Will your employees’ hush trips brush with the law?

When the pandemic took hold in 2020, flexible working models were quickly adopted across the globe. In tandem, concepts now known as “stealth working” and “hush trips” (as coined by Bloomberg) started to creep into our consciousness.

The idea behind these terms was that, hidden behind their laptop screen, employees were now able to secretively work from any location in the world, keeping their employer in the dark about their globetrotting.

According to a survey conducted by RV rental marketplace RVShare and Wakefield Research, over half (56%) of adults in the USA commented that they planned or were likely to indulge in a hush trip this year.

Whilst the idea of indulging in a temporary digital nomad lifestyle sounds idyllic, this silent act of rebellion could have greater legal implications for workers and employers alike, affecting taxation and leading to businesses incurring unexpected and unapproved costs.

So, should employees be concerned? How can businesses take action? Could these concealed hush trips be landing both employers and employees in hot water? Let’s find out.

Who’s taking hush trips?

Hush trips have been embraced by a minority of workers looking to benefit from their company’s flexible work models – believing that flexible work gives them the power to choose their working location and destination.

There have been stories of employees going to extreme lengths to conceal their whereabouts, including wearing winter jumpers in exotic locations whilst on video calls and even using a VPN to conceal their location.

Whether actioned through naivety or deliberate deception, stealth working and hush trips can have damaging implications when local laws are breached.

What are the repercussions of stealth working?

Working remotely for a limited spell in another country is usually legal up to a point – however, there are numerous factors than can tip the period of remote work in a foreign country into non-compliance.

The repercussions of hush trips could result in a brush with the law for employees and employers alike:

Possible repercussions for employees:

1. Time restrictions: The length of time a person can reside within a country for work purposes varies. The repercussions of overstaying will likely result in deportation, as is the case in Europe. If you are caught overstaying in the Schengen territory, the legal implications vary depending upon which country you were caught in. For example, whilst Greece is known for giving heavy fines to those caught overstaying, Germany is known to have the most rigorous immigration laws in the EU in this regard.

2. Visa: Having the incorrect type of visa could result in legal repercussions, with both employers and workers alike being drawn into legal battles. Whilst employees may be able to engage in some business-related activities without needing a visa or permit, each country has specific stipulations regarding remote work and paid business activity.

3. Salary: To temporarily reside in a country, there are varying minimum levels of income requirements. For example, in Portugal, a worker must have a minimum income of €760 per month. In comparison, in Croatia, a worker must earn at least €2,365.45 per month during their residence. Workers in breach of legal salary requirements may face legal complications.

4. Trust: If your employer finds out an employee has broken their trust or even breached company policy by taking a hush trip, there could be repercussions which result in disciplinary actions or dismissal.

Possible repercussions for employers:

1. Salary benchmarking: For a worker to reside within a country, even temporarily, an employer may need to benchmark their salary in line with local standards. This might be because they require a certain level to live and work locally, and could result in the need to increase a worker’s salary to comply with local employment laws of specific countries. I

2. Permanent establishment: An employee generating income for an overseas company or residing in one location for a fixed period could trigger permanent establishment and corporate income tax or VAT. This can have numerous repercussions for organisations including unfunded and corporate liabilities, penalties, damage to reputation, increased audits from tax authorities and so on.

3. Insurance: Businesses could incur financial burdens if they do not have the correct insurance policies to protect themselves or employees if they become unwell, sustain injury or to cover the type of work they are doing whilst stealth working overseas. In most countries, a form of employer liability insurance is a legal requirement that covers compensation costs and legal fees.

4. Immigration: Businesses could be liable for the actions of employees’ stealth working, and potentially be drawn into legal complications over immigration and visa breaches.

5. Labour laws: Employment laws vary across countries; if it is deemed for any reason that the employee should be registered as a local employee, they may need a local contract and their employment will be bound by local labour laws and statutory allowances. Stealth work can mean the employer is not aware that this is the case, and can lead to breaches and penalisations.

If you suspect an employee may be engaging in stealth working, you should contact a compliance and legal expert for advice on how to proceed.

How do businesses navigate hush trips?

Communication:

Whilst a well-researched hush trip may not be illegal or cause any disruptions to an employee’s productivity, it could potentially compromise an organisation’s culture. Building a company culture based on open communication and transparency plays an important role in retaining top talent.

According to a study by Dynamic Signal, referenced in the World Economic Forum, 80% of the U.S. workforce reports feeling stressed and disconnected because of poor company communication, and 63% of workers want to leave their job as a consequence.

Policy:

Equally, having policies in place that support flexible working is important. Organisations ought to consider adopting policies which outline their position on global remote work and digital nomad work models.

If an organisation does not want to embrace this style of working, there should be company policies in place that make this clear to employees.

Alternatively, if an organisation decides to support a digital nomad work model, businesses may want to outline a restricted length for travel, specify which countries it applies to and consult with  compliance and legal experts in that country to oversee global immigration and taxation laws.

How can digital nomad policies benefit businesses?

If businesses choose to adopt digital nomad policy options, it could bridge the gap between the legal implications of employees taking hush trips, and businesses creating transparent policies and promoting open communication in the workforce.

The increasing number of countries offering digital nomad visa options reflects the changing shape of the global workforce. Employees could have greater global opportunities if businesses considered global assignments or expansion to stay ahead of evolving global work trends.

Consulting with a global expansion expert like Mauve can help you remain compliant while exploring factors such as digital nomad visas, global immigration and taxation laws.

To find out more about how we can help, get in touch.