Alex Thompson, founder and CEO of legal support provider Legaroo, thinks the digital nomad lifestyle is “wonderful.” He’s also got some words of caution.
The growing, geographically free lifestyle of digital nomads challenges companies to update their recruiting, legal and risk procedures. The trend is part of business travel’s evolution since these employees work on behalf of the company from “anywhere” and should be “chaperoned” in some of their choices.
Because of the risk involved, HR, legal, travel procurement and corporate leadership must be engaged. They should implement policies and update labor contracts to avoid unexpected liabilities when recruiting and hiring. I would suggest hiring a specialized consultant with an understanding of international risk management and even going so far as to consult with immigration and tax advisors to review some preliminary points.
Here are some additional considerations.
Company policies. Firms need to figure out when an employee becomes an “acknowledged” digital nomad. How discretionary is it for an employee to become a digital nomad, with all the potential related issues such as payment, taxes, social security, travel expenses and many more items?
The definition of “home” could be a national or international address, but what about multiple destination addresses and the applicable timeframes, tax and social security implications? Companies should be clear about the repercussions of employees failing to disclose their locations and well-informed about local legal obligations and the risks of non-compliance. They should work out any responsibilities for leisure activities and travel.
And what’s the company’s definition of in-person and remote meetings, and are digital nomads exempt from showing up in real life?
Recruitment processes. The ultimate corporate objective is to hire and keep “talent.” However, labor contracts must be drafted for recruits and adjusted for existing employees to fit the digital nomad lifestyle. The conditions of employment must deal with non-compliance of the digital nomad to corporate policies, as this may generate unwanted and expensive liabilities.
Cyber-security standards. How can the company deal successfully with confidentiality guidelines and cyber security when the destination may be tech-risky or unknown? Companies should review their liabilities in the case of a digital nomad’s breach of client information and communicate obligations to use approved hardware and software when dealing with company business.
Duty of care. Company policies on providing safety and prevention measures for digital nomads abroad are crucial. Is the company providing the most comprehensive medical and legal assistance for that employee and family? Organizations need to be crystal clear about what insurance covers and does not cover. Even if you have the best insurance and assistance products, we have seen that political unrest, war, natural disaster, pandemics and many other situations may trigger exclusions to execute assistance and payment from the insurer. Companies should ascertain what policies, if any, relate to “uninsured” situations. Judges may be more willing in certain districts to grant compensation for suffering and damages endured by employees than companies anticipate. This has been particularly true and traumatic for some companies when dealing with the Russia-Ukraine war and the urgency it created to expatriate/relocate their people. Firms are wise to have a robust emergency reserve to deal with uninsured situations.
Economic and political well-being. Are company policies clear about where the digital nomad is not allowed to move, travel or call home? Adventurous types might like to reside in risky areas. Companies may want to create a list of forbidden countries if they don’t expect to be able to assist in moments of stress. Organizations should also determine how they would handle new risks. When a political or economic crisis occurs in a digital nomad’s home, a company would want to have already created procedures for calling them back, relocating or even terminating them.
Related to this, to what extent might employees be willing or able to legally renounce corporate, duty of care, safety and prevention rules and, even if they did, would courts still insist on corporate responsibility?
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The digital nomadic lifestyle enables millions to enjoy a unique mix of work and personal experiences while residing in other countries for short or long periods. It’s a wonderful trend.
It’s also in companies’ best interests to retain the digital nomad’s skills while having policies that provide for duty of care, safety, prevention, crisis response, cyber security, benefits, wellness and perks. Employee responsibilities, conditions, waivers and obligations should be bulletproof.
All of this can create stronger, thriving businesses.