7 Challenges Caused By The Remote Work Revolution (Employer’s Guide)

The rise of remote work has revolutionized the traditional workplace, providing employees with newfound flexibility and companies with expanded talent pools.?

However, as businesses embrace this transformative shift, they must also confront a host of challenges.?

In particular, authorizing remote work across borders brings a unique set of risks and complexities that employers must navigate.?

In this article, I will look at the seven main challenges employers may face when their employees perform their duties remotely from a foreign jurisdiction.?

Let’s get started.

1- Minimum Labour Standards Requirements

An important challenge employers can face in dealing with remote work practices is the potential of having to deal with foreign labour laws.

Typically, different jurisdictions will have a set of laws and statutes imposing on employers obligation to provide their employees with certain minimum labour standards.

For example, in the province of Quebec, the Act respecting labour standards sets out the minimum acceptable working conditions employers must offer their employees.

As such, the location where the remote worker is physically located may be the primary factor in determining the applicable statutes setting out the applicable minimum labour standards.

For example, in a traditional setting, an employee working in Quebec for a Quebec-based entity will benefit from the minimum employment standard laws applicable in Quebec.

However, if the same employee moves out to British Columbia and continues to work for the Quebec-based entity, the applicable minimum employment standard laws can shift to that of British Columbia.

Employers should have a proper account of where their employees are located so they can anticipate and comply with the minimum employment standards applicable to their employees.

2- Court Jurisdiction Challenges

Another important challenge in cross-border remote work is determining the proper court jurisdiction.?

Typically, this complex task hinges on the actual location of the employee's work.?

For example, in a traditional work environment, it may be easier to establish court jurisdiction when the employee works and lives in the same jurisdiction as the employer.

However, it can get quite complex to determine the proper court jurisdiction if the employee actually works in one jurisdiction, with an employment contract subject to the laws of a second jurisdiction, and the employer based in a third jurisdiction.?

To tackle this issue, employers should consider proactively managing the workplace through carefully crafted employment agreements and remote work policies.?

3- Safeguarding Sensitive Information

Over the last decade, we have seen an important push by many jurisdictions around the world to adopt data protection and privacy laws designed to protect personal information shared with businesses.

When you have employees working from a foreign jurisdiction, you will necessarily have to take into account your compliance with data protection and privacy laws.

For instance, if a Canadian entity with employees located in Canada shares personal data or sensitive information across jurisdictions to remote workers located in Europe, the data transfer will trigger the application of European data protection laws, such as the General Data Protection Regulation (GDPR).

Consequently, employers will need to implement technical and organizational measures to ensure that the information obtained by their remote workers is adequately secured and properly safeguarded.

Also, should there be a data breach, the Canadian entity will not only need to deal with Canadian data protection statutes in Canada but also with the applicable statutes in foreign jurisdictions requiring them to possibly make data breach disclosures to foreign data protection supervisory authorities.

4- Unwanted Tax Consequences

How could we talk about the risks associated with remote work without talking about taxation!

If you are a company offering remote work options to your employees, you should take into account the tax consequences of such a decision.

Typically, companies will need to report their income within jurisdictions where they have an establishment and generate revenues (although these requirements can vary for every jurisdiction).

To the extent there is a sufficient nexus with that jurisdiction, income taxes may need to be filed.

Now, when a company authorizes remote work, if the remote workers perform revenue-generating activities for the business and that their activities create a sufficient nexus with the foreign jurisdiction based on their applicable laws, then the employer may be required to file income taxes within the jurisdiction.

Similarly, remote employees personally earning revenues while working from a foreign jurisdiction may also be personally impacted by the foreign tax laws that may be applicable to them.

5- Insurance Coverage Challenges

Without proper disclosures to your insurance carrier, your remote work policy may adversely impact your insurance coverage.

Companies typically carry a wide range of insurance policies protecting them against risks and liabilities.

However, when you authorize employees to work remotely from foreign jurisdictions, you may be surprised to find out that your insurance carrier may deny coverage when confronted with a claim.

For example, if a remote employee’s acts or omissions cause injuries to a third party, your insurance carrier may refuse to cover the thirty-party claim if your insurance disclosures were inaccurate.

Insurance companies generally evaluate their risk exposure based on the size of the company, the geographical location of the employees, the nature of the business, applicable jurisdictions, and many other factors.

If the remote worker exposes the insurance carrier to additional risk that it had not factored into its premiums, the coverage can be denied.

6- Workplace Accident Issues

In most jurisdictions, there are laws and statutes that are adopted to protect the health and safety of employees.

Traditionally, employers without remote work policies were in a better position to identify and manage their legal obligations as it related to workplace accidents as all their employees worked out of the employer’s offices or establishments.

However, remote workers are able to perform their duties from their homes, hotels, rental units, or any other location as they simply have access to the Internet.

In this context, employers should keep in mind that even though the employee may be working from a remote location, they remain responsible for their employee’s health and safety.?

Remote employees getting injured remotely may validly hold their employer liable for their losses.?

Furthermore, employees residing outside the jurisdiction of their employer can face potential coverage gaps in case of work-related injuries.?

As such, employers should make sure that they address the health and safety of their employees even if they are working remotely.?

7- Immigration and Work Authorization Issues

Many employers assume that their employees are authorized to work remotely from anywhere without any immigration formalities.

However, this assumption is incorrect.

Residing and working in a country other than one's citizenship can entail adherence to foreign immigration rules.?

Employers must ensure that their employees are duly authorized to work out of the jurisdiction where they are actually located.

For example, Canadians typically do not need to obtain a visa to enter the United States for the purpose of visiting or studying.

However, if a Canadian employee enters the United States without a visa but ends up working out of the United States, that can result in a violation of US immigration laws.

This can be problematic for both the employer when sending workers for legitimate purposes in the United States or the employees personally who may be barred to enter the United States without a visa.

Depending on the nature of the work being performed, duration, and other factors established by foreign immigration laws, Canadian employees may need to apply for a visa authorizing them to work in another jurisdiction.

Takeaways

As remote work becomes increasingly prevalent, employers must proactively address the potential challenges they may face in a cross-border setting.?

The purpose of this article is not to suggest that remote work will expose employers to excessive risk and should be prohibited but is intended to shed light on some of the possible challenges that will need to be addressed.

With the proper grasp of the applicable laws, compliance requirements, and impact on their business, employers can safely navigate the complexities of employees working remotely from another jurisdiction.

In this article, I have highlighted seven of the most common legal challenges that employers may face.

However, keep in mind that my list here is not exhaustive.?

I hope that I was able to provide you with a general overview of the challenges faced by employers helping you implement remote work policies intended to balance all the benefits associated with remote work and possible pitfalls.

Remember, if you need legal advice on this topic, be sure to speak with a qualified attorney.

Good luck!