19 December 2018
Why Global Mobility is more import then ever
Business moves fast and global, with HR as its backbone. Doing international business without flexible, proactive and strategic HR-Management is like driving with brakes applied: instead of having a greater share of wealth and growth you will drop behind.
On the other hand, new challenges occur: international business is facing protectionist tendencies not only in the US and China, but even within the EU where companies have a clear advantage due to common regulations. The cornerstones of Global Mobility remain the same, but we need to have an even closer look at the details.
Global Mobility’s Cornerstones
In the first instance the immigration regulations need to be checked. Even within the EU, HR too easily relies e.g. on the Blue Card – an approved work permit allowing high-skilled non-EU citizens to work and live in any country within the EU. With the exception that it is not valid in Denmark, Ireland and the UK, a fact, which is easily overlooked. On a global perspective, changes on immigration regulations can always occur on short notice due to political decisions. Hence it is crucial that HR is up to date with the latest visa requirements.
Also, compliance with local labour law in the home and host country need to be ensured. The mandatory supplement to the home contract for example includes the duration of the assignment and is essential for the visa application process. For a six month assignment e.g. to the UK a Non-EU citizen needs to show proof of his employment contract and his salary from his e.g. German company.
Generally, income tax is paid in the country where the employment is carried out, unless a double taxation treaty is in place. When being regularly on business trips e.g. to the UK the “183 days rule” needs to be followed to avoid paying UK tax contributions. Furthermore it is important to check the fiscal year in the host country. The UK for example looks at the tax period of 1 April to 31 March the following year. An important tool to control regular travelling abroad is a travel calendar which should be completed regularly.
Furthermore, the social security regulations need to be checked. Depending again on the home country, the destination and the frequency of travels, different applications are relevant. For a six month assignment e.g. to the UK, HR would have to apply to the German Social Security authority to remain in the national system. It is the objective of both the company and the employee to remain in the home social security system and avoid contributions in the host country. Especially for assignments to non-EU countries that have no agreement (e.g. Russia), this would mean that social security contributions in both countries would have to be paid.
Summary and conclusion
Overall it is imperative for HR to know the regulations of immigration, local labour law, tax and social security when dealing with Global Mobility. Every company has to comply with those regulations in order to avoid a possible loss of visa status for the employee, the payment of monetary fines and the overall loss of credibility.
Our experience shows that mobility within the EU is often underestimated. With the UK leaving the EU on 29th March 2019, it could get even more challenging.
Christin Sandau & Birgit Ennemoser, Stuttgart, Auren HR Germany