Understanding the Complexities of Business Travel

Extended Business Visit or Short Term Assignment

In recent years, we at Newland Chase have found that there has been an overall global rise in business travel. Business activities are undergoing substantial changes and it is becoming increasingly difficult for organisations to track and define these activities within their existing structures in accordance with the scope of regulations.

Typically a global company may have a mobility program which includes overseas assignments of varying lengths or terms depending on their needs in the host country or the reciprocal need of the host country. Whilst there can be many business advantages in sending employees on extended business trip assignments; there are also associated implications where a company sends international assignees on a frequent or regular basis. These implications can include immigration or employment restrictions posed by the host country, or tax liabilities.

Differentiating Between Business Travel and Short Term Assignment

We find that many companies are finding it increasingly difficult to differentiate between extended business travel and short term assignments. This in turn makes the company vulnerable to compliance issues. In short, business travel is normally for a period of up to 6 months. The duties performed are covered under business visa conditions and employees under this category are not subject to payment or tax in the host country.

A Short Term Assignment is normally defined as being of more than 30 days, but less than 12 months in duration; although some assignments can be considerably longer for example for a number of years depending on the companies’ requirements. Employees on Short Term Assignments are considered to be entering the host countries Labour Market and in most circumstances a Work permit or equivalent maybe initiated and the assignee will become liable for taxation in the host country, this is particularly the case when an assignee is present in a jurisdiction like the UK.

So Why do Companies Get it Wrong?

In consideration of this, our team at Newland Chase pose themselves with the following further questions:

  • How many business travellers stop to advise their HR of their activities or duration of their stay in the host country?
  • How many global companies have systems in place prompting their HR and Personnel departments to monitor the business traveller once he/she has left their country of origin for the host country?
  • What systems are in place by the host country company to monitor the activities conducted by the business traveller? I.e..
  • How long is the business traveller in the host country for?
  • Has this duration/stay in the host country changed since the trip has been authorised?
  • Is the business traveller still getting paid by his/her country of origin?
  • Is the employer still paying the expenses or has the host country made any payments?
  • Have the needs of the project changed?
  • Has the business traveller returned to his home country as originally planned?

The response provided by Human resource departments to these all important questions has been:

A) Non-Cooperation by the Work Force

A reoccurring example of when this has happened is when assignees have agreed their business travel with their line manager and failed to keep Human Resources fully updated of their schedule or activities that they are to carry out in the host country.

B) It was a Short Trip

The department concerned did not feel that such a short trip would present any issues. There is a lack of knowledge and experience of the rules and regulations appertaining to the host country.

C) Repeat Practice

It was felt that as individuals in the past within the organisation had travelled to the same host country and performed similar activities and not obtained a short term assignment visa or even a business visit visa, that there was a sense of ‘we haven’t had to go through any special measures before, why now?’.

D) Lack of Resources

Lack of staff across multi-disciplinary teams has meant tracking and recording is not always considered to be a priority. The physical location of the assignees has often meant that HR Departments are not always aware of the exact activities to be carried out by the traveller.

Consequences of Getting it Wrong

A business traveller may inadvertently find themselves in breach of the host country’s laws by overstaying the business visa limits (in particular the employment, immigration and tax laws) or by performing a ‘prohibited activity’. In more serious situations, it may be a criminal offence resulting in a substantial fine or even a prison sentence, which can be particularly harmful to an employer’s reputation- this can be the case even once the traveller has returned to the sending country.

In immigration terms, the consequences of being non-compliant are that the employee may be prevented or outright banned from entering the host country, along with the loss of revenue and business opportunity. Alternatively, the host country may be restricted in hosting business visits or be labelled as a company who encourages the breach of immigration rules.

How Can Technology Help?

There are sophisticated tracking tools available on the market which assists companies to track their overseas workers and business travellers. This technology can identify when travellers are likely to stay beyond permitted business visit periods, automatically notifying HR or Tax departments when conflicts are likely to arise. It is believed that prohibited business activities can be prevented by having in place a well-documented business travel and compliance policy. Tracking Tools are also pivotal in educating employees and business managers of the risks of noncompliance more effectively.

It is our recommendation that when HR is first approached with a request for business travel, that they work to a specific checklist to appraise the risk of each visit ahead of time. Criteria can be set as to when a particular case causes concerns, or may need further review later down the line. We recommend to all parties concerned, that when a potential traveller initiates their request for business travel, that it is best practice for the concerned party (usually HR) to track the aforementioned trip and to look out for any ‘breach triggers’. ‘Breach triggers’ are situations which, should they arise, may lead to the traveller eventually being non-compliant. Potential triggers could be, for example, when a) a business trip is extended, or b) the needs behind the trip change, or c) an additional payment needs to be made to the traveller.

At Newland Chase, our experienced team is well versed in such triggers and how to respond to them. We are also accustomed in using technology to track the movements of employees and can assist your organisation in developing a personalised checklist/system for you to ensure that you do not become non-compliant.

For further information, please email us at enquiries@newlandchase.com.

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