Digital Nomad Policy: Why Your Company Needs One

If you don’t already have a digital nomad on your team, you may be hiring one soon. First, because the number of digital nomads is increasing: according to a study by MBO Partners, the digital nomad population in the US grew 50% from 2019, from 7.3 million to 10.9 million.

Second, because you’d be foolish not to. Digital nomads are highly employable. They’re well-educated, highly skilled, and digitally savvy. Many are in high-demand occupations, like computer programming and engineering.

Research shows that they are more intrinsically motivated, which could explain why they’re also more committed to continued training. Many digital nomads are freelancers with no limit to how much they can earn.

Finally, being exposed to different cultures and environments gives them what researchers call “acquired diversity”—a fresh way of looking at things that helps drive innovation in teams.

Employing digital nomads

There are practical advantages to employing them, too. One is that they don’t take up office space. A company relying on a fully nomadic team might forgo an office entirely, saving potentially hundreds of thousands of dollars in rent per year.

Working with digital nomads also creates the possibility of round-the-clock productivity: with teams strategically distributed across time zones, a business might be able to function 24/7.

Best of all, employing a digital nomad isn’t as wild or as risky an idea as you might think, although there are issues to consider. Here’s what to keep in mind when hiring one:

The digital nomad is a type of telecommuter

While employing digital nomads might seem entirely new, a digital nomad is a type of telecommuter—and companies have had telecommuters in the workforce for ages. Examples of traditional telecommuters include expats (employees sent to countries where the company has no office) and foreign hires (employees who work from home in a country where the company has no office).

There may be legal issues to consider

When employing telecommuters, companies have to comply with home-country and, in some cases, host-country laws and regulations. This will depend on the telecommuting arrangement, the host-country, and the length of stay.

Digital nomads move around—and that’s a good thing

By definition, a digital nomad is someone who frequently changes their geographical location. That’s a good thing, since short-term stays rarely trigger an illegal permanent establishment (PE), which is when a local government wrongly assumes that a company is doing business in their country because they have a telecommuter there.

Honesty is the best policy

Knowing where telecommuters are based helps companies comply with home and host-country laws and regulations. When employees are forthcoming about their working location(s) and proactive about keeping their employers up-to-date with their plans, everyone wins.

It’s best to agree in writing

It’s good practice to draw up a written agreement that sets out the rights and responsibilities of the telecommuter and the employer. Creating a digital nomad policy that details the company’s terms, conditions, and processes regarding digital nomadism is also recommended.

There are alternative ways to hire

Companies that want to work with digital nomads but aren’t prepared to hire them as employees have the option of bringing them on as independent contractors or leased employees. Doing so reduces the administrative burdens and risks associated with hiring. It also gives digital nomads more freedom—to go wherever they want, stay for as long as they’d like, and work on local projects.

Creating a digital nomad policy

Companies that want to go the traditional hiring route or support existing employees who may want to become digital nomads will benefit from creating a digital nomad policy.

A digital nomad policy is a reference document that explains the company’s commitment to supporting digital nomadism, addresses potential issues, and establishes guidelines for handling them. There are a number of advantages to having one in place:

It prepares the company for the future

Digital nomadism is not a passing trend. As it continues to grow, digital nomads will become the norm, not the exception. Investing time in creating a legitimate policy that addresses potential issues is aligning your company with the future of work.

It empowers employees and managers

A digital nomad policy helps employees understand their rights and responsibilities as either current or future nomads. Managers can reference the policy to make decisions related to the hiring and management of these employees.

It prevents negative outcomes

A digital nomad policy sets forth guidelines and establishes processes that help prevent negative outcomes and ensures the company complies with laws and regulations.

The time to create a digital nomad policy is now

As more and more people seek to become happier, more creative, and more engaged at work, digital nomadism will continue to grow. Companies looking to motivate and retain employees must embrace and support digital nomadism, starting with creating a digital nomad policy.