What is a workation?

The definition of a "workation" comes from merging of "work" and "vacation". As part of a workation, individuals work from a location away from their regular workplace, be it within the same country of residence or abroad. Other terms used for workations include "workcation", "temporary work from abroad", “mobile work abroad” and "remote work abroad". The last three options refer to scenarios when the employee works outside their home country.

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What are the advantages of offering workations as a benefit?

Studies show that workation is a highly sought-after benefit by employees, as this arrangement supports flexibility and work-life balance, enabling employees to connect with family and friends abroad, or discover new destinations while maintaining productivity at work. There are many aspects that highlight work-from-anywhere opportunities aka workations as an employee benefit advantageous to both – employees and employers.

Increased job satisfaction

According to WorkFlex work-from-anywhere survey (2024), opportunity to go on a workation significantly increases the job satisfaction of employees. Workation is an opportunity to prolong their holidays and work from a vacation destination; visit family abroad and spend quality time with them while continuing to work; discover the world and spend a few weeks working from your dream destination.

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Improved productivity

When employees are given the autonomy to choose where they work from, be it the office, home office or a workation destination, they feel understood, valued, cared for and become more invested in their organizations, as indicated by data in the WorkFlex survey (2024). According to Gartner research, greater flexibility in the organisation bring the number of high-performers up by 40%. Additionally, the flexibility given decreases the risk of burnout.

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Access to larger talent pool

More than 80% of employees reveal that flexibility to work from abroad temporarily is an important decision factor in choosing their employer. Covid pandemic proved that majority of knowledge worker jobs can be successfully done in a remote setup.

Employees got used to having the flexibility to choose their workplace, and thus aren’t willing to return to the office full-time. Employers that offer flexible working policies, be it fully remote or hybrid model with opportunity to work from abroad temporarily, rank higher in the eyes of talent and thus have access to a larger talent pool.

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Workations and Global mobility

Where do workations fit within the realm of global employee mobility?

In this article, we focus on the workation type where individuals work temporarily abroad, rather than at a different location within the same country, since the cross-border scenario adds more complexity from a compliance perspective.

Historically, global mobility has primarily focused on employee cross-border travel for employer interests, such as business trips. However, workations introduce a new dimension since they are a mobility request driven by employee interests.

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What does a workation entail from a compliance perspective?

• The employee works across borders at another location, which is a short-term interruption of their presence at the place of work, but not the work itself.

• It is a benefit triggered by the employee's personal desire to work elsewhere.

• There is no business reason or business interest in the trip.

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How to develop a workation policy?

Since the workation benefit is one of the most complicated flexibility perks in terms of compliance, it is crucial to implement a thorough work-from-anywhere policy. Fortunately, all compliance aspects can be effectively managed by defining specific terms in the work-from-abroad company policy and implementing appropriate risk mitigation measures.

To develop a comprehensive workation policy for your company, you should start with defining the following three main components:

1. Eligibility: Who can go on workations? What employee groups are eligible for this benefit?

2. Maximum number of days: What’s the accumulated length one can spend on a workation yearly? Are there any limitations to the number of days per one workation?

3. Geographical Scope: What are the countries employees can travel to for a workation? Do we exclude any countries or regions from the scope?

Let’s take a closer look on each of these three components and consider the best practices from other workation policies.

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Who is eligible for workations?

Not all employees are capable of working remotely. Due to job roles or team dynamics some individuals cannot benefit from this perk. To determine eligibility for workations, consider the following baseline assumptions:

1. ‍Remote work capability: Only employees who can perform their job remotely are eligible for workations. Since workations involve being away from the main workplace, employees who need to be present in the office, manufacturing plant, or other employer facilities cannot take advantage of this benefit. To address their flexibility needs, consider offering other benefits, such as flexible working hours.‍
2. Managerial support: For a successful workation, there must be a buy-in from the direct manager. Without the manager's support and trust, the workation will not be enjoyable.‍
3. Productivity and compliance: Employees should feel assured that changes in their workplace will not affect their productivity and that they can still complete their tasks, which is a matter of individual working style. Additionally, employees should agree to and follow the company's workation policy to ensure this benefit does not create any compliance issues.

Considering these three aspects, outline in your workation policy which employee groups are eligible for the workation benefit in your organization. This may include relevant entities, departments, teams, and job roles.

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What is the maximum number of days one can take a workation per year?

When looking at over 100 employer workation policies worldwide, the most common limit for workation allowance is 30 days. With this allowance, employees can enjoy several extended holidays or work for an entire month from another location. On average, employees typically take an 8-day workation, allowing for 3 to 4 workations a year to reach the 30-day limit.

Additionally, many employers allow employees to work abroad for up to 180 days a year, which is the maximum threshold for certain tax regulations that we will review later in the article.

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What’s the geographical scope for our employees' workations?

According to insights from over 10,000 workations enabled by WorkFlex, 42% of workation trips are made to non-EU countries, while the rest stay within the EU.

Companies typically adopt one of three policies regarding the geographical scope for workations:

1. Limiting workations to the European Union (including the UK and Switzerland),
2. Allowing workations globally
3. Adopting an "EU Plus" model. The "EU Plus" model allows employees to do workations within the EU and their home country. For instance, a developer from India working in the Netherlands could work temporarily from other EU countries and from India. This approach ensures the benefit extends to third-country employees with family in other countries, not just those who want to extend holidays in nearby European destinations.

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What are the legal and compliance risks of workations?

While workations bring clear benefits for both employees and employers, certain compliance risks must be addressed before a workation takes place. Failing to comply with local laws while traveling and working abroad can result in extra fees, taxes, and administrative burdens, none of which are desirable when the goal is to enjoy a work-from-anywhere benefit. Let’s take a look at what each of these risk dimensions entails:

• Permanent establishment: The risk that the traveler-employee constitutes a Permanent Establishment in the destination country. As a result, you’d have to register the company locally, attribute profits to the local business (branch) and file corporate tax.

• Employment tax: Obligation to set up payroll in the destination country. This implies that you have become an employer there and have to pay employment tax (generally consisting of wage tax and social security contributions).

• Social security: The traveler-employee becomes socially insured in the destination country and/or drops out of the coverage of the home country's social security, both of which are not desirable.
• Insurance: The traveler-employee having an occupational accident while abroad, and the employer being responsible for it.
• Labour law: Local labour law becomes applicable to the traveller’s employment. This could result in significant additional financial obligations or in-kind entitlements to the employee, such as holiday pay (depending on the specific laws in the destination country).
• Work entitlement: The traveler-employee has no right to work in the destination country, creating an illegal labour situation that is generally very heavily penalised.
• Data protection: Unauthorized access, breaches, theft or damage of data during your employee's trip abroad, as well as ensuring coverage by and compliance with adequate data privacy laws similar to GDPR in the destination country.

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Enabling compliant workations: WorkFlex approach

Each employee workation request requires individual approach since compliance risks are impacted by employee-specific factors: home country regulations, destination country regulations, employee demographics, trip details, as well as company policy.

To ease the workload of HR and global mobility specialists, as well as to ensure 100% compliance for every employee trip, WorkFlex software provides automated compliance risk assessments based on employee- and trip-specific details.

After a workation request has been submitted by employee, WorkFlex global compliance engine starts a 3-step process.

Step 1: Identify and assess compliance risks

Considering the trip details and employee demographics, the WorkFlex compliance engine evaluates compliance risks across seven main dimensions:

• Permanent establishment​
• Employment Tax​
• Social Security​
• Labour Law​
• Insurance
• Work Entitlement (e.g.Visa, work/residence permit)​
• Data Protection​

Within less than 24 hours, you will receive a thorough compliance risk assessment specific to the trip, accompanied by a final mark using the traffic light system: green for low risk, yellow for medium risk, and red for high risk.

Step 2: Implement risk mitigation measures

Once the compliance risks are identified, WorkFlex automatically implements all relevant measures to mitigate these risks:

• ‍Employee Instructions: A document that supports the employee with their trip from A to Z, summarizing considerations for entering the destination country, working in the destination country, traveling safely, insurance, internet and data security, and other details.‍
• Travel Health Insurance Certificate: Provides worldwide coverage, insuring the employee against health and occupational risks.‍
• A1- or CoC-Certificate: Specifies the applicable social security scheme for the traveler, helping to mitigate social security risks.‍
• GDPR Transfer Impact Assessment (TIA): A systematic evaluation conducted to assess the potential impact of transferring personal data from one location or jurisdiction to another. It involves a comprehensive analysis of the data protection and privacy implications associated with the transfer, ensuring compliance with relevant data protection laws and regulations.‍
• Audit Trail: WorkFlex automatically captures and stores all travel details, from initial trip requests to manager and HR approvals, complete with timestamps. This ensures transparency and accountability throughout the process, with all necessary information accessible in one place.

Step 3: If any risks arise during the trip, WorkFlex takes full liability

If any risks materialize during the employee's trip, which is highly unlikely given all the compliance risk assessments and documents provided, WorkFlex takes full liability, ensuring a no-risk experience for both the employer and the employee. WorkFlex supports with the following:

• 24/7 Availability for Consultations: Employees are provided with a telephone number and email address for the WorkFlex team, which can be reached at any time if compliance issues arise during the trip.
• Assumption of Liability: WorkFlex assumes liability up to an amount of €50,000 in the event of legal disputes. Additionally, we support our clients in discussions with the authorities of a country when they reach out. The financial aspect covers local corporate tax, social security premiums, or employment tax

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Conclusion

Workations offer a unique blend of professional and personal benefits that can significantly enhance employee satisfaction and productivity. By allowing employees to work from various locations, companies can foster a more flexible and engaging work environment. This flexibility helps in reducing burnout, improving job satisfaction, and attracting a broader talent pool, all of which contribute to a more committed and effective workforce.

However, the implementation of workations requires careful consideration of compliance and legal risks. Companies must ensure that their workation policies address key aspects such as eligibility, duration, and geographical scope, while also mitigating potential risks related to taxation, social security, labor laws, and data protection.

By leveraging tools like WorkFlex, businesses can streamline compliance processes and ensure a smooth, risk-free experience for their employees. Ultimately, a well-structured workation policy can be a powerful asset in today's competitive job market, offering a win-win situation for both employees and employers.