Boom in remote work widens talent searches

“I don’t think we have a single search where, at the end of COVID, you need to be in the office every day.”

So says Kristina McDougall, founder and CEO of executive search firm Artemis in Waterloo, Ont., as employers realize “actually, they’re functioning quite well” despite the dramatic surge in work from home this past year because of pandemic restrictions.

While some had concerns about things such as collaboration and team cohesiveness among a disbanded workforce, many more employers have come to embrace the new setup.

Not surprisingly, many organizations are also realizing that the hiring pool does not need to be quite so local because there’s valuable talent to be found further afield ― in another city, province or country.

A survey of more than 600 senior managers in September by Robert Half found that 55 per cent of Canadian employers widened their search parameters to access a broader talent pool ― compared to 21 per cent before the pandemic.

“They’ve been able to go outside of their own backyards to not only find what candidates are available but actually the best candidates that may be available right across the country,” says Mike Shekhtman, regional vice president at Robert Half in Vancouver.

Of course, access to a larger talent pool can mean people with differing education, work experience or even socio-economic backgrounds than those found locally, says McDougall.

“It gives you more diversity in your team in terms of the experience that people are coming to the table with.”

And many employees are onboard with the trend: 44 per cent say they would consider moving to a different city if their company offered long-term remote arrangements ― largely for a change of scenery (37 per cent) and lower cost of living (32 per cent), according to Robert Half.

However, there are several considerations that employers should keep in mind if they’re considering stretching hiring parameters, including competitive recruitment and payroll and employment standards regulations.

Competition and compensation

For one, there’s the increased talent, because if you look in any regional market, it’s not just local employers that are competing for the same candidates, says McDougall.

“We’re finding, as an example, there’s a lot of U.S. companies that realize that [their] location doesn’t matter ― Canadian software engineers are a pretty good place to start recruiting.”

A recent survey of more than 1,000 engineers around the world found that 67 per cent of Canadian engineers want to work at companies in major United States tech hubs, but 49 per cent don’t actually want to work in the United States.

A California-based tech company “can certainly beat the market here and drive salaries up if they’re not mindful to be paying in line with what is locally competitive,” she says. “If they just want the best talent and they’re willing to pay for it, then it can really drive up [salaries locally]. And we are starting to see that.”

With compensation, you’re always going to be chasing the competitors, says Steven Nguyen, senior HR coordinator at financial tech company Paytm in Toronto, which has recently ramped up its remote recruitment.

“No matter what, no one’s going to win in compensation. You offer more, they offer more ― it just keeps going up like that. We do our best to stay competitive and within market as well. Our biggest priority is to make sure the projects are interesting, the culture is stabilized and just making sure that we have a human connection with all our employees,” he says. “We want to value employees and make sure we show them that.”

The other option is to pay less if staff relocate to cheaper abodes. Facebook, for example, made news in the fall when CEO Mark Zuckerberg said salaries would be adjusted if remote workers moved to a location where the cost of living or the cost of labour is lower.

“It’s an ongoing conversation... Do you adjust their salary down because now [employees] live in a smaller and less expensive region?” says McDougall.

In looking at the salaries of staff who choose to relocate, compensation will be determined by the company’s office location (68 per cent) and the employee’s new location (22 per cent), according to a recent Robert Half survey of more than 500 workers and 180 HR managers in Canada.

However, most (84 per cent) workers say that they would not be willing to take a pay cut if they were to move.

Reducing or trying to reduce the salaries of existing employees is not necessarily a good move, says Robert Richler, lawyer and human resource advisor at bernardi in Mississauga, Ont.

“[Employers] would want to be cautious about paying employees who are doing the same job less money because of where they’re living, just because there could be discrimination, potential claims for that type of action,” he says. “That could be a classic example of what could be constructive dismissal.”

It’s too soon to tell how the rise of remote work is going to impact compensation, but at this point, there hasn’t been much movement, says Shekhtman.

“What we do know is that employers are still offering very competitive compensation to attract candidates, no matter where they live. I think it’s critical, especially for in-demand positions, because if you know that we pay fair market value for talent, there is a much better chance to retain them. Recruiting is not always the hardest part of the job ―retention sometimes is for employers. So, we’ve seen that people and organizations are savvy to pay well because they don’t want to lose people, and they know what the cost of hiring may look like as well.”

Recruitment strategy more important

But it’s not just a matter of money if you’re an employer looking to entice candidates from further afield ― you have to be more creative in your recruiting, says McDougall.

“It’s far easier to send a message to a local candidate pool and one that’s maybe only two degrees of separation from your existing network. Attracting talent farther away is a trickier thing to do... How you get their attention is a little bit harder to do.”

Some places in the United States are trying to entice remote workers to move to their community, as seen with websites such as makemymove.com. Software engineers moving to Chattanooga, Tenn., for example, are offered up to US$10,000 toward a new home and US$1,250 toward moving expenses: “Come for rock climbing and the fastest, most affordable internet in the country.”

As a result, there’s been a “massive push by many employers” when it comes to employer branding, says Shekhtman, “because now you are not only competing as an employer with people and/or with organizations within your own community, you’re competing with employers right across the country.

“We’ve seen a lot of organizations that are coming up from the U.S. that are setting up satellite offices in Vancouver or Calgary or Toronto. Employer branding is so prevalent in the way you are marketing yourself as an employer and the type of not only compensation but benefits that you’re able to offer to attract that top talent,” he says. “Utilizing social media, utilizing LinkedIn, as an example, and various methods to drive engagement is critical.”

One of the biggest advocates for an employer brand is the employees themselves, so it’s about making sure that they are putting out great content, says Shekhtman, and “ensuring that they are being your biggest ambassador, which goes back to how well you treat your employees.”

Of course, the wider the pool of talent, the greater the challenge of time-zone differences. One hour may not be too arduous but when the differences stretch to five, 10 or 15, issues around scheduling, meetings and overall availability rise accordingly.

For Canada and the U.S., it’s not too bad for PayTM, says Nguyen, but China and India are more difficult.

“We’ll find a mutual understanding with standups and meetings across different teams. India and China [have] been a little bit more difficult because you’ll have either early hours or later days ― we try to find a good understanding or mutual ground for that. So far, it has been OK. It’s a little stretch in hours sometimes, but we try to make sure employees understand that if you wake up earlier for a meeting, it means you can leave earlier for the day. And just make sure people understand that flexibility in time.”

Differences between countries can also emerge when it comes to onboarding and cultural codes, he says.

“The way India works, the way Japan works, the way Canada and the U.S. work, they’re all different.”

Corporate culture is much easier to maintain or evolve when people are working together in one location, says Shekhtman.

“When we’re in an office, so much innovation is driven unintentionally, and it’s much more difficult to do that when you have different people working across different time zones in different schedules. So, keeping that company culture, evolving culture and maintaining a high level of collaboration can be a challenge if you’re not putting specific programs in place and initiatives to drive that.”

Payroll, employment law matters

Another huge consideration when it comes to hiring people who are in another province or country? Compliance with payroll and employment standards.“It’s not as simple as ‘Let’s just put them on payroll and it doesn’t matter where they live’ ― you need to be thinking about compliance,” says McDougall. “It’s an extra step.”

While the differences may be slight for things such as payroll remittances between provinces, employers with a non-local workforce might want to consider hiring a company to sort out the local legalities.

“We helped a company recently hire someone in Switzerland and we used a third party to help us facilitate that employment because I have no idea what the laws are in Switzerland, nor do I want to invest time and effort in making sure that we’re compliant,” she says. “And it’s expensive.”

Canada is definitely easier than other countries, says Nguyen, with employees put on the Toronto entity payroll ― though Quebec can be a headache, he says, citing payroll funds for daycare and a different pension plan.

“It was a huge challenge when we first figured it out.”

But when it comes to the U.S. and other international countries, “you have to have an entity for them and a different payroll, just to make sure that taxes are clear and it doesn’t become too much of a scramble for them,” says Nguyen.

“The other thing is if you’re hiring for the U.S.A., India and China, unless they have a Canadian work permit or some sort of legal right to work in Canada, it will be super difficult to hire them if you don’t have an entity there.”

On the tax side, the federal government talks about a “permanent establishment,” which is “usually a fixed place of business of the corporation, which includes an office, branch, oil well, farm, timberland, factory, workshop, warehouse, or mine... If the corporation does not have a fixed place of business, the corporation’s permanent establishment is the principal place in which the corporation’s business is conducted.”

But it’s not always clear whether employee home offices are considered permanent establishments when it comes to provincial income taxes and an employer’s payroll withholding obligations.

The same complexities are involved when it comes to layoffs and terminations of employees who work remotely, particularly outside the province or territory. Ontario’s Employment Standards Act, for example, applies to an employee and their employer if the employee’s work is to be performed in Ontario or the work is to be performed in Ontario and outside Ontario, but the work performed outside Ontario is a continuation of work performed in Ontario, according to Suhaib Ibrahim, lawyer and HR advisor at bernardi in Mississauga, Ont.

When working remotely and over the internet, this raises many questions, he says: Where is the work “performed” for an out-of-province employee with an Ontario employer? Is the work performed at the worker’s desk or on the servers in Ontario? What happens if the employee is engaged in meetings, again remotely, with fellow employees across the country and in Ontario? Where does the work take place then?

“If they are going to be a traditional employee, then you have a question of: What is going to be the law that applies to them?” says Richler. “Are they going to be subject to their local employment laws where they’re living? Or are they going to be subject to the laws of the jurisdiction where the employer is situated?”

There are a number of factors that the court will take into consideration, such as where the contract was entered into, he says.

“If it’s delivered to them by email and they’re situated in Ontario, then the contract would be deemed to have been accepted in Ontario. And, on first blush, it would seem that the Ontario law would apply, especially if the business is to do work in Ontario. If the business is to do work in Calgary, it becomes a little bit more murky. If the employment contract is silent on it, they’ll look at various factors. But if the employment contract says the Ontario law is going to be the law that governs the contract, then the Ontario law would govern,” says Richler.

“It’s important to be aware of that and to know which laws are going to govern because if the end of the relationship comes, there could be very different results based on that,” he says. “If you don’t set that out at the outset, you may be in for a surprise when it comes time to deal with the end of the relationship as to what you are required to pay or not pay.”There’s a lot of education that is required of employers and HR because of the differences and nuances in legislation across the country or beyond our borders, says Shekhtman.“It’s really important for employers to take time to educate their teams, and even seek external expertise... and do their due diligence through that process, and make sure that they know what they’re walking to when they’re looking for a new position or hiring remote employees,” he says.

“Legislation also changes on a regular basis, so you need to be up on the current laws. And you can do that on your own. You need to be able to seek that advice with your partners.”