The CapRelo Insider provides a glimpse into the news, trends and happenings affecting the global mobility industry. Our experienced client services team provides updates and analysis directly to our clients, with policy and program recommendations tailored to their companies and employees. To learn more about how we can help you, contact us today.

To meet the needs of your mobile workforce, we recommend continuous evaluation of policy allowances and benefits. Below we outline new challenges and changes we have observed in the field. Contact us if you would like to discuss how we can help you adjust your policy or program.

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Industry Updates

South Korea – Tax Provision Bill with Measures for Foreign Workers Becomes Law

South Korea has extended the sunset clause for the flat tax rate for foreign workers through 31 December 2023. If a foreign worker begins work in the country prior to this date, that worker can elect to have the 19-percent flat tax rate (20.9 percent including local income tax) applied for five consecutive tax years, including the first year he/she starts to work in South Korea. Foreign engineers may also be granted a tax reduction equivalent to 50 percent of the income tax on earned income for five years (60 months) if they start work prior to the extended deadline.

The Impact

This extension may affect tax costs and budgets for inbound South Korean expats, and therefore impact policies and administration for employers. The tax reduction and flat rate may also offer an additional incentive for employees considering assignments in South Korea.

U.S. Federal Judge Reinstates Independent-Contractor Rule

A federal judge in Texas has revived a rule that would make it easier for employers to classify workers as independent contractors rather than employees. The Fair Labor Standards Act (FLSA) entitle employees to minimum wage, overtime pay and other benefits while independent contractors are not entitled to these benefits. The Department of Labor (under President Trump’s administration) issued a final rule defining the differences between these two categories of workers. The new standard was set to take effect in March 2021; however President Biden’s administration issued a withdrawal of the standard. Judge Marcia Crone of the U.S. District Court for the Eastern District of Texas has now reinstated the rule, arguing that the Biden administration’s actions violated the Administrative Procedure Act (APA).

The Impact

The DOL may appeal Judge Crone’s ruling. However, the outcome of the debate will significantly impact the business models of some companies with higher percentages of workers who may be considered independent contractors or employees.

For Many U.S. Employers, Some Remote Work Expected to Last

About one-third (34 percent) of private-sector employers expanded remote-work options for workers during the COVID-19 pandemic, and around 60 percent of those organizations intend to keep those policies in place, according to the U.S. Bureau of Labor Statistics. In response to a recent FlexJobs survey asking job seekers their preferences for post-pandemic work arrangement, 39 percent prefer a hybrid arrangement and only 3 percent of respondents want to return to full-time in-person work.

The Impact

While the long-term impacts of the pandemic remain uncertain, employers that can offer some form of remote work will have advantages in recruitment and retention. Companies should work with their service providers to carefully navigate the impacts of remote or hybrid work arrangements on mobility programs. For more information, check out CapRelo’s and HR.com’s joint research report on Creating Flexibility in Talent Mobility Programs and Policies.

Impact on Mobility: Russia/Ukraine Conflict

Impact on Housing

Per Dwellworks, housing options in Poland are extremely limited. Despite diligent sourcing and secured commitments from suppliers, housing is in short supply across Europe and the Middle East from Dublin and London, through to Dubai and Istanbul. Everyone in the housing and employee-support ecosystem, including suppliers of travel, lodging, and local services, is working around the clock to find housing and confirm bookings.

Areas not currently surrounding the crisis may still be impacted as employees are moved to other locations, causing a swell in demand elsewhere.

Impact on Shipping & Logistics

The conflict in Ukraine has impacted international freight shipping to and from Russia, limiting options and requiring workarounds for sea freight. According to AGS Worldwide Movers, air freight from Russia remains possible, though routing options are limited. There have been no changes to customs regulations or procedures so far.

The situation is fluid and could change at any time. Items to be aware of that may impact your employees/policy/program local to the crisis or have an impending ripple effect:

• Limited options remain available to assist with last-minute removals and storage, if necessary
• Storage, in Russia in particular, is beyond capacity and may be quite limited
• Prepayments in Russia have halted due to Russia’s partial ban from SWIFT
• Crossing borders from Russia into the EU and vice versa has halted
• With air space restrictions, planes have been forced to reroute flights, requiring additional fuel storage and reducing cargo capacity

Impact on Immigration

As of Thursday, 17 March the European immigration authority has put applications on hold for Russian nationals. The authority is assessing each application to determine whether the company or persons fall under EU sanctions.

CapRelo immigration partner, Newland Chase, anticipates that the processing of applications not involving Russian-owned employers will continue at some point, but timeframes have not been confirmed.

COVID-19 Travel Restriction Updates

Canada – Government to End Pre-Arrival COVID-19 Testing

The government of Canada has announced that fully vaccinated travelers entering Canada will no longer be required to complete a pre-entry COVID-19 test beginning April 1. Also, only randomly selected travelers will need to complete post-arrival testing, and they will not be required to quarantine while awaiting test results.

The Impact

These changes to required testing and quarantine rules should reduce costs and expedite business travel to Canada.

As conditions continue to change around the world, we recommend clients reference Newland Chase’s Entry Guide which is updated continuously.

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