Employing remote workers? How a Central Employing Entity could benefit you
18 August 2020
More than 75%* of companies are currently supporting remote working across borders as part of their workforce strategy, in order to manage the employment of individuals who have no clear employment entity. This may be because there are employees who now want to work in a location that differs to their current employment contract location, want the flexibility to work across two or more countries (“global commuters”) or because they are employees who can be truly location agnostic (“global nomads”), hired from and performing their role anywhere in the world.
Traditional employment models were not set up to support the complexities that such arrangements entail across tax, immigration, employment law and employee lifecycle management. Or take into account the operational aspects like delivery of pay, which are key benefits of a Central Employing Entity (CEE), sometimes referred to as a Global Employment Company.
What is a CEE?
A CEE is a special purpose vehicle established to employ a defined population of employees (e.g. globally mobile, top talent, local hires in new/low volume markets or global remote workers).
They are generally established in locations that have the most effective tax, legal and social security systems and that also make sense from an operation and infrastructure perspective. Common CEE locations include the UK, Ireland and and the US
It provides a centralised approach to critical areas - managing the risks associated with a complex employee population, harmonisation of HR policies, processes and reward, talent and performance management.
Evolution of the CEE
Historically, we saw CEEs used in the oil and gas, engineering and manufacturing sectors for traditional globally mobile populations, like rotators and those on back-to-back assignments. In recent years, the CEE has been re-purposed and we’ve supported companies from a broader mix of industries including technology, telecoms, fintech, professional services and not-for-profit organisations to support with global expansion, deal readiness, talent management and strategic decisions including managing increasingly distributed workforces.
Benefits of a CEE
- Provides a way to employ the best talent globally, regardless of where they are geographically based, in a streamlined way and without the need to ‘outsource’ their employment.
- Provides a way for remote workers to enrol in company provided benefit plans (e.g. medical, pension etc.). Also provides a way for remote workers to be granted equity.
- Serves as a centralised employment and pay vehicle for employees in locations where the company does not have a legal entity (globalists/nomads/remote workers).
- Helps manage corporate risk (e.g. permanent establishment, transfer pricing, payroll, compliance, etc.) for specific groups of complex employees.
- Improves the speed of deployment or employment of key talent in/to new markets.
- Cost savings - Can provide a lower cost alternative to creating individual employment infrastructure in each location (i.e. through local entities) or outsourcing employment (e.g. to PEOs).
Where do I get started?
It’s really important to ensure that a strategic challenge and feasibility review takes place initially, to understand and articulate to key stakeholders how and why a CEE could support employment of global remote workers (or other employees) before the creation/investment process begins. A due diligence phase follows, to review and confirm the appropriate CEE location, any host location considerations, the appropriate participation criteria etc. leading into the design, build and implementation phase focused on putting in place the right process, policy and governance framework to support the successful ongoing maintenance of the CEE.
For more information, please get in touch.