Alex Thompson, founder and CEO of legal aid provider Legaroo, thinks the digital nomad lifestyle is “wonderful”. It also has a few words of warning.
The growing and geographically free lifestyle of digital nomads forces companies to update their recruitment, legal and risk procedures. The trend is part of the evolution of business travel since these employees work on behalf of the company from “anywhere” and must be “chaperones” in some of their choices.
Due to the risk involved, HR, legal, travel purchasing and company management must be involved. They must implement policies and update employment contracts to avoid unforeseen liabilities during recruiting and hiring. I would suggest hiring a specialist consultant with an understanding of international risk management and even going so far as consulting immigration and tax advisors to review some preliminary points.
Here are some additional considerations.
Company Policies. Companies need to know when an employee becomes a “recognized” digital nomad. How discretionary is it for an employee to become a digital nomad, with all the potential issues involved such as payment, taxes, social security, travel expenses and many more?
The definition of “domicile” could be a domestic or international address, but what about multiple destination addresses and applicable time limits, tax and social security implications? Businesses need to be clear about the repercussions of employees not disclosing their location and knowledgeable about local legal obligations and compliance risks. They must determine all responsibilities related to leisure activities and travel.
And what is the company’s definition of in-person and remote meetings, and are digital nomads exempt from showing up in real life?
Recruitment process. The company’s ultimate goal is to hire and retain “talent”. However, employment contracts need to be drafted for recruits and adjusted for existing employees to accommodate the lifestyle of digital nomads. Terms of employment should address the digital nomad’s non-compliance with company policies, as this can create unwanted and costly liabilities.
Cybersecurity standards. How can the company successfully manage privacy guidelines and cybersecurity when the destination may be technically risky or unknown? Businesses should review their responsibilities for breaches of customer information by a digital nomad and communicate obligations to use approved hardware and software in the course of business operations.
Duty of care. Company policies regarding security and prevention measures for digital nomads abroad are crucial. Does the company provide the most comprehensive medical and legal assistance to this employee and his family? Organizations need to be crystal clear about what the insurance does and does not cover. Even if you have the best insurance and assistance products, we have seen that political unrest, war, natural disasters, pandemics and many other situations can trigger exclusions to run assistance and payment of the insurer. Companies should verify which policies, if any, relate to “uninsured” situations. Judges may be more willing in some districts to award compensation for employee suffering and damages than companies anticipate. This has been particularly true and traumatic for some companies in the face of the Russian-Ukrainian war and the urgency it created to expatriate/relocate their staff. Businesses benefit from having a strong contingency reserve to deal with uninsured situations.
Economic and political well-being. Are company policies clear on where the digital nomad is not allowed to roam, travel or call home? Adventurous types might like to reside in risky areas. Companies may want to create a list of banned countries if they don’t expect to be able to help in times of stress. Organizations should also determine how they would manage new risks. When a political or economic crisis strikes a digital nomad’s home, a company wishes they had already created procedures to call them back, relocate them, or even fire them.
In this regard, to what extent might employees be willing or able to legally waive company rules, duty of care, safety and prevention and, even if they did, would the courts insist still on corporate responsibility?
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The digital nomad lifestyle allows millions of people to enjoy a unique blend of professional and personal experiences while residing in other countries for short or long periods of time. It’s a wonderful trend.
It is also in the interest of companies to retain the skills of the digital nomad while having policies that provide for duty of care, security, prevention, crisis response, cybersecurity, benefits, well-being and benefits. Employee responsibilities, conditions, waivers and obligations must be bulletproof.
All of this can create stronger and more successful businesses.