Sourcing global talent allows companies to find the right employee for their specific needs. But for payroll specialists, managing international employees creates extra challenges—from staying up-to-date on compliance requirements and accurately paying employees in different currencies to protecting sensitive employee data.
To help companies maximize reward and minimize risk when hiring internationally, it’s critical for teams running payroll to stay ahead of these challenges. This post reviews three common challenges that come with paying international talent and how to rise above them.
Challenge #1: Maintaining Compliance with Laws and Regulations in Multiple Markets
Every country presents unique requirements for compliantly paying employees. Some examples of differences between countries include:
- Mandatory minimums for employee vacation time
- Classifications for full-time employees vs. independent contractors
- Tax laws
- Employer contributions toward insurance, healthcare, social security, and pension
- Unemployment benefits
- Process for employee severance
Payroll personnel must continuously track updates to laws and regulations in international markets or risk being noncompliant. Similarly, when entering new markets, payroll needs to invest significant up-front time and resources to ensure they pay workers compliantly.
Solution: Trust the Experts
If payroll teams lack the bandwidth to routinely track changes and align with other HR and legal team members, they can turn to third-party experts whose sole responsibility is ensuring that foreign employees remain in compliance.
Challenge #2: Ensuring Accurate Payroll Every Time
Retaining top talent requires a smooth back-end employee experience. That’s why leading payroll specialists do everything in their power to ensure they pay their global employees on-time and accurately.
If other departments are not on the same page as HR regarding promotions, terminations, time off, or bonuses, payment inaccuracies are likely. When employees receive late paychecks or don’t receive commissions, bonuses, or accurate payments, they lose trust in their employer.
Adding in the element of managing international employees only amplifies challenges for payroll personnel. Coordinating with HR or legal to stay up-to-date on employee status changes or compliance requirements in multiple countries increases touchpoints and the likelihood of errors and inaccuracies.
Additional challenges in ensuring accuracy include:
- Converting currencies for different countries
- Dealing with translations and language barriers
- Working across time zones to pay workers on time and providing real-time support when issues arise
- Opening and maintaining foreign bank accounts
Solution: Standardize Payroll Systems Around the World
Companies need a payment interface that any employee around the world can easily navigate. This interface should be customizable to account for local nuances such as language, currency, country-specific benefits and taxes, and payment schedules.
When a company hires employees in a new country, payroll specialists must work with HR and IT to ensure their payroll interface is accurately updated. If a company lacks the resources to invest in adopting, customizing, and maintaining this kind of system, it must turn to a third-party global payroll specialist.
Challenge #3: Protecting Employees’ Personal Data
According to a recent ADP report, employees worldwide ranked security as their most important priority associated with pay. A business’s interest in securely paying employees, however, should go beyond satisfying employee priorities. Thanks to GDPR (General Data Protection Regulation), companies operating in the EU that are not careful with sensitive information are subject to more severe consequences than ever.
Companies who are out of compliance with the GDPR mandate will face fines of 20 million euros or up to 4% of global revenue—whichever is greater. For example, British Airways paid a fine of 183 million euros ($231 million) because of a data breach in 2018.
When paying employees across the world, companies put themselves at an increased risk of having their data hacked. Payroll must coordinate with HR, legal, and IT to stay aware of data collection and privacy requirements that vary from country to country. In addition to the EU’s GDPR, countries such as Australia, Brazil, Japan, India, and New Zealand have their own data privacy protection laws.
Solution: Double-Down on Data Protection.
HR, legal, and IT teams need to work together to ensure global employees keep data secure. When moving into new countries, companies must make sure teams collaborate to understand the laws regarding data protection and privacy.
Ensure that data privacy is a key component of the payment and time-tracking systems HR and payroll teams set up for employees. Companies also need to set up practices to ensure they stay up-to-date on changing data protection requirements in every country they operate in.
If a company doesn’t have the resources or finances to devote to these efforts, they must hire a specialist who can ensure the organization takes necessary precautions with sensitive information–no matter what country they operate in.
Overcome Every Global Payroll Challenge With One Solution
For payroll specialists responsible for talent in multiple markets, it is no small feat to streamline global employee management by aligning HR, legal, and IT. That’s where international payroll providers come into play. Partnering with a global payroll service provider allows companies to turn over every aspect of international payment and HR to a dedicated specialist.
Global payroll providers cover everything, including:
- Ensuring compliance by staying on top of each country’s requirements for benefits, taxes, salary, and more.
- Serving as a single source of payment for employees across a range of countries, so companies only have to make one monthly payment in one currency, regardless of how many international employees they have.
- Offering a company’s supported employees timely and accurate payments, along with support they can turn to if they have questions about their paycheck.
- Protecting data by utilizing industry-leading privacy practices while staying on top of changing global standards.
Velocity Global helps companies compliantly manage payroll for employees in over 185 countries. With expertise covering everything from country-specific benefits requirements to international data privacy regulations, we have the scope and experience to serve as a one-stop-shop for every company looking to compliantly employ a global workforce.
If your company is looking to streamline its global employee management, or has questions on payroll services in individual countries, reach out to Velocity Global today to find out how we can help.