Future of Work: Outbreaks push more ASPAC companies toward Work from Anywhere

Murray Sarelius, Head of People Services at KPMG China discusses how ASPAC companies adapated to work from anywhere and how this will impact businesses moving forward.

Murray Sarelius, KPMG

17 May 2022

For the past two years, pandemic restrictions have led companies worldwide to adopt Work from Anywhere arrangements, but the appetite for remote work has been much stronger for businesses located in Europe and North America than in the Asia Pacific (ASPAC) region.

Now, as Hong Kong (SAR), China (RC) undergoes a surge in COVID-19 cases, a sea change is occurring as companies in the jurisdiction move to address rising demand for Work from Anywhere arrangements from their expatriate employees. Whether this trend will continue once pandemic pressures ease — and whether other jurisdictions in the region will see similar rising interest — remains to be seen.

In the meantime, the global mobility teams of companies in ASPAC need to be agile in adapting to new conditions, crafting policies to meet changing demands, and managing the tax, immigration and other risks that Work from Anywhere arrangements can entail.

Background/survey results

Compared to companies in other regions, companies in ASPAC seem to have had a greater cultural tendency toward “presenteeism” – the belief that physical presence makes employees more reliable and productive. This tendency may have eased over the past two years as Work from Home proved successful, but even recently, many ASPAC companies are still driven toward remote work by circumstances rather than choice.  
In September 2021, 530 companies from 46 jurisdictions were surveyed (RC) about their current remote working considerations and decisions during KPMG International’s global webcast on Work from Anywhere issues. The survey’s findings highlight these regional differences in attitudes toward remote work:

Only 32% of ASPAC companies were considering domestic remote work, compared to 43% in Europe, Middle East and Africa (EMA) and 46% the Americas.
In cross-border scenarios, only 16% of the companies in ASPAC were considering short-term remote working, somewhat below EMA (20%) and well below the Americas (33%). In contrast, the percentage of ASPAC companies considering virtual assignments or hiring talent in another country (nearly 50%) is more than double the overall average.

At the time, travel restrictions were cited as the main reason for remote working in ASPAC while employee requests topped the list in EMA and the Americas.

However, as recent events in Hong Kong (SAR) China show, external conditions can change abruptly, causing more ASPAC companies to consider Work from Anywhere as a business solution to suddenly rising employee demand.

What’s changed since the survey?

With its zero-COVID strategy, Hong Kong (SAR) China successfully avoided outbreaks for almost two years, but early in 2022, the emergence of the highly transmissible Omicron variant caused its government to consider even tighter steps to contain the virus. Measures announced but not necessarily implemented included full lockdowns, mandatory mass testing and compulsory attendance at quarantine centres for people who test positive. In March 2022, schools were closed three months early for summer holidays, including some schools attended by the children of expatriates.

Travel restrictions had delayed or prevented the return of many expats in January from holiday breaks abroad, requiring mobility teams to quickly understand and manage employees’ sudden cross-border situations. As mobility professionals were busy managing these cases, the school closings and threats of other restrictions prompted more expats in Hong Kong (SAR) China — weary from two years of restrictions and unwilling to accept the prospect of even stricter ones — to leave. According to media reports, more than 50,000 people left Hong Kong (SAR) China in the first half of March, with a net outflow of 43,200. (Later in March, Hong Kong’s government announced it would start gradually easing restrictions as of 1 April 2022.)

Having already proven that they could work from home effectively, many expats still in Hong Kong (SAR) China took the opportunity to go further afield opting to work from their home countries or other places, at least while the restrictions endure. Many companies in the jurisdiction already faced an acute shortage of talent. With this shortage about to worsen, these companies are being compelled to consider demands to Work from Anywhere as one solution to fill the emerging talent gap.

The result is that Work from Anywhere has catapulted from rarity to necessity in Hong Kong (SAR) China, almost overnight.

What are the implications for global mobility teams?

Significant tax risk is created whenever an employee works in a jurisdiction that is different from their jurisdiction of employment. Depending on how long the situation lasts, the employee could find themselves liable for income tax and social security. Their employer may face unexpected reporting and withholding requirements for the employee, as well as corporate taxation if the employee’s work in the jurisdiction crosses the threshold of a permanent establishment.

Unfortunately, companies located in Hong Kong (SAR) China that suddenly have large numbers of employees working in other countries are not likely to encounter the same level of leniency that was displayed by tax authorities around the world in the pandemic’s early stages. In jurisdictions in the Americans and Europe that are moving to treating COVID-19 as endemic and may be considering the hole in their budgets created by emergency response measures, tax authorities will likely start taking a harder line on cross-border tax issues. This will heighten tax risk even more for businesses in jurisdictions like Hong Kong that see a surge in cases later in the pandemic’s cycle.

In addition to tax, Work from Anywhere raises host of other legal, immigration and regulatory issues for mobility teams to manage. For example, banking, asset management and other financial services businesses may need to work with regulators to navigate physical presence rules for front-line workers and responsible persons in regulated roles.

More than ever, mobility teams need to mitigate tax and other risks by setting clear, consistent policies and guidelines around Work from Anywhere. Companies can also benefit from end-to-end systems for monitoring and managing the movements of their globally mobile employees — so they know where employees are, what they are doing, and whether the risks they create are being managed.

Takeaways for global mobility leaders

In the same way early 2020 saw a very quick switch to Work from Home, early 2022 saw another abrupt shift to Work from Anywhere in Hong Kong (SAR) China, once again putting pressure on mobility teams to adapt, opening new areas of tax and other risks to handle.

Are these current trends a temporary reaction to circumstance, or do they represent the beginning of a longer-term, more permanent shift that brings ASPAC thinking on Work from Anywhere, and remote work broadly, more in step with or even leading other regions?

The answer remains to be seen. However, if the shift is indeed permanent, companies may need to assess more structural changes to their employment arrangements. They would also do well to consider the potential of involving global mobility in creating alternative talent solutions, such as permanent remote work and virtual assignments, to help cover their recruitment and retention needs.

In a world where events can cause work patterns and business imperatives to turn on a dime, it’s critical for global mobility teams in all locations to closely monitor global trends and regional differences and take them into account in developing their organisation’s Work from Anywhere strategy.