The rise of the digital nomads: what employers need to know

New data has revealed a spike in fully remote job searches in the first few months of 2023, highlighting the growing appetite for flexibility in today’s workforce. The data also shows seasonal trends as some take advantage of hybrid working to travel overseas during the summer months. In this article, experts from RSM’s Global Employer Services team share the benefits, concerns and what employers need to know.

‘Digital nomad’ is not a new term, but who might fall into this category has evolved over the last few years due to the pandemic revolutionising the way that office-based employees work. A digital nomad used to refer to someone who performed their role from anywhere in the world but it typically only applied to those who held seniority and were required to work internationally as part of their roles, sales employees for example.

These days thanks to the proliferation of remote working, made possible by the myriad of technology solutions on offer and the rise of flexible working policies, the digital nomad lifestyle could be an option for more people than ever before. And, new statistics suggest that this way of working is becoming increasingly popular.

Employees pack their laptop bags for summer

The Flexible Working Index, which tracks where, when and how people prefer to work, as well as the kinds of roles companies are offering, analysed more than 310,000 job searches between January and March this year. The data showed the number of searches for ‘fully remote’ roles with no obligation to come into the office rose by 21% during this period.

Interestingly, the data showed that searches for fully remote roles back in Autumn 2022 were at an all time low, which demonstrates there is a new appetite for these flexible working arrangements as the warmer months approach.

Furthermore, the report found that job candidates searching for companies offering ‘unlimited annual leave’ rose by 33% between January and February 2023, and then dropped to 26% in March – still a high proportion. This could be considered indication that employees today are looking to embrace travel as COVID lockdowns become a thing of the past, as well as demonstrating that employees are prioritising a healthy work/life balance when looking for a new position. This is only expected to become more popular as more emphasis is put on mental health in the workplace.

Striking the right balance

Commenting on the trends reported, Kenny Ransquin, a Partner at RSM Belgium, said. “We are seeing the pressing need for organisations to realign with the surging trend of remote work. This shift goes beyond logistical solutions; it's about tackling complex tax regulations with a sharp strategic mind. Amid these oscillations, the lens of sustainability is crucial, given the potential of climate change to fuel remote work trends further.

“In terms of employee rewards, striking the right balance between appeal and fiscal wisdom is paramount. Innovations could include seasonal remote work, or a rotation of work across international offices, while always ensuring tax compliance.

“Finally, the remote work wave also impacts corporate real estate, nudging a move towards shared or flexible workspace arrangements. The message is clear; companies must adopt an adaptable, fluid approach to stay afloat in these shifting workforce trends. It's fascinating to watch these changes, which are unpredictable but captivating, demanding our attention and a new strategy.”

Augustin de La Chapelle, a Director at RSM Switzerland, added, “The Swiss employment market is likely less mature than others in terms of fully remote roles. The ‘work from anywhere’ trend is mainly noticeable in relevant industries such as consultancy, IT, technology. However, that said, we expect that the global trend of employees looking for remote roles is very likely to follow in Switzerland and other Western Europe countries in the coming years, therefore employers must ensure they are prepared to navigate the complex tax and legal considerations.”

A minefield of hidden legal, tax and cultural issues

For employers who may have implemented and effectively managed a short-term flexible working policy during the pandemic to comply with government-set social distancing rules, a long-term plan for remote working might sound like a minefield of legal, tax and cultural issues.

Kenny commented, “The worldwide dispersion of employees can significantly influence a firm's tax status. Unreported overseas work by employees might introduce unexpected tax complications for the business, considering the diverse tax rules that apply in different regions.

“A solid approach for tackling this is implementing robust policies and platforms that can accurately log employees' work locations and durations. Moreover, it's essential for firms to routinely enlighten their workforce about the tax repercussions of working abroad and the necessity for accurate reporting.

“It's critical for business leaders to keep their fingers on the pulse of international tax laws and consider expert advice. A meticulously crafted global mobility plan becomes indispensable to employers, helping them steer through these intricacies and sidestep unintended tax liabilities.”

Augustin added, “Offering a widespread ‘work from anywhere’ policy might sound attractive to companies looking to recruit and retain talent in an increasingly competitive market, however this comes with some, perhaps hidden, challenges such as ever-changing tax, social and employment compliance.

“From our experience, this trend for some businesses will only work in reality for limited periods of time, 10 to 20 days for instance. It may otherwise work better on an individual case-by-case basis, rather than the employer authorising a fully remote working policy which could become out of control in a world of unaligned regulations.”

Travel appeals to new talent

Despite the compliance risks for employers, the trend of skilled workers looking for increased flexibility over how and where they work isn’t going away. The 2023 State of Remote Work report, published by technology company Buffer, included a survey of 3,000 remote workers from around the world. 98% of respondents said that they would like to work remotely, at least some of the time, for the rest of their careers.

Furthermore, Remote.co’s Work and Financial Wellness Report found that 63% of global workers would “absolutely” look for a new job if they couldn’t continue to work remotely. This suggests that employers unwilling to provide some level of flexibility over where their employees perform their roles are at risk of losing talent to competitors.

Employer mobility takes centre stage

Kenny concluded, “In the face of technological leaps and the rising tide of remote work, businesses are now on a more dynamic playing field. Employee mobility is taking centre stage, propelled by data and forecasted to redefine the workplace of the future. As teams spread out across the globe, tax matters become a puzzle, with different pieces shaped by unique regional rules.

“It's a business imperative to remain vigilant, harnessing the might of data and forward-thinking projections. To effectively manage this, employers need strong systems for employee location tracking, ongoing tax-related education, and strict adherence to the myriad of international tax laws.”