“As employers prepare for post-pandemic employment, what working structures are most treasury teams pursuing and what are the key benefits and challenges to consider?”
As companies move toward hybrid working arrangements, there are many broad issues to tackle from tax and regulatory compliance to real estate and business strategy. Finance and treasury departments need to be attuned to these different impacts and plan effectively alongside other parts of the business. And when it comes to tax and human resources, there are real obligations to consider by allowing people to work in different countries (in the US this applies to different states too), away from their home working locations. Treasury will need to assess what this means from a cost perspective, and where the company is putting its funds.
Earlier in the pandemic, authorities announced reliefs to mitigate unintended tax consequences of having people work in places where ordinarily they wouldn’t be. Largely, however, these no longer apply. Where employees are still working remotely or in a hybrid arrangement, there is now the potential of companies accruing tax risk in these different countries. Treasury will have to think how this could impact the audit and how the business should address this.
It is important to remember, however, that while the working landscape has changed, the tax regulatory landscape hasn’t – we are back to where we were pre-pandemic, governed by double tax treaties and other bilateral and multilateral tax and social security agreements. This means employees in a different country could foreseeably create corporate tax exposure. Treasury and finance teams will have to determine if that individual could, by virtue of how long they are there or what they are doing, create a permanent establishment, which is deemed as a corporate taxable presence for the company and could force the company to pay corporate tax in that foreign jurisdiction.
There are also risks for companies as employers. Companies may need to register as an employer or operate a payroll. If companies don’t do this, they are potentially liable for the tax not withheld for the employees in that location. In short, it could open the company to employment taxes it might not otherwise be subject to, and in Europe particularly, the employer social security costs can be significant.
Although it’s still early days to identify what enforcement activity will be taken by tax authorities, we’ve seen cases in Israel and New Zealand where employees working remotely have been contacted by tax authorities and told they need to pay taxes. This tax season could put employees on those tax authorities’ radar when tax returns are filed – and companies must be prepared to address any tax consequences that arise.
The workforce has been liberated in a way unforeseen at the start of 2020, with many businesses that wouldn’t have considered hybrid working now accommodating what employees want – which is now amplified, given it’s an important source of talent attraction in a post-pandemic work environment. Companies must find a way to navigate a path forward that meets their business needs and manages tax and employee obligations. By leveraging tools to track the correct tax requirements for an employee’s work locations and the element of change management around the payroll, companies can effectively tackle these new complexities.
We are seeing our corporate clients adopting various work arrangements, with some bringing staff back and others offering the flexibility to work from home. There are some who have adopted new approaches such as designating a specific day per week for people to be in the office for in-person interaction and meetings. One of our clients did that and I thought that was an interesting approach.
For us, we are also gradually getting our employees back into the office, in line with local guidelines in various markets. We believe that an office environment works best for our employees and that it helps with the interaction and culture building. Our juniors and interns will also benefit from the in-person coaching and mentoring that will take place by being in the office.
We are also seeing changes to recruitment practices. There is now more flexibility such as hiring talent from locations outside of the office where the role is based. For instance, some of our US headquartered clients are now asking if they really need to have in-country roles for their Asia Pacific operations. They are exploring if it may be best to hire in the US for now then relocate those employees in Asia as the business grows to meet local regulations and guidelines.
While there have been various upsides to remote working, it has also brought to the forefront the importance of mental health and well-being of employees. Working from home over such a long period of time meant that the lines between working and personal hours are now blurred. It is not unusual to hear that people are working longer hours, with commuting time now spent on emails and calls instead. There is a real element of virtual fatigue as people are working much harder to stay connected with colleagues as compared to being in the office.
As the world moves on to gradually reopen, we will start to see various models being tested and adopted but one thing is certain, the future of work will continue to evolve.
We had a flexible working policy in place even before the pandemic and our approach to ways of working will remain flexible and the individuals will continue to be managed by outputs and measured in terms of meeting their goals. We know some colleagues would benefit from more time spent together and some individuals have expressed a desire for a blend of office and remote working. Our response to this will be to introduce a “Hub, Home, Roam” approach which will rely on trust and flexibility.
We have used the feedback gathered from colleagues to put together a plan for future ways of working at Golding Homes and consider how colleagues can safely return to the office over the coming months. We will be doing everything possible to support and keep both colleagues and customers safe. We always had a flexible working policy and given the success of remote working over the past 18 months, we will explore the possibility of further expanding the flexibility of recruitment policy in treasury as necessary.
Clearly there will be fewer face to face bank meetings in the short to medium term and it’s likely the trend will continue in to the long term. As the treasury team is small, we managed to keep the team dynamics broadly the same during the pandemic and made a conscious effort to have more frequent conversations with the team members. Whenever possible we reduced the number of emails and had video calls with the colleagues instead. We set aside some of the saved commuting time to have non-work-related catch ups.
We will continue to use various internal communication channels to promote treasury successes to the wider business. Long working hours and the blurred work life balance was clearly harmful. As a result, we are having ongoing discussions in the team to constantly remind each other of the importance of having a clear separation between work and personal lives. Also, the blend of remote and office working going forward will hopefully aid in getting the right mindset to have a clear separation and avoiding potential long working hours.
Despite experiencing some challenges in performing certain tasks, overall productivity and efficiency has improved. Frequent team catch ups have strengthened both the professional and personal relationships among the team members. The individuals have become more open and supportive of each other than before.
There’s a real acceptance that the office is all about connecting with people now to develop collaboration, swap ideas and to illicit support and development. At the same time, the ability to work remotely is also extremely useful especially when you just need to “get things done”. A healthy balance between both is our rationale for the way forward here.
The benefits to take from our working patterns over the last 18 months is the flexibility afforded from a hybrid working style. If used correctly it should boost productivity. We are all aware now of the toxic side of working remotely. It can be very difficult sometimes to switch off, especially when you see colleagues and external contacts burning the midnight oil. Not many of us really miss the commute, but the separation it gives between work and home life has an important purpose.
Other aspects of the job are harder when carried out remotely. Training people for example is often something best done when sitting someone down and focusing on the subject matter. Picking up on body language and directing towards an objective can also be much harder to do on a Zoom or Teams call.
It’s not so much a question of what’s changed with remote working, as what hasn’t. The level of professionalism, dedication to the cause and hard work have been maintained throughout the last eighteen months. The department has faced many challenges, many of which were not even considered a possibility pre-pandemic, but these have all been overcome.
“What will be the most important implications for treasury teams to come out of COP26 in Glasgow? How should corporate treasury prepare?”
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