The Office Is Over (and what that means) is
a collection of Post stories looking at how
the pandemic has changed the view of the workplace
Big Tech was the first to execute sweeping changes to the way its employees worked. Just days after the World Health Organization declared COVID-19 a global pandemic, almost all the employees at Google LLC, Facebook Inc., Twitter Inc. and Shopify Inc. were sent home, with no word on when they would be allowed to return to their perk-filled offices.
Two months later, Google and Facebook extended their work-from-home policies until 2021. Twitter chief executive Jack Dorsey then dramatically shifted the yardstick, tweeting in mid-May that employees who can work remotely will be allowed to do so forever.
Canadian tech darling Shopify immediately jumped on the bandwagon, announcing a “digital by default” model that would continue post-pandemic, prompting a flurry of online commentary ranging from the death of office real estate to the tantalizing prospect of working from a beach in Jamaica.
It seems the future of work is shaping up to be a remote one for a staggering number of white-collar workers. Anyone armed with sufficient internet speed and a working laptop could potentially set up in, say, balmy Barcelona for a month, and cool off in the Cotswolds for the next two months. Even small companies would suddenly have access to a global talent pool, no longer needing to demarcate their hiring boundaries by geography.
A win for all, in theory.
But the reality would be riddled with myriad legal, technical and security complications, ranging from data breaches and sorting out payroll taxes across global borders, to overhauling existing compensation structures and establishing a consistent corporate culture, say experts helping companies reshape their workforces.
Such a shift in the workplace would be complex, and one that could swing in favour of employers as easily as employees.
“We’re seeing a different thought process taking shape around the world of work. Employers started this journey saying, ‘Let’s do this temporarily and get cubicle workers back first in a few months,’” said Jean McClellan, a partner at PWC Canada’s consulting practice. “Now they are saying, ‘What are the factors at play and what will it cost us to completely change the way we work?’”
McClellan said one of her clients, a large financial institution, sought PWC’s services to figure out if it could procure asset management talent from around the world, instead of just locally.
“Their own asset management staff work on quite a global basis as it is, so they also wanted to know does that make them a target for another organization seeking global labour?” she said. “There are implications from an employment-law perspective and from a tax perspective in terms of where the worker resides. All of those things have to be considered before thinking about how to access a different labor pool.”
If you’re an American company hiring a data scientist in Estonia, then Estonian employment laws apply
Donald Dowling, partner, Littler Mendelson
Processing payroll taxes in a foreign jurisdiction is the biggest issue companies will encounter when hiring abroad, said Donald Dowling, a partner at U.S.-based law firm Littler Mendelson PC, who has extensive experience advising companies on international labor and employment law.
“If you’re an American company hiring a data scientist in Estonia, then Estonian employment laws apply,” he said. “You have to report their income to Estonian tax authorities; you can’t just put them on the U.S. payroll.”
Dowling said many companies won’t go through the logistical hassle of paying taxes in a foreign jurisdiction just for one recruit, even though they could use the services of payroll processing companies such as Automatic Data Processing Inc. (ADP) and Ceridian HCM Inc. as intermediaries.
“I’ve seen U.S. companies that pay their foreign recruits offshore, because they know that the local tax authorities would probably not come after an American company that has no roots in, say, Estonia, beyond that one worker,” he said. “But just to be clear, that’s a crime.”
Guatemala, the United Kingdom, Thailand and Ecuador are exceptions to this rule: a foreign company is exempted from local payroll taxes if it doesn’t have any assets or branches in any of those four countries.
One added complication, according to Dowling, is that a company would also have to give foreign employees all the benefits that come with living in their jurisdiction since it would be subject to local employment laws.
It is not simple to just let an employee work abroad if they wanted to, or hire a foreign recruit
“I’ve seen a number of cases of employees for American companies in France asking for maternity leave, paid sick days, vacation time and hours according to French employment law, which they are entitled to, but those companies would not have wanted to (give them that),” he said.
“For all these reasons, it is not simple to just let an employee work abroad if they wanted to, or hire a foreign recruit unless the cost and logistical aspect made sense.”
Data security is another issue since remote workers are easier targets for hackers because they are less likely to have the same kind of encryption protocols as employees back at the office.
In one example that has already reared its head, the U.K.’s National Cyber Security Centre and the U.S. Department of Home Security in early May warned that sophisticated hacking groups were looking to obtain information related to “national COVID-19 responses, health care research, and targeting organizations in sectors like health care, pharmaceuticals and academia” by exploiting remote workers.
McClellan said large employers would have to consider security implications when expanding their labour pool outside Canada. In particular, heightened security protocols exist when data travels between foreign and domestic servers, assuming a worker abroad is communicating with a domestic team on a daily basis.
It’s potentially expensive. You have to hire the right tech people to support these security protocols
Jean McClellan, PWC Canada
“It’s potentially expensive,” she said. “You have to hire the right tech people to support these security protocols.”
Despite these complexities, Sara Sutton, the founder and chief executive of FlexJobs Corp., a job search company dedicated to remote work, said she’s seen an uptick in the number of companies offering increased flexibility in location when hiring.
“The interest in remote work had already been on the rise over the last 15 years or so,” she said. “This pandemic has just exacerbated the openness that both job seekers and employers have towards this way of working.”
The majority of companies increasing their share of remote workers still tend to be from the tech sector, but Sutton said she’s seeing many roles within health care and education that are morphing into remote jobs.
In a survey of the 54,000 companies listed on FlexJobs site, two e-learning companies, China-based VIPKid and Toronto-based EF Education First, were among the top 10 companies globally that went on a hiring spree for remote workers in 2019.
The data also show that Amazon.com Inc., American Express Co. and Anthem Inc., an insurance company, were the top three Fortune 500 companies hiring remote workers last year.
Sutton said companies tend to become more flexible when hiring during a downturn, but revert to more full-time, on-site employees when things are good.
“A full-time employee comes with more costs, so what we’re seeing now is an increase in freelance, remote and part-time hiring,” she said.
But as companies begin crafting a new way of working, they’ll also look at the elaborate perks they often use to attract employees.
For example, Google employees have access to free custom-made meals, nap rooms, a pantry filled with healthy snacks, kombucha and cold brew, game stations and bathroom shower stalls, not to mention rooms designed for “healthy working” (read: yoga balls). Similar perks exist at many other Big Tech firms, including Facebook, Twitter and Shopify.
McClellan believes that such perks might attract individuals to a certain company, but her data show that office perks are ranked as “one of the lower incentive items” when compared to better working hours and a meaningful work environment.
“What we are hearing from employers, based on feedback from their employees, is that (employees) want a connection to purpose and meaningful work and that’s what drives retention,” she said. “If you can provide a job with meaning, is that maybe better than all of the bells and whistles?”
But some perks can also help develop a particular corporate culture, which is more difficult to do if people are in far-flung locales and don’t often meet in person. Sutton’s company, FlexJobs, has adjusted to the work-from-home situation by offering employees online perks.
“We organize online trivia game nights. For Halloween, we are going to send out different packages of treats to our employees’ homes,” she said. “You can do a big variety of things to cultivate a strong remote work culture, and, to be honest, most organizations don’t offer the perks that Google and other big tech companies do.”
GitLab, a Silicon Valley-based startup with more than 1,200 employees distributed across 65 countries, created a “Head of Remote” position months prior to the pandemic.
The company said its first Head of Remote, Darren Murph, is in charge of guiding and managing GitLab’s clients and partners through any kind of remote workflow issues, as well as building an “all-remote culture.”
Almost four in 10 Canadians, according to Statistics Canada, have the technical ability to work remotely if their workforces implemented it permanently, which could end up being both good and bad for employees, said Eddy Ng, a professor of management and organizational behavior at Bucknell University in Lewisburg, Pa.
“Many employers have not yet touched the compensation structure, because they are not sure how long this pandemic is going to last,” he said. “But one of the key things to know is that jobs that are advertised as ‘telecommute’ do pay less.”
One of the key things to know is that jobs that are advertised as ‘telecommute’ do pay less
Eddy Ng, Bucknell University
Facebook noted that its salary structure could change based on geography when it announced earlier this month that it was moving towards a model where up to 50 per cent of employees could work from home permanently if they chose to.
“If you’re out in the Prairies, and you’re no longer paying for commuting and living in downtown Toronto, of course, your employer is going to start arguing that your own costs have gone down, and, therefore, your compensation could come down,” Ng said.
Geoffrey Leonardelli, a professor of organizational behavior at the Rotman School of Management in Toronto, said there’s some evidence suggesting that people higher up in an organization have an easier time transitioning to remote work, because they are more likely to have a home office.
“They may not be aware of the challenges that come with getting work done in a small space,” he said. “How do you address that problem?”
Leonardelli’s research, however, indicates that employees mostly benefit from a remote work scenario, although his research didn’t factor in working remotely during a pandemic.
“Employers may also benefit, but perhaps employees more so,” he said.
There is also the question of how much employers save when employees work from home, given that workers pay their own electricity and internet bills.
“The argument is, should employers be paying for Wi-Fi? If they reduce salaries, what are the costs that employees have to still bear given that they need access to good technology, encryption and strong internet?” Leonardelli said.
Last week, the German-language paper Tages-Anzeiger reported that Switzerland’s top court ruled that employers were required to pay employees’ rent if they are expected to work from home. The court decision, which has yet to be made public, resulted from a dispute between an accounting firm and an employee who was working from home. The employee said he had to rent a bigger apartment in order to comfortably work remotely.
Many big Canadian companies, including the big banks, insurance firms and accountants, already provide a small stipend for employees to set up work-from-home offices. Canadians working from home can also claim a portion of some of their home expenses when filing their taxes.
Ng said companies, for the most part, are not going to want to run two sets of costs when it comes to making a cost-benefit analysis of remote working.
“You’re not going to see many companies wanting to maintain their downtown Toronto offices spaces at high rents, and yet providing technology, upgrades and stipends to their workers at home,” he said.
The billion-dollar question, of course, is: Will remote work stay at current levels in a post-pandemic world?
Ng is not particularly convinced that the majority of companies will go down the remote work path forever.
“I don’t see a mass migration to telework after we find a vaccine unless employers can reach a critical mass with the number of workers who want to work remotely, in order to realize savings,” she said.
Sutton, however, who has been involved in the remote work sector for 13 years, is confident the trend will continue, because remote working offers an “emergency preparedness insurance” for employers.
“It helps employers to have an option for their employees to work from remote locations in case of snowstorms, shootings, massive events that we might not be able to predict,” she said. “I don’t think we are ever going to go back to the naive time where organizations were putting their head in the sand about remote work.”