The speed at which the coronavirus pandemic took hold over the world in early 2020 undoubtedly caused various degrees of disruption to many organisations’ international assignments of employees.
Recently we created a survey with leading accountancy and investment firm Smith & Williamson LLP and international employment law alliance Innangard and Innangard Executives to explore the ways in which our national and international contacts and clients responded to and planned to manage the continued global mobility challenges faced as a result of the pandemic, with specific focus on international assignments and expatriate employees. We are delighted to be able to share the results and key themes and analyses with you.
Immediate impact of the coronavirus pandemic on global mobility
International travel restrictions and quarantine requirements had an obvious and immediate impact on the global mobility of those hoping to relocate and those already relocated abroad, leading to expatriates either being stranded abroad in their host countries beyond their planned assignment or having their assignment cut short to allow them to return home earlier than planned and within the appropriate travel windows as they applied over the course of 2020.Organisations have been dealing with last minute obstacles such as visa rejection in the host country for planned international assignments, meaning such assignments cannot go ahead causing disruption to long-term business strategic plans. Coupled with the turbulence and eleventh-hour finalisation of Brexit, some organisations with expatriate employees in the UK had to formulate emergency plans for repatriation of certain assignees. The difficulties of this were worsened by urgent, heightened travel restrictions in response to the emergence of the new and more infectious British variant of the virus in December 2020, with a number of countries banning flights to and from Britain.
Short-term business trips of globally mobile executives have been drastically reduced, with a majority of organisations turning to virtual means of communication to carry out what previously would have been in-person meetings.
In addition to the impact on expatriate assignments and short-term business trips, an overwhelming majority of organisations experienced an increase in the number of “in situ” employees requesting to work from their homes internationally or in a country other than where their employer’s office is ordinarily located, due to national lockdowns preventing attendance in the physical workplace. This brought with it a plethora of issues for employers to grapple with, such as ensuring implementation of appropriate homeworking policies, equipment and technology provision, data protection matters and ensuring compliance with local immigration, tax, host-country payroll withholding and social security consequences. Regarding the latter, in order to be fully aware of the associated obligations, some organisations sought specialist advice, whilst others were alarmingly oblivious to the potential ramifications: we would encourage such employers to seek appropriate expert advice at any early stage to avoid pitfalls.
What have we learned?
Organisations have reported that the main challenges to international assignments as a result of the COVID pandemic relate to ensuring tax compliance and to family-related issues, such as spousal career and salary disruption caused by an unexpected extended stay in a host-country, urgent preparation of education and living arrangements for families, and immediate compassionate leave required in unfortunate circumstances of COVID-related family illness. Lack of formal policies, or policies that were not prepared with a pandemic in mind, have also been cited as causing difficulties for organisations. Employers should always be wary of the double edged sword of having irrelevant policies in place that serve no practical use beyond the paper they are written on and policies that are too rigidly drafted, creating administrative burdens for organisations.
Accordingly, organisations reported that the benefits and package elements especially relevant to expatriates during the pandemic were medical and spouse/family support related.
Mental health support and counselling was cited as being particularly important, alongside appropriate consideration for children being required to relocate and change schools in uncertain economic times. It has been suggested that contractual notice periods for international assignments should be aligned with school terms in host-countries in an attempt to cause as little disruption as possible to children’s education.
Looking ahead to the future
Organisations agree that the pandemic will have a broader impact on the form and use of international assignments going forwards.
Some envisage that senior employees who were previously required to relocate internationally for an assignment may now be reluctant to do so, given that the forced homeworking and travel restrictions endured during the pandemic have demonstrated that certain roles and tasks are capable of being performed from practically anywhere in the world, and that technology advances have allowed them to engage effectively with appropriate individuals already situated in the relevant host country. Indeed, provided there is an internet connection and appropriate equipment/technology in place, an assignee may now be of the view that the upheaval of their life and family to an entirely different country is unnecessary. Similarly, organisations may now deem the cost and administrative burdens associated with arranging and successfully executing international assignments superfluous in the circumstances; this will be especially so for organisations that have already restructured strategic models to compensate for the changing nature of assignments during the pandemic period.
The impact on international assignments will, of course, vary based on the specific organisation and/or industry. Indeed, our survey participants do not predict that international assignments will be entirely obsolete, as one third of survey participants answered no when asked whether advances in technology and virtual communication platforms will reduce the need for global assignments in the future, stating that the role performed by expatriates requires presence on the ground locally, regardless of technological advances.
Organisations also predict an increased desire for hybrid home and office working from employees. This will impact where potential international assignments can feasibly take place, as employees may no longer be amenable to a move requiring them to live in a city, typically in a small apartment-style residence and attend the workplace for the entire working week.
Another concept which may impact the pre-COVID permanent and long-term nature of international assignments could be the increased use of regular short-term business trips to the particular country to carry out specific meetings or elements of projects, instead of permanent relocation to the country. However this will be dependent on flexible and regular travel resuming and on careful planning to ensure compliance with maximum time periods of stay within a jurisdiction to avoid unintended and adverse tax and social security consequences.
Other important points identified in the survey:
- The majority of organisations consider that there will be an increase in employee self-initiated moves, presumably owing to the increased options for where and how work can be carried out, given how easily multiple sectors have adapted to remote working as a result of the pandemic. This, in conjunction with the pre-pandemic rise in self-initiated moves amongst the millennial generation for career development and international experience reasons, could further inflate self-initiated moves. Organisations should be mindful of this and recognise the value in pro-actively exploring this move-type with employees and putting in place appropriate policies and procedures so as to drive change, rather than allowing a drift back to the “status quo,” leading to a consequential flight of talented people to more forward- thinking organisations.
- Generally, organisations do not expect great change in assignee demographics, with predictions that the number of female assignees will stay the same over the next 2 years. The majority of organisations consider that gender diversity has not evolved in global mobility programmes over the last 5 years. This is unfortunate news as a continued minority of women in expatriate positions suggests that diversity and inclusion at senior leadership levels is impacted. Beyond the present troubles of the coronavirus pandemic, organisations keen to succeed and grow might be wise to turn an eye towards gender diversity of international assignments to assess whether any proactive initiatives can be introduced to ensure that opportunities are not lost.