice-president of business development at Cowan Insurance Group. “We now have this worldwide talent pool because organizations realize they’re OK with working from home; it’s a good investment and a good thing because it’s expanded their talent pool.”
Dropbox, Facebook Inc., Salesforce.com Inc. and Spotify are among the companies that have granted employees the option to permanently work from anywhere after the coronavirus crisis is over. Closer to home, Ottawa-headquartered Shopify Inc. announced in May 2020 it would be a “digital by default” company going forward, meaning it would hire employees from around the globe. It also now has a Destination90 program that allows employees to work almost anywhere in the world for up to 90 days per year.
But as glamorous as it sounds, the potential work-from-anywhere boom has plenty of practical implications for plan sponsors, including around employee benefits and total rewards offerings. “I think there’s going to be more companies that are going to offer this flexibility on a go-forward basis,” says Jacquie Fritsch, principal consultant for national benefits at Cowan. “There are a lot of considerations . . . that I think employers haven’t needed before, haven’t thought of before and will have to consider now as they look forward to the workforce post-COVID.”
Cowan, which is based in Cambridge, Ont. and has an international benefits consulting practice, has seen an uptick in employers looking into benefits solutions for workers in other countries. But part of that interest has been a reactive response, says Fritsch, where an existing employee decides on their own to move to another country — whether to be with family or take up residence in a vacation home — because they can work just as effectively abroad. “The No. 1 thing that’s been happening most recently is employees just moving, whether inter-Canada or . . . abroad, saying, ‘I’ve got a laptop and WiFi signal so I can work where I need to’ and not taking into consideration the impact that it will have on their benefits until something happens.”
While some employers may have already been thrust into this situation, Fritsch encourages those that haven’t to avoid getting caught out by determining their remote working policies — including for those working in another province or country — and how they’ll address benefits coverage and duty of care to employees in other countries, as well as how to communicate those policies clearly.
Scotiabank has been proactive about this possibility, making it clear to employees that if they hope to relocate during the pandemic, whether temporarily or permanently, they must first discuss the option with their manager. Ayman Alvi, director of global benefits, says the bank has also provided them with some points they may need to consider.
“What if in two months from now you’re asked to come back to be in the office? How does that impact you? We’re very clear that if you are considering that type of change it needs to be discussed with the bank and your manager to understand the circumstances and that what you’re doing makes sense as it relates to your role.”
This conversation is complicated by the fact that Scotiabank still doesn’t know what a post-pandemic workplace will look like, he notes, though it’s currently making plans. “That uncertainty gives us pause to lay out policy and even go down the road of thinking through some of the options when we don’t know what that’s going to look like.”
Not all employees have set their sights on international destinations — some are more interested in moving to another province. As well, companies of all sizes are increasingly willing to hire talent from across the country, notes Sarah Beech, area president for Arthur J. Gallagher & Co. in Toronto. “I know a small entrepreneurial business and they were looking for a unique skill set in graphic design and the company’s based in Ontario and they hired someone in B.C.”
Those situations are much easier for plan sponsors to manage, says Alexandra Georgescu, vice-president of health solutions at Aon, though the level of impact depends on the type of employer. While pan-Canadian employers with national structures won’t likely face too much of a challenge, plan sponsors that have been operating exclusively in one province will face payroll and taxation implications with their out-of-province staff.
“There are a lot of questions that come in when you have one employee in another province: Do I need to respect the province of employment or the province of residence? Which payroll deduction do I need to apply to their payroll? All those considerations are to be noted and dived into.”
Beyond those questions, employers must think about the provincial health-care requirements. Alvi points out that some benefits plans require employees to be part of their province’s health-care plan, but when someone moves to a new province, there’s a three-month window before they can access the new province’s system.
As well, employers with staff moving into or out of Quebec face additional complications, as the province requires employers’ prescription drug plans to at least match the Régie de l’assurance maladie du Québec plan, notes Georgescu. “[It] has some very distinctive features that all benefits plans need to abide by.”
However, she adds, Canadian insurers often have contractual wording that says they’ll automatically comply with all provincial regulations. Even if an employer based outside of Quebec has a less generous plan than the RAMQ, an employee newly based in that province would automatically gain access to drug coverage that follows the provincial rules.
Fleeing the coop
But what if an employee moves out of the country? Employees can lose their provincial health-care coverage if they’ve left the country for a certain amount of time — and if they need to get back in an emergency, pandemic-related travel restrictions may complicate or delay their return. But beyond that, says Beech, they’ll likely also lose parts of their benefits coverage.
“Most out-of-country policies have a duration, so it may be 30, 60, 90 days. So someone who left and thought, ‘Well, I’m going to be at home anyway so I’ll live in Barbados for six months,’ they would need to really look at the provisions and ensure they had coverage elsewhere.”
Since the onset of the global pandemic, some insurers have implemented fine-print around whether employees can access their out-of-country coverage if they catch the coronavirus abroad, given early government mandates for Canadians to return home, she adds. Long- and short-term disability insurance also have residency requirements, with employees required to return to Canada if they become disabled. “There’s a pretty significant checklist of what you need to look into to make sure you’re appropriately looked after.”
Employees moving abroad open the door to thorny conversations around who’s responsible for coverage, says Georgescu. “Was that the employee’s choice to move abroad or the employer’s choice and who’s responsible for that insurance? You would think the answer is, the employee chose it so it’s his responsibility. But then a legal question arises where, if the employee chose it but I approved it, he’s working for me, do I become responsible or not? Not all of the answers are defined, as we’ll need a little more jurisprudence and a little more experience around this.”
The cost component is a major issue employers will need to consider if they decide to allow an employee to continue working outside the country. “Maybe I’d love to cover [this person], she’s a key employee . . . but covering her in the [U.S.] the same way I cover her in Canada could cost $30,000 just for her and that could be what I pay for my entire benefits plan in Canada, depending on how small an employer I am,” says Khankan. “There’s the want and there’s what you have to do and then there’s what you actually can do. They may not look the same and there’s going to be some hard decisions for employers.”
Meanwhile, employers that are tentatively dipping their toes into the global talent pool need to be aware that offering a benefits plan to those employees won’t look the same as what they offer staff based domestically. Benefits plans for global employees must meet the host country’s employment laws and tax rules and may require establishing a local corporation. As an example, Fritsch points to France, where an employer must have a local entity set up and be remitting taxes.
As well, the benefits that are considered competitive in Canada may not look quite as exciting in another country. While a standard Canadian plan includes health, dental, life and disability coverage with a life benefit payout roughly 1.5- to two-times an employee’s annual salary, an average U.K. plan, for example, has far less focus on health and dental, which is covered by the country’s National Health Service, and the life benefit payout is roughly four- to five-times an employee’s annual salary, including commission and bonus. And in the U.S., group benefits plans are seen as a major talent acquisition tool, particularly for their health coverage.
“You might think, as an employer, ‘I want all my employees across the world to have the same benefits; this is fair, this is equal,’” says Khankan. “But the best thing for employees might not be what you think is fair and equal. It could just be that you’re needing to adjust the plan to be compliant in this country and you need to be competitive.”
As well, employers need to understand the networks their benefits provider has in place in the countries where employees are based to ensure they’ll be adequately taken care of, notes Pamela Kwiatkowski, senior vice-president of distribution and client experience at MSH International, which provides expatriate benefits programs for Canada Life Assurance Co. and Sun Life Financial Inc.
Taking a gap year?
Experts are divided as to whether working from anywhere is here to stay on a large scale. MSH expects globally mobile and expatriate employees will be a growing trend, with the firm estimating roughly 100 million expats will be working around the world in the next decade, according to Kwiatkowski.
But Aon’s survey indicated that, while employees may be big on remote work, there are limits. When nearly 1,000 North American employers were asked how they’re adjusting their relocation policies to accommodate employees’ desire for global mobility, 66 per cent said they wouldn’t allow remote employees to choose a work location outside their current country and 11 per cent were unsure. Only eight per cent allowed the option on a temporary basis, two per cent had added it on a permanent basis and nine per cent were actively considering it.
However, relocation within the country was more palatable, with 23 per cent allowing it on a temporary basis, nine per cent making it a permanent option and 15 per cent actively considering it. Nearly a third (30 per cent) were opposed and 10 per cent were unsure. Looking specifically at Canadian respondents, 55 per cent said no to employees working outside Canada, while the remaining 45 per cent “weren’t necessarily saying yes,” notes Georgescu. “[Movement] is simpler within Canada . . . and there’s more employers open to it because it’s more manageable.”
Mitch Frazer, a partner at Torys LLP and chair of the firm’s pensions and employment practice, sees the trend as an opportunity to take advantage of an unusual year to briefly live abroad. “It comes up from time to time [with employer clients], but it’s not as big an issue, because I think what people are doing is going to live [somewhere else] for a year and they’ll come back when they have to come back. The most interesting story is going to be, what does return to work look like?”
Kelsey Rolfe is a Toronto-based freelance writer.