The idea of “working from anywhere” isn’t going away. As flexible work becomes the norm, more employees are asking to take their laptop on the road—sometimes for a few weeks, sometimes for months.
For HR and ops teams, this brings a challenge: how do you support digital nomads without opening the company up to legal, tax, or compliance risk?
This guide is built for employers who want to enable flexibility—without losing visibility or control. We’ll cover the real risks, the grey areas, and how to build a clear digital nomad policy that protects both the business and your people.
What Is a Digital Nomad (and Why It Matters for Employers)
“Digital nomad” used to mean a freelancer with a backpack. Today, it might be your senior engineer spending three months in Portugal while working U.S. hours.
The line between remote worker and digital nomad is blurry—but from a legal perspective, where someone is physically located matters more than where your company is based.
When an employee is working abroad, even temporarily, you’re no longer operating purely under your domestic rules. And that’s where the risks begin to stack up.
Legal Risks of Managing Digital Nomads
Let’s be clear: we’re talking about your own employees here—not contractors. These are people on your payroll, possibly hired via an Employer of Record (EOR), who want to travel and work from another country.
Here’s what that can trigger:
Employment Law Conflicts
Local labor laws may kick in once someone is working in a country—even temporarily. That can affect notice periods, working hours, vacation policies, and more.
Tax Residency & Payroll Complexity
If someone stays too long in one place, they might become a tax resident. You (and they) could be on the hook for local payroll taxes or social contributions—even if they’re already taxed in their home country.
Example: In the UK, tax residency kicks in after 183 days. In Switzerland, just 30 days of paid work can trigger local tax liability.
Permanent Establishment (PE)
If the person performs revenue-generating work or signs contracts abroad, your company could be seen as having a taxable “presence” in that country—even without a local entity.
Visa and Immigration Issues
Most digital nomads travel on tourist visas. But working on one—especially for a foreign employer—is illegal in many countries. Getting this wrong can lead to penalties for the employee and reputational damage for your company.
Health, Safety & Insurance Risks
You still owe your team a duty of care—even if they’re working from a beach in Mexico.
Before approving a nomad arrangement, ask:
- Is your employer’s liability insurance valid in the country?
- Does your health plan cover care abroad?
- Have you assessed country-specific risks (health, political unrest, crime, infrastructure)?
- Will you be covered if something happens on work time?
If the answer is “I’m not sure” to any of those, you’re potentially exposed.
Data Protection in Lower-Regulation Countries
When your employee connects from a café in a country with low data protection standards, the risk isn’t just poor WiFi.
You need to consider:
- Whether the jurisdiction meets GDPR-equivalent standards
- The risk of accessing sensitive systems over insecure networks
- Whether company devices and apps are properly secured (VPNs, device management, 2FA)
Training + technical controls matter more than ever when someone’s working outside your usual infrastructure.
How to Build a Digital Nomad Policy That Works
You don’t need to say “yes” to every request. But having a policy gives you a structure for evaluating requests fairly, minimizing risk, and setting clear expectations.
Here’s what a strong policy typically includes:
Keeping Digital Nomads Connected to the Team
Just because someone’s working from another time zone doesn’t mean they’re any less invested. But the distance can add up—fast—if there aren’t intentional efforts to keep them in the loop.
That doesn’t mean more meetings. It means smarter habits.
Start with the basics: make sure your tools support async work. Things like Loom videos, shared docs, and written updates give everyone visibility without relying on overlapping hours.
Don’t forget the human side either. One-on-one check-ins with managers go a long way when someone’s halfway around the world. Not to chase deliverables—just to connect, align, and spot blockers early.
And when it comes to social stuff, rotate team events or offer more than one time slot. If you always plan around HQ hours, remote folks (especially nomads) will eventually stop showing up—not out of disinterest, but exhaustion.
The reality is simple: if someone feels like a side character in your company story, they’ll act like one. Make space for them, and they’ll show up.
Final Thoughts: Flexibility with Guardrails
Letting employees work abroad is a powerful way to offer autonomy, retain talent, and attract globally minded professionals.
But it comes with real risk if it’s done casually or without oversight.
The solution isn’t to block nomadism entirely. It’s to build a framework that lets your team explore the world without putting your business in legal limbo.
