So how can businesses move quickly to help their employees at a time of crisis, as well as plan for emergencies in the future?
HR in a crisis:
Since the February 2022 invasion of Ukraine by Russian forces, we have witnessed tragic and heart-wrenching scenes, with death and destruction across towns and cities. The devastation, displacement, and despair of huge numbers of people throughout the country has been seen across the world.
Many global companies found that their employees in these locations suddenly had their lives turned upside down. Where possible, most left the country immediately, migrating to a safer and more secure place, often along with their families.
In support of this movement, the countries of the European Union invoked the Temporary Protection Directive which circumvents the overburdened asylum procedure and offers a quick and simplified path to access protection across the EU.
As a result, Ukrainian refugees have been given residence permits to stay inside the bloc for at least one year, a period that will be automatically extended for a further year. In addition, many other non-EU countries have also relaxed visa requirements to facilitate these cross-border moves of Ukrainians, and certain countries, such as Germany, have introduced relaxed visa requirements for skilled Russian nationals.
Whilst emergency visa requirements provide temporary relief from the normal visa and work permit considerations, attention still needs to be given to other matters, such as:
- payment of salary and fees to these impacted individuals
- new liabilities to personal income tax
- wage tax withholdings
- associated social insurance obligations
Longer term planning
In some instances, short term exemptions may be provided for up to six months, depending on the local country requirements but, for many, this period will start to expire at some point towards the end of the summer. Companies need to be prepared for what comes next.
The hope is that many of those displaced will be able to repatriate back to Ukraine, albeit that some may end up in different locations within Ukraine that have been less impacted by the ongoing conflict.
Naturally, there will also naturally be many instances where the emigree will prefer to settle and carve out a new life in a new country, at least in the medium if not longer term.
This will present further challenges for employers in managing sensitively the personal choice of their impacted colleagues and families, while appropriately planning their own compliance obligations.
Important HR considerations
Many individuals were being treated as contractors or consultants in Ukraine prior to the conflict, under the country’s very favorable legislation for this approach. However, their employment status in other countries may be more complex, and it is vital that any transition from contractor to employee status is well managed.
More often than not, net pay will be impacted. Further adjustments may be required for cost of living differences between Ukraine and the new country location, which will need to be well understood by the business while it manages through this period of change. Budgets in 2022 and beyond will be impacted.
For companies willing to accommodate individuals in countries where they don’t currently have a legal entity in place to do so, consideration will need to be given as to how to best employ or contract with those individuals locally, while mitigating (or embracing) local tax nexus considerations, alternatively known as permanent establishments.
This exercise may quickly become complicated, depending on the number of individuals and/or countries under consideration.
Preparation is key
The war in Ukraine has brought to the forefront the issues companies may face during a crisis, where businesses need to move fast and implement emergency HR plans.
As a result, organisations are realising that they would benefit in having a policy in place that sets out their approach to these types of challenges, as well as a specialist partner that has the knowledge and expertise to help, and at speed.
If moves like these are to be successful for both the company and staff, employers should look for a partner that specialises in the intricacies of global mobility, global payments, entity setups, compliance activities, taxes and HR, where they have operations, as well as further afield.
Katie Davies is chief solutions architect at HSP Group