Does anybody know why companies that offer fully-remote employment contract, don't allow the employee to work outside the country even for relatively small amounts of time?
As you move from country to country, employment laws and tax laws change as well.
Your employment contract will probably be illegal in some countries, and this could cause legal troubles for both you and your employer.
Depending on how much time you spend in a country (and this threshold may vary from country to country), you may be required to pay taxes there. This could as well affect the employer, who may also be required to pay part of your taxes.
I'm not saying that it's impossible, just really really hard, both you and the employer would need to hire an expert on taxes and labor law for each country you go to.
Exactly. What I've seen done when people really want to work outside the country is they are given the option to quit and become a contractor. That puts most of the risk on the employee to handle the country specific regulations, along with all the other contractor type risk (and benefits).
(and this threshold may vary from country to country)
To be more specific: this depends on treaties between the country of residence and the country of employment, so it can vary for every combination of countries. It may even mean that taxes are due in both countries (double taxation), and getting a tax waiver in one of them may require legal proceedings and/or expensive accountants.
It may even depend how close you are to the border. E.g. between germany-austria-swiss, you have grenzgänger status if you are within 30 km of the closets border, which may influence your social/ healthinsurance and your income tax
Could also be for IP reasons. There are legal technicalities that I don't pretend to understand: One contract I worked on required the work to be performed in a specific Canton in Switzerland. Once the work laptops had IP on them, the machines were not allowed out of that Canton. Had something to do with international IP law that was never clear to me.
Switzerland is a decentralized federal state where cantons get a great deal of autonomy, eg Zug (near Zurich) is famous for having low taxes and being very friendly to crypto companies.
Many US companies are also unwilling to let remote staff operate in states where they don't have operations, because they're concerned about creating a "nexus" there and becoming liable for state sales taxes etc.
I feel a lot of the answers here are true but missing the point. It’s true that the company wants to protect itself legally from the complications of having staff of operations in various countries. But I doubt the company really cares if you are in another country while fully remote - they just don’t want to knowingly have their employee in those various jurisdictions. I would just make sure that you never give the company a reason to think you are outside the country. but that isn’t the same as actually not working outside the country. Of course, this only applies to private or public companies, if a government organization had this as a policy, I would follow it to the letter.
International remote work seems simple from the employee's perspective, but you must consider the company's perspective, which is much more complex:
- Labor/tax laws are different for every country. That is potentially 180X+ more work for HR/lawyers. Even adding just a single country potentially doubles the amount of work.
- Often the host country expects local tax payments for the portion of the revenue generated by the remote worker. This can be a pain to calculate/track.
- Legally, tourist visas usually do not allow work. So work visas need to be sponsored.
- In addition, countries also have export laws about data/technology.
So it is much simpler for most companies to just not allow international remote work. Bigger companies like Google that already have international offices are better prepared to support international remote work.
Perhaps in the future international labor law will catch up, but most treaties, laws, and policies were created when international remote work couldn't even be imagined.
Legal and tax issues is the main reason. Most companies don't want to deal with them. But that doesn't mean it's impossible. For example companies like Automattic, Convertkit, and Safetywing are fully location independent. Employees can work from anywhere.
For the past 6 months I have been trying to develop a home for digital nomads to find location independent jobs. Most remote job boards are filled with remote jobs that restrict working outside the country just like you mentioned.
FWIW, I am currently building a paid Discord server to send instant job alerts for location independent jobs. All jobs are hand curated by me to only include the companies that are nomad friendly and care about diversity. If you may find it helpful, consider subscribing. Thanks.
1. No country that I know of allows you to easily have employee status for an entity in another country.
2. Even if you don't require a visa to do tourist stuff in country X, you probably do need a work permit.
Work legislation hasn't been adapted to remote work yet. Probably won't get satisfactory in our life times.
What are those "relatively small amounts of time" though? Because I'm not sure someone would notice a week. You mean the common 90 days allowed without a visa when there's no visa requirement?
Something like 1 week every 2 months, but it doesn't matter how long or with what frequency, as it's clearly not something i can request or do formaly anyway.
Others mentioned to just move around and tell them nothing, which i think is risky.
They’re worried that they would be deemed as being partially located in the country you work from, and would have to deal with that country’s tax authority, employment regulations, etc.
Because it is most likely illegal for you to work in that country you choose, unless both you and your company satisfy a lot of requirements (for most countries) including work visa and company having physical presence in that country or digital nomad visa. Though it’s true that a lot of nomads get away with it, but a lot of companies don’t want that hassle/risk.
Most digital nomads are independent contractors so they bare the legal risks in their own. Many countries don’t care until they do, then there is a crackdown in a place like Chiangmai. Kind of risky, but I see the appeal.
A lot of companies have contracts stating that all data will be processed in their country. Anyone working outside the country would breach those contracts.
Specially for regulated industries and if the company you work for has clients in regulated industries and up the chain of clients. What if somebody steals your laptop with NPI/PII data. As with a lot of things, a lot of stuff only matters when things go bad (like somebody stealing your laptop)
Employing people abroad is a bit of a hassle. Maybe you need a local entity, or use an agency, or have self-employed freelancers etc. One country = much less headache.
Are you looking to be a digital nomad, or do you have a specific other country you visit on a regular basis?
If it's the former, you're SOL for all the reasons listed in this thread.
If it's the latter, you may be able to bring this up and figure out if it's OK to work X days per year in country Y specifically. The company may not want to bother with it anyway, but that is a relatively easy problem to solve compared to "working indeterminate periods in any place in the world". It's even possible that the two countries in question have a special relationship and there's no constraints working remotely one to the other, or that the situation is so common the consequences are well known and easy to account for.
It seems difficult for the company to ensure that you have a work permit for any country you might be going to.
There are countries where you really don't want to get caught working without a work permit, but even in more lenient places in general it's just dangerous for the company to be caught in this situation.
And to legalise that work (even between EU countries) means they have to get involved with yet another fiscal system which is probably a lot of overhead for just one guy wanting to work in any country he likes.
Without being an expert: I know large companies that have a remote-first, fixed country policy, but allow exceptions under special circumstances (e.g., for family reasons). My assumption is that if one wants to support an employee in a good way, it's worth the paperwork in case of such special circumstances, but it's an unacceptable risk to allow it by default and try to play catch-up as a substantial part of the workforce moves around the globe.
Also not mentioned: Visas and permits. Not allowing it for a "relatively small amount of time" means that you aren't encouraging your employees to go to a country on "vacation" and working through it, all while being on a tourist visa that doesn't actually allow you to work while you are visiting. This is a pretty common rule for a tourist visa.
The reason sounds rather lame. Better reasons to limit remote work to a single state include the need to comply with another set of tax and employment laws, health insurance policy may be based upon all employees residing in a particular state and not wanting to establish a physical nexus in another state.
This sounds more like a flexible work from home arrangement than a remote job.
Besides, I don't know what state you're in but in Texas or California merely being in the same state does not imply "near enough to be called in at short notice"!
also not mentioned below is time zone, they may just be going the assumption they want someone present 9-5 and by being same country and time zone you'll be online parallel to the team. Some explicitly mention the timezone and not the physical location as well. This as well as the other comments on government reasons.
In my experience both same time zone, and meeting up regularly (eg once a month) are important for making remote working as effective as possible. This can lead to a same country policy.
If I was starting a new remote organisation now I’d allow a number of weeks a year to work more remotely in other countries. It would be disruptive and impact meeting scheduling, so I think is most effective when planned like a holiday.
Another odd factor is envy which oddly gets blended mentally with audio quality. If the boundaries of remote get stretched, you end up with staff with tropical islands in the background and often worse or unreliable internet, and often a poor semi-temporary audio setup.
I rationally like the idea of everyone working in amazing locations. But in reality, while people joke about it, emotionally they get envious. Not a fair reason, but I can imagine some business owners blocking it just for that.
I can understand this for companies not in the EU. But within the EU it seems to me that it's just inertia -- as far as I know, if you're an EU resident you can work from any EU country for 90 days with no changes to tax, insurance, social security, etc. required.
If even for small amounts of time, you can ask about how small, and if that also means you're not allowed to answer calls from work when on vacation. It may very well be that you're not even allowed to bring a work phone or work laptop into some countries.
For how long? I agree with most comments that the concern is usually local taxation law. But if it is a short period, like less than a month, then what's the motivation to tell your employer?
Do you know the rationale behind this? e.g. is there some networking rules? If your company is behind some zero trust network, that's would be a non-issue.
One unfortunate thing I have learnt through experience: it's not a good idea to do business with anybody unless it's relatively easy and convenient to sue them or have them arrested, if need be.
Jobs that require security clearance often have this stipulation too, even when the work is deemed sufficiently insensitive that it can be done remotely.
Those computations get more complicated as you get older, but if you are young or just not over 45, you can generally pay for your medical care out of pocket in Thailand.
Is that true? I'd guess that Thai medicine is a lot cheaper. I have digital nomad-style insurance and I kind of assume that my co-pays will be less than those in the US. American Healthcare is crazy expensive.
Anecdote: I once got sick in Luxembourg (pretty expensive country overall) without health insurance. Saw a doctor in the format of urgent care. Got prescribed antibiotics + something else. Total cost for doc + drugs was 40 euros. No way I get off that easily in the States.
Anecdote: I went to see a doctor in California without health insurance. Saw a doctor in the format of urgent care. [Actually, I'm not sure of this - it's pretty likely, but there's a chance I saw them by appointment.] Got prescribed nothing. ("We call this desquamation. It means it's peeling. We don't know why.") Total cost for the visit + nothing was zero dollars.
This isn’t a great idea if OP’s employer does geolocation via IP address. They may not find out about this monitoring until they are on the ground in Foreignlandia and are unable to access the corporate network. At that point, they may be terminated for cause and will be expected to return a now bricked computer within 48-hours or face having its cost deducted from their final paycheck.
Your employment contract will probably be illegal in some countries, and this could cause legal troubles for both you and your employer.
Depending on how much time you spend in a country (and this threshold may vary from country to country), you may be required to pay taxes there. This could as well affect the employer, who may also be required to pay part of your taxes.
I'm not saying that it's impossible, just really really hard, both you and the employer would need to hire an expert on taxes and labor law for each country you go to.