Nowadays, it seems as if every business regardless of size has remote teams working across the globe. However, if you are looking to expand into new territories across the world, you will eventually find yourself dealing with a global payroll. As employees across the globe require their paychecks, you will be needing to deal with it. It doesn’t matter if they get paid an annual salary or if they are contracted at an hourly rate. When you have a global workforce, you’ll have currencies, payment frequency, and even language varying from employee to employee.
What’s more, there isn’t any room for error. After all, payroll is easily one of the most important aspects of the business to get done accurately. Unfortunately, it’s also one of the hardest. It’s time-sensitive and requires a lot of processing and admin work.
Therefore, you might be wondering how to go about ensuring that your global payroll operations stay on track and fully compliant.
If you are aiming to hire any employees overseas, you need to consider all of the local legislation that is involved. These things will matter when you are paying your workers in their respective local currencies. It doesn’t matter if you have a single employee or a hundred of them, the employees will need to be paid on time. If you are handling everything in-house, you will find it very difficult to manage payroll in a single country. You can only imagine how difficult it gets when you are handling payroll for a global company.
In the United Kingdom, you need to worry about things like National Insurance contributions, income tax, and pensions. Every employee has a different total amount deducted from their salary based on different factors. These factors include their age and how much they make. Another thing you have to worry about is their benefits when you are calculating their take-home pay. After all, some employees may be leveraging a scheme that allows them to cover the cost of transportation to and from work.
You also need to factor in the differences regarding the frequency of pay from place to place. Some countries will have employees getting paid bi-weekly and some of them will require more frequent payments. Some countries will also require either a 13th or 14th-month bonus payment that is paid yearly either at once or spread out across multiple months.
As you can tell, there is so much to understand and think about when you are dealing with a global workforce. You might be wondering, what’s the deal if you get things wrong?
A Compliance Minefield
The truth is, payroll processing is already tedious and difficult enough as it is. However, it only gets increasing complex when you are adding in people from different countries who are getting paid in different currencies.
A lot of companies will also mess up their employee benefits when they have a global workforce. You may be wondering whether or not you are required to offer company healthcare insurance to all of your employees. For some countries, it falls on the government. However, for others, you need to do it as an employer. You also need to know whether or not workers who are on maternity leave are entitled to full pay and benefits. You also need to know if the sick pay policy applies across the board.
Anyone that works for you is going to trust that you know all of these things. They will trust that you will be paying them on time. After all, your employees have their expenses to worry about. They need to know that they are going to get their payment on time so they can make their payments. If you end up either missing a payment or you pay late or even the wrong amount, it can cause irreparable damage to your employee and employer relationship.
Keep in mind, payroll doesn’t only involve paying your staff. It also involves a lot of other pertinent reporting responsibilities. Not only do you need to showcase and demonstrate to the government that you paid the right amount for tax purposes, but you also need to ensure that you have everything accurate for these records too. Any inaccuracies in your payroll can cost your company dearly. It can impose severe financial penalties on your organisation. Thus, it’s so important to ensure that your payroll is being handled by someone that has the experience and who is organised.
Avoiding Global Payroll Problems
A lot of companies that have a global payroll end up outsourcing it to companies that specialise in such things. It’s the best and easiest solution to ensure that it gets done properly. You can allow the experts to go to work while you can focus on result-producing activities involved with running your business.