Mobility via Podcast

PODCAST

Episode 16: 2021: Outlook on remote working and the impact of COVID-19 vaccines

KPMG Global Mobility and International SOS professionals discuss the future of remote work and the impact of COVID-19 vaccines.

Anne d'Arcy

Anne d'Arcy

Principal, Tax, Global Mobility Services, KPMG US

+1 212-954-4853

Jeremy Prout

Jeremy Prout

Security Director , International SOS

David H. Mayes

David H. Mayes

Principal, Tax, Global Mobility Services, KPMG US

+1 617 988 1083

Andrew Vincett

Andrew Vincett

Partner, Global Mobility Services, KPMG Switzerland

+41 58 249 68 63

Podcast transcript

Anne: Welcome to our next episode of Mobility via Podcast. I am Anne d’Arcy, a principal from the Global Mobility Services Practice here at KPMG. In our past podcasts, we have covered the topic of work anywhere. Having to respond to what could be the fastest social change in modern times, companies worldwide in 2020 enabled remote working nearly overnight. Today we want to look forward.  We now have multiple vaccines and despite a few bumps, the pace of vaccination is picking up globally, which hopefully moves us closer to returning to life as we know it, albeit likely with some lasting changes.

On today’s podcast, we are joined by Jeremy Prout, Security Director for our alliance partner, International SOS. Jeremy is responsible for the provision of security services and assistance to international SOS claims in the Americas region.  He has over 15 years of experience in global security operations and consulting. We are also joined by my colleagues Dave Mayes, a principal in KPMG’s Boston office, and Andy Vincett, a partner in our Zurich, Switzerland office. Dave has spent the last 11 months talking to our U.S.-based clients about the impact of the pandemic on the future of working arrangements and whether employees can truly work anywhere while Andy has been looking at this with more of a European lens.

KPMG and International SOS have been side by side in many client discussions, helping companies firstly focus on health and safety, and then as the pandemic continued, bringing a holistic approach to identifying and managing risk across remote workers and of course business . I said at the beginning that we want to look forward.  2020 is behind us now and there are many reasons to be hopeful as we kick off 2021.

So first to you, Jeremy. The vaccine or maybe I should say vaccines are now available and being administered on a national and state basis globally. I know you do not have a crystal ball, but does this signal the end of the pandemic?  And what are we talking about in terms of timing?

Jeremy: Thanks, Anne. Certainly exciting news in 2021 with where we’re at with vaccinations and the number of vaccines that we seem to be growing at a high rate, and the production of those as well. So, I don’t think we’re at the end but we’re certainly at the beginning of the end with this vaccine rollout.  So let’s look at where we’re at today. So today is the fifth of February when we’re recording this. We have approximately 119 million doses of vaccination have been administered at present across 67 different countries. So that comes down to right now we’re at about 4.5 million doses a day globally.  In the U.S., we’re currently sitting at around 37 million doses at this point.

So we’ve seen a bit of a slow rollout at first. That’s picking up pace and we’re seeing more vaccines given on a daily basis in more locations. And it’s also a bit uneven. So we have locations like Israel where we’re seeing you have 40 percent of the population already having at least one shot, and then we’re seeing really the rest of the globe lagging behind, a lot of that due to the inability to purchase vaccines. As well as that and a combination of the systems and then also some trust issues about vaccination in general.

We have countries that have purchased a significant amount of vaccine, Canada being one, which has actually purchased enough to provide nine doses per each Canadian. So, as we go on with this, we’ll see more countries be able to have it, ones that might not have the resources to procure it, as other countries have stores that they’re not going to use.

We’re also seeing an increase in vaccination confidence. As more people become vaccinated, that lends credence and confidence to others to understand that this is something that’s safe. And as we see the numbers, not just the third trial data that’s out there which is incredible, but as we start seeing deaths drop, hospitalizations drop, that’s also going to increase confidence and get more people to vaccinate. Also, vaccination really does … can have a great impact. We’re seeing this in the UK where there’s really a push to vaccinate individuals right now. So those types of locations that have high impact, being able to blunt those case spreads, the hospitalizations is going to be a critical part of what this vaccination program is going to do.

And then looking towards the future, the question is how long is this vaccination going to be good for? And we don’t really know that yet. We expect that we’ll probably need some kind of a booster program going forward, but we’re very much trending in this good direction.  And as I said, we’re at that beginning of the end point. Thank you.

Dave: Thanks, Jeremy. And I’d say from the KPMG point of view, we’ve seen with our clients, the vaccine news has certainly given them we’ll say hope. There’s light at the end of that tunnel and that they may be returning to some form of normal in the near future. But there’s still certainly some uncertainty about what that new normal is going to look like.

And as we think back to how organizations reacted from that employee and human capital perspective at the beginning of the pandemic, most started just by addressing those immediate burning platform issues of how do we make sure our people are safe, how do we make sure that they’re productive, and then how do we keep them connected to our culture.  There were, I’ll say, a pretty wide range of responses that organizations kind of fell into; probably into three broad buckets, we’ll say. 

The first bucket was just around those that thought that things are going to go away soon enough and that they’d be back to doing business as they were before.  The second is more of a balanced approach, that while they may be undecided on when and where they’re going to return to the way things used to be, they still took some steps to embrace that virtual working and looked for ways to review processes and policies to support remote work in a measured way.  The third category was those pathfinder organizations that were looking beyond the pandemic and trying to imagine what work would look like in the new reality.

So there’s been I’ll say a good mix of challenges but also a number of opportunities to accelerate transformation.  I’ll say one of the sentiments that has certainly grown coming out of the pandemic is that employees are really going to be demanding some more flexibility in how and where they do their work in the future.  So, even organizations that fell into that bucket of saying we’re going to go back to doing business as we did before, they’re starting to realize that they may need to support remote work in some form in the future.  And from a risk and governance perspective, which is our focus here, one of the realizations that a number of organizations have had is that remote work does have its challenges in that their employee footprint is changing, and that has an impact on their overall tax risk profile. 

So, we’re helping answer a number of questions from payroll departments, for example, as employees are moving temporarily or permanently to work in different states.  That’s triggering some changes to withholding obligations and difficulties in just navigating some of the changing telecommuting rules.  Some of our corporate tax clients in their departments, they’re also concerned about just potentially creating permanent establishment issues in new jurisdictions and state nexus triggers within the U.S.  And so, they are looking at how to manage the movement of certain roles and functions that may have an impact on some of their transfer pricing policies, for example. 

And so, as we reflect on where we are, I can’t think of a time at least in recent memory, when it’s been more important for HR teams, mobility teams, corporate tax teams to really collaborate to make sure that they are striking the right balance between providing that employee flexibility that they’re demanding and managing the risk to organizations.

Anne: Great, thanks.  Dave talked about some of the risks that come up in discussions we have with our clients on a daily basis.  So Jeremy, are there other hidden risks organizations should be focusing on as we come out of the pandemic?

Jeremy: That’s a great question, Anne.  I think what organizations need to focus on are really the traditional risks first.  We want to be thinking about what are the risks that are out there that have always been there?  And what we’ve seen many organizations do is getting a focus, really focusing in on COVID-19.  So, if I’m going to do a trip to Brazil, what am I thinking about?  What are the hours of research I’m spending on doing before my first trip ever to Brazil right now?  It would obviously be on COVID-19. 

What else am I missing though is hey, do I understand the security risk environment?  Do I understand the medical environment outside of COVID-19?  And do I understand if I’m going to a location where ground transportation, driving is rather hazardous?  Do I understand these traditional risks and more likely the risks that I’m probably going to run into than COVID-19?  What we’ve seen is a lot of client of ours have this laser focus on COVID-19 and they may have these blind spots on traditional risk. 

Added to that, there’s also a question about … I promise that I won’t use the term new normal after this podcast, but what I’ll also say is new neighborhood and new risk.  The places that we’ve gone to before, let’s use London as an example, and obviously I’m not recommending anyone do a tourist trip to London right now, but let’s say a couple months as case counts change, you go to London and you’re going to a location, maybe you’ve been there four or five times already, and you’re going to go to a neighborhood that you’ve been to before pre-pandemic. 

That neighborhood is going to be very different right now and may be very different after the pandemic as we see neighborhoods change.  We see businesses change, we see different people in there, we’re going to see restaurants that are closed.  So, a location that you may be very used to before, that you may be familiar with, if that neighborhood has changed, then that risk environment may have changed as well. 

So really what we need to do is to be very careful as we’re going to places, even places we’ve been before, and really understanding what has changed in the last year.  What’s changed in the last by the time you get there, maybe a year and a half.  And to be asking those questions well in advance.  And again, we want to understand what the pandemic impact is, what our relation to the pandemic is, but we always want to focus in on those traditional risks and the new emerging risks that we’re seeing in many different locations across the globe.

Andy: When we think about tax risk, I don’t think we can really call it a risk blind spot.  I for one have been telling anyone who will listen over the last year about the big tax risks that can come from the disruption caused to the work force over the last year.  But it’s important to remember that companies have got a lot more to think about than just the big tax risks. 

Imagine what it was like two years ago, you’re an employer, you’re in the center of a big city, 5,000 people come to your office, come to your building every day.  They go through a turnstile.  It’s a very controlled environment.  You’ve got a lot of control over the people and data.  But over the last year, that’s changed; right?  Everyone is working from home.  Some people are working from anywhere.  Employers have got a lot less control over the environments that their employees are working in. 

So, employers need to be thinking about do they have adequate insurance coverages.  Do they know where their people are?  Do they know what the duty of care legislation is, and the local labor law is in the countries that their employees might be working in?  I know of one example where an individual was based in Italy and it came time that the employer wanted to terminate the individual, but they could rely on the labor law of Italy because that’s where they’d based themselves and that’s where they’d become resident. 

Similarly, data privacy is a huge issue, is always a huge issue.  And the lack of control that employers have over their employees, where they’re opening their laptop and what they might be sharing is so much less in the last year.  There’s an example that came to light of a couple that were working at home during the pandemic, and they happened to work for competing banks.  How can employers maintain the integrity of the data that’s so important to them in situations like that? 

So these are some of the risk blind spots I think that employers need to grapple with now that they’re getting their arms around the big tax risks that have come over the last year.

Anne: All very interesting on the hidden risk.  It looks like there are big changes coming.  I’m sure this will bring a number of opportunities for all of us irrespective of our location.  So we’re turning our attention to vaccines and the impact on the returning to work and business travel.  Jeremy, what are you hearing from companies in this respect?

Jeremy: Great question.  So, what we’re mostly hearing right now from organizations is how do we educate our populations about vaccines.  Most of the discussions that we’re having with clients are about vaccine programs.  What’s available?  Let’s say it’s a global institution.  It’s one thing to understand and to break it down state by state in the U.S., but if you have a global institution, how do we educate our employees to get those vaccines?  Because right now an organization cannot go out and buy a vaccine like we do with the flu shot and just set up one day and vaccinate 20 or 30 people or more. 

So this is a situation where organizations are looking at this and saying what can we do?  And really that’s education, so let’s educate our employees about these things.  Let’s do a webinar and maybe bring a corporate medical advisor or a doctor in to talk about vaccination so that the individuals have this information, and they can better make these decisions for themselves. 

So, one of the challenges also with organizations is the question comes up can my company make this mandatory for employees.  And the reality is it’s a bit mixed.  If you want to restrict individuals from coming onto your premises because of the lack of a vaccine, you certainly can do that as an organization.  So that seems to have come out now.  There may be some challenges around that going into the future, but you can mandate it looks like at this point, put out a mandate that if an employee wants to come on premises, that they’ll have to vaccinated.  Otherwise it’s a remote worker at that point.  And there will be obviously some questions and challenges that go around that. 

But really again, the key part of this is let’s get that confidence up to these employees.  Let’s explain what the vaccine is.  Let’s dispel some myths around it, so that they do have that good information to make the best decision.  And as far as the other considerations around it, I think we’re also going to see some of these challenges around premises for other institutions. 

Now, we’ve seen Ticketmaster already came out and said they’re not going to require this for concerts, so there’s some concerns about that.  But obviously there’s always been vaccination requirements globally for entry into countries.  Depending on how the future goes, this could be something where we’re seeing some type of a digital passport, digital key for entry into locations.  So that’s not off the table at all.  So there are still questions about if that’s going to happen or not because the technology exists there and obviously the concerns about seeing different strands come up and different problems around that still exists. 

There’s certainly more to come on what vaccines are going to have an impact on and really what is this from a premises perspective, a travel perspective as far as those requirements that organizations and nation states are going to be putting into place.

Dave: Thanks, Jeremy.  And this has been interesting for a lot of our clients too, and while in many respects for most folks, the start of 2021 still feels like they’re on the same hamster wheel that they were on in 2020, there has been some change in the actions that we’re seeing a number of companies take. 

We’ve seen organizations create cross-functional teams including HR, tax mobility and legal to tackle some of the remote work issues together.  Many have started to put together their remote work policies, or at least have identified some of the guiding principles of their remote work approach.  But they’re finding that the devil is very much in the details here.  And by that, I mean there are still a number of questions that are coming up around how to operationalize some of those policies.

Some of the questions we’re getting are around what processes should I put in place to manage the remote work requests that are coming to me.  Some of our clients are still fielding dozens of requests a week, which is putting a strain on their internal resources.  They’re also asking what types of updates do they need to make to their HRAS systems and to payroll to make sure that they’re complying with the reporting and withholding obligations that they have.  And a number of corporate tax teams are still asking if they should perhaps update their legal entity structure to help mitigate, manage and ringfence some of the risk that remote work is creating.  And if they do that, then how much are those structures going to cost them on a go forward basis after setting it up and just to maintain? 

So, the phase that we’re in with a lot of organizations is tackling some of these operational challenges.  Andy, maybe do you want to touch on what some of the strategic opportunities that we’re seeing some organizations leaning into?

Andy: Absolutely, Dave.  Let me pick up on that work force planning piece and turn it to talent.  The phrase war on talent is nothing new; we’ve all heard it before.  But it’s even more brought into focus in the aftermath of a crisis.  If you think about big economic crises, the war on talent is a critical part, and winning that war on talent is a critical part that determines how well a company can respond. 

What’s interesting this time is that I feel like whereas the cards are normally held by the employer when it comes to emerging from crises, particularly economic ones, here we’re in a situation where the employees and the talent market have more cards.  They have more say and more power to demand more from their employers.  What are you going to do for me?  How are you going to cater to the flexibility that I’m demanding? 

I think there’s a good couple of examples about how companies have in the past responded well out of crises to the war on talent, and one is the Detroit motor industry at the back of the financial crisis of 2008.  We saw that the companies that responded quickest, rebound the quickest and accelerated into the future were the ones that could rebrand themselves as greener, away from the gas guzzling past, maybe looking at green energy, maybe looking at electric trains, high-speed trains, and branding themselves to the talent market that that was their future and come and join us.  Those companies it’s been proven have responded much, much better. 

Similar example in Scandinavia with a tobacco company who realized that recruiting from the big Scandinavian universities their future managers was becoming tougher and tougher and tougher because the stigma and the brand that went with the big tobacco was becoming less and less attractive.  So what they’ve found over time is that they’ve recruited from different countries, Eastern European countries primarily, future talent out of the universities there because they found that the quality of the graduate they could find was the same was the brand associated with tobacco wasn’t quite seen as negatively as in their domestic market. 

 So, I think what I take from those examples and what I take from looking at the crisis that we’re going through at the moment and that we’re hoping to emerge from in 2021 is that we should really be watching for the companies that can successfully rebrand their employee proposition to the talent market, as they will be the ones that will respond best and perform best as we come out of 2021 and into 2022.

Anne: So 2021 looks to be another interesting year for all of us as we navigate the challenges ahead to return to our respective offices or not as the case may be.  KPMG and our alliance partner International SOS are here to help clients as they work through these challenges, bringing a holistic approach to keep your employees safe and your organization and your employees compliant. 

Thank you to Jeremy from International SOS and to my colleagues Dave Mayes and Andy Vincett for sharing your insights with us.  In future episodes, we continue to address the top-of-mind issues of interest to our listeners.  In the meantime, we’d like to hear from you.  If you have thoughts on today’s episode or ideas for future episodes, please send us an email to us-taxwatch@kpmg.com.  Finally, I would also like to thank you, the audience, for joining us today.

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