Digitalization has led to increased control by authorities and enhanced compliance requirements. Hence companies must focus more on administration of international transfers of employees to comply with the regulative requirements.
We have interviewed an expert in Global Mobility and the article is packed with important information and actionable advice from NICCI member Thanabal Vijayaindra, that has consulted for companies as Bilfinger IS Norway, DNB Bank, Sapa, DNV GL, SINTEF & Yara International.
-What is Global Employee Mobility?
Most businesses operating in a global market do have mobile workforces. Global Mobile employees can be workers who are transferred to another country on a long-term or short-term assignment. They can also be business travellers, who travel often to other countries, or commute to another country regularly.
-Can you give a real-life example of a complicated multi country employee movement? (To illustrate how complexed things are)
An employee of South Africa in a Norwegian multinational company was moved on a Long-term assignment to Norway for three years. He obtained a work permit in Norway for the during of assignment in Norway. After some months he had been selected as the project manager to run a six-month project in Australia. After a long process of application, a work permit to Australia was obtained. Upon successful delivery of the project in Australia, the same employee was asked to take responsibility for a training program for technical staffs in Belgium.
These multiple assignments during the three years of assignment position in Norway resulted in complex issues for the employer as well as for the employee. Some of the main issues to be handled carefully by both parties are:
- Obtain appropriate visa and work permit for each location. Start the process early!
- Which company bears the costs of each assignment (final place of charge)
- Payroll obligations in all three locations (Tax Deduction, Social security membership etc.)
- Multiple reporting obligations for employer and obligations for employee to submit tax returns in three countries
- Building a competitive compensation package to compensate for hardship and varying cost of living situations
Without having a common policy and procedures to handle these multiple issues, a company may face difficulties in terms of employee satisfaction as well as unpredictable legal issues and financial expenses.
-What are the key challenges for Norwegian companies having employees working from multiple locations?
Norway, as part of European Economic Area (EEA), can utilize the multilateral agreements to avoid double taxation situations and to secure appropriate Social security membership for employees on cross-border assignments. This possibility gives the employers a reasonable chance to predict the costs and possibility to manage employee expectations.
However, the increasing number of cross-border assignments from Norway has been to countries outside the EEA, which creates issues that need careful management and compliance.
- how to build compensation package for assignees coming from countries with lower employment costs to Norway with extremely high cost of living and salary levels
- how to compensate the employee for the different work time regulations in Norway compared to the home country regulations
- how to protect the employee from higher tax and social security rates on the employment income
Apart from the financial side of complex issues mentioned above, the inter-cultural understanding and management of a multi-cultural workforce has been on the agenda for Human resources management (HRM). The world is becoming increasingly global and that all aspects of management, including HRM, are becoming more alike. Success and failure of a project can simply be depending on proper management of workforce.
-How complexed is it when Norwegian companies post employees in India? What are the main things to handle?
As India continues to be the fastest growing economy in the G20, the country has attracted more foreign direct investment (FDI) and professionals into the country. The strategy of Norwegian authorities has been to strengthen Norway’s bilateral relations and economic ties with India.
One of the important agreements made between the two states to facilitate the cross-border assignments was the social security agreement to avoid double deductions from the income of employees working in each other’s countries, and allowing short-tenure Indian workers in Norway to get back social security deposits in Norway.
Norwegian companies sending their employees on temporary assignment should also be aware of the following:
- The assignee would require a tax residency certificate (TRC) from the tax authorities of Norway to avail treaty benefits in the India tax return
- The due date for filing the India tax return is 31st July following the end of every fiscal year. This deviating tax year compared to the calendar year filing in Norway creates a set of new challenges for the Norwegian employers with respect to data collection/allocation and reporting on behalf of the assignee.
- As per the provisions of the Provident Fund scheme of India, both employer as well as employee will contribute 12% of monthly pay. A Certificate of coverage (COC) should be obtained from the Norwegian social security authorities (NAV) and filed with the PF authorities in India to avoid double coverage and costs.
How about Indian companies with staff in Norway?
Higher cost of living and minimum wage regulations in Norway tend to escalate total costs for the hiring company in Norway. The salary level and total compensation in India vary from the total reward structure in Norway. Designing compensation in line with the customary practise and local regulations in Norway is one of the main tasks for management.
Apply for the correct visa/work permit type well ahead of the planned start date of assignment. The employee is not allowed to perform work before he/she has received the work permit documentation. Upon receipt of the work permit, obtaining a national insurance number in Norway is the key to every other actions later (bank account, salary payment, reporting etc.) Hence, providing the support and assistance to the newly arrived employees to Norway has always been a good investment.
-What are the immediate effects of the Corona crises, in a global mobility perspective?
Nationwide lock down periods followed by preventive measures taken by the countries around the world to stop virus spreading has resulted in many early terminations of ongoing assignments. Companies have imposed travel restrictions and postponed planned projects. The number of cross-border transfers has decreased during the last 8 months.
Assignees accompanied with their families have been requested to stay in the host location for extended period due to the travel restrictions imposed by governments. Unaccompanied assignees have not been able to see their families for months because of the local lock down periods. This has caused unexpected costs and other practical problems for the assignees and for companies.
As result of difficulties with travelling and cross-border movements of employees, more and more companies have introduced virtual mobility scenarios. There are some hidden costs and compliance risks in these scenarios. Working from home has become the new normal for many office workers during the pandemic. Important point here is, working from home “in which country”? We are going to see a lot of regulatory changes on the field of cross-border posting and positions in the coming months and years.
-How did you get into this field and for how long have you been working with it?
It was a great opportunity that I got a temporary job with Norsk Hydro ASA in 1995. I started working in the field of International Taxation and reporting of employment income to various tax authorities. Guidance and support I received from the Manager and the colleagues in the department gave me the push to learn more on the cross-border transfers and the challenges employees and companies had to deal with. Combined with my interests and company’s need for increasing the staff in the department, I continued my career in Norsk Hydro during the period of many mergers and acquisitions.
Then the time changed, and I started looking for new challenges. In 2009 I moved to Telenor and worked in close cooperation with Telenor’s newly established company in India (Uninor). It was my biggest opportunity to learn more about the complex regulations for foreign companies and employees coming to India. I realized how difficult it would be for any company to navigate in the complex world of regulations. I started thinking, maybe there is a market for such services in the Norwegian business environment?
In 2012 I decided to leave Telenor and established my own consulting company. The main objective was to support small and medium sized Norwegian companies who had to deal with all these complexities. Hence, I Started Kichans Easy Steps AS and delivered services to clients in Norway.
-Which companies have you worked- or consulted for?
Since the creation of Kichans Easy Steps AS in 2012, I have served as consultant and business advisor for many companies, like Bilfinger IS Norway, DNB Bank, Sapa, DNV GL, SINTEF, Yara International.
-What kind of consulting are you offering?
We are offering consulting and training in following areas of Global employee mobility:
- Support with designing Global mobility policy
- Establish Process and Procedures for handling assignments in accordance with established policy
- Support and guidance to select insurance and pension plans suitable for the host location
- Prepare assignment agreements
- Prepare compensation packages in accordance with company’s assignment policy
- Support with data collection and reporting of employment income to various tax authorities
- Prepare cost estimates and support-materials for decision makers
-During the last years you have been developing your own cloud platform for companies to administrate their global mobility. Who is it for?
Ever changing complex regulations for income reporting and the need for timely and correct data collection from many locations created a need for centralized database and a simplified software. For companies with small number of assignees in few locations, it was always a challenge to find a suitable and cost-effective IT solution in the market. We created a cloud-based Global mobility management tool “SWAIRI” to facilitate collection and sharing of relevant data for companies and their service providers.
-What is the key benefit for the companies?
Key benefit for companies using SWAIRI is “Correct data at correct time for correct purpose”.
-Key features in the system?
The system SWAIRI provides the user with many features that have hitherto been done with the help of number of Excel sheets and exchange of data through emails. Here are some key features:
- Collect all employee data and assignment related data in one database
- Easy access for stakeholders from around the world to register/import data “Only once” to avoid duplications
- create own reports with Report generator and templates for agreements
- Simple cost estimate calculator, including the tax and social security costs for selected countries
- Dashboard showing overview of assignee population and various other financial status
-Do you have some advice for Norwegian companies with employees spending time in India?
- Regulations are rapidly changing in India to coop with increasing demands from business environments. Spend time in the preparation phase to collect important information.
- Cultural aspects are not to be underestimated. Specially for employees bringing their families on assignment, it is important to take course on Inter-cultural understanding and learn more about “Dos” and “Donts” in India
- Discuss with companies already entered the Indian market and create a relationship with assignees already living in India
- Join the local clubs and common interest groups to get more connections with the local population. The accompanied spouse and children need social network while the assignee is busy with work and company activities.