Most HR professionals are aware of the concept of “extended business visitors” — and the liability risks associated with using this international mobility model as a result of increased tax and immigration enforcement.
However, successful management of extended business visitors can still be challenging. New realities, such as the ability to work remotely, can turn extended business visitors into extensive business concerns.
Evolution of traditional models
HR and global mobility professionals play a strategic role in managing international operations when it comes to developing sophisticated expat models and deploying global talent management policies. However, the traditional concepts of a long-term assignment (LTA) and short-term assignment (STA) tend to exclude business travellers.
As a result, a large number of employees travelling internationally, but not entitled to LTA or STA benefits, fall off the radar and are managed directly by project teams who are less familiar with the compliance risks.
This can include assignees making extended trips to one country or multiple trips to the same country or several different countries.
Some employers have created a third expat model to cover extended business travellers (EBT). However, the arbitrary definition used for EBTs often excludes a number of situations that put companies at risk.
Whether based on the mistaken concept of the 183 days of tax-risk-free or the equally unfounded concept of the 90 days of work permit concerns-free period, such an approach simply does not work where each country has adopted its own distinct tax and immigration laws.
As an illustration of the complexity of drawing a thin line between the blurry concepts of a business trip versus short-term work assignment, a single day of consulting services rendered in a foreign country could be viewed as work and require an appropriate work authorization.
On the contrary, several weeks or even months of technical after-sale services can fall under the business visitor category if certain conditions are met.
Under traditional expatriation models, the consultant in the first example would mostly go unnoticed while the business visitors could be included in STA or LTA policies.
If so, the immigration risk inherent in the consultant’s situation would not be addressed. Moreover, both situations could trigger tax consequences — some countries add up the number of days spent by any employee in the country to determine tax liability and one additional day can tip the scale.
Family concerns, dual careers, security concerns and technologies that have made remote and mobile virtual work ever more possible are also creating increasingly complex situations. A worker could be employed by a company based in country A and render services that are benefiting a client in country B, while executing such services from country C where the family chose to reside.
Another mistaken reflex would be to consider only the rules of country A where payroll is located while tax and immigration regulations would need to be addressed for countries B and C.
In addition to the tax and immigration risks, the liability of employers and HR professionals is a growing concern. Driven by competitive pressures, cost-control measures and perceived difficulties in obtaining proper work authorization, organizations may be tempted to circumvent immigration laws by getting short-term expatriates into the country as business visitors.
This can amount to aiding unauthorized employment or counselling misrepresentation. In Canada, counselling misrepresentation exposes an employer to sanctions under the Immigration and Refugee Protection Act (IRPA). Penalties for violating the act can involve fines of up to $100,000, jail terms of up to five years, or both.
Other sanctions for non-compliance include tax audits and exclusion from the Temporary Foreign Worker Program. In the United States, under the Immigration Reform and Control Act of 1986 (IRCA), an employer that has actual or constructive knowledge of an employee’s unauthorized status may be administratively fined between $250 and $11,000 per undocumented alien.
Additionally, an employer with a pattern or practice of violations may be criminally fined up to $3,000 per undocumented alien and imprisoned for up to six months.
Lax compliance policies with regard to business visitors can also result in civil action by employees. In one situation, an employee was found guilty of misrepresentation by the U.S. Customs and Border Protection.
He carried his Canadian employer’s letter, which vaguely stated he would attend business meetings, but admitted in an interview such meetings were de facto training sessions on functionalities of the software previously deployed at client site.
Banned entry into the U.S. and alleging he was not properly informed nor documented by his employer, the employee filed a lawsuit against the company for damages arising from his inability to enter the U.S. in the future for personal or professional reasons.
In another case, a whistleblower alleged the company systematically used extended business visitor visas to temporarily staff projects at U.S. client sites, in direct violation of U.S. immigration laws. The evidence filed with the court included employees’ emails and memos from the company’s intranet, specifically instructing the visa applicants on how to procure business visitor visas by avoiding vocabulary such as “work, implementation, activity, consulting, et cetera.”
While the suit was ultimately dismissed (Palmer v. Infosys Technologies Limited Incorporated), the situation was damaging to the employer.
In either case, this type of litigation is clearly a risk for any organization, causing financial and public relations damage.
Beyond avoiding sanctions, the management of extended business travellers is critical to the ability of an organization to conduct business internationally. The winners of this complex game become strategic contributors to their organization’s competitiveness, supporting them in efficiently delivering business commitments to international clients.
“The stakeholders within our global organization acknowledged the risks inherent in extended business travel assignments and took specific actions to mitigate them,” says Pierre Joubert, vice-president of human resources at Alstom Power & Transport Canada.
“As a result, we are collecting and analyzing structured data about our short-term assignees and are managing them the way we manage our long-term expatriates. This approach to global mobility management is guaranteed to bear fruit in the long term as a strategy for achieving 100 per cent compliance and facilitating the movement of our global talent.”
Companies doing business in several jurisdictions should conscientiously establish a structured approach to tracking business visitors by compiling and analyzing the right data to ensure compliance with tax and immigration regulations.
Beyond simply tracking entries and exits, it is critically important to appropriately interpret the information collected in collaboration with professional partners in tax and immigration.
The next challenge for global organizations is to transform the general awareness of the importance of tracking business visitors into the development and implementation of strategic polices to efficiently manage this important segment of the workforce.
Julie Lessard is a partner and head of the business immigration strategic team at law firm BCF in Montreal. She can be reached at (514) 397-2260 or firstname.lastname@example.org.