CEO's Thoughts

Payrolling your new employee overseas

By July 11, 2014January 18th, 2018No Comments
filling out payroll image

Thinking about how you are going to run payroll for your new employee overseas in a foreign market?

Spoiler alert: it is not as easy as it sounds.  Unless you have large headcount in a country or multiple countries already supported by a truly global payroll provider, you’re relegated doing a manual payroll run every period for your new employee overseas. [In case you are curious we tend to like Celergo if you have over 100 employees spread across three or more countries]

 

 

If you have someone on staff who understands the intricacies of that particular country, as well as the time to keep up to date to changes in payroll and labor law in that country, you can likely run payroll from HQ.  Specific expertise around the following areas is required:

  • Paid time off accrual and payment
  • Bonus payment schedules
  • 13th month (or even 14th month) pay laws
  • P11D dispensations (in the UK)
  • Monthly, quarterly and/or annual payroll tax filings
  • Pension, unemployment, and other employer mandatory social charges
  • Benefit deductions for regular payroll and 13th month, if applicable

If that seems like too monumental of a task for an already fully engaged – and potentially unfamiliar – HQ staff, then you’ll need to outsource the payroll function.  There are pros and cons to researching and hiring a local firm to run your payroll in country, as opposed to hiring an organization like Velocity Global to perform this for you.  Below we run through the list of factors you may want to consider.

If you go directly to a local payroll provider:

    • Will language barriers cause challenges to execution?
    • Is your small headcount payroll going to be a priority when the local provider has larger clients with longer history?
    • Are time zone differences going to delay responsiveness?
    • Is the provider going to be as responsive as they were in the sales process once you’re onboard as a client?
    • What happens when you enter a new country, do you start the research process all over again?
    • Will you encounter hidden costs once the project is underway?
    • Is the local provider beholden to your in-country manager, therefore creating the possibility of impropriety/collusion?
    • What happens if they stop performing, do you have a backup?

 

Let’s have a conversation about how we can help.  Send your questions or call request to benwright@velocityglobal.com

– Ben Wright