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Hiring International Staff? Here’s What You Need to Know About Global Payroll
by Eden • Tue, 10 Jan 2023 07:01AM
Companies that operate in different countries or hire international staff will eventually face the complexity of global payroll. It is crucial for business leaders and payroll professionals to establish a system to handle global payroll efficiently and without hassle.
The process of a company paying employees is known as the payroll process. As many companies are progressing towards a more digitalized and flexible work system, more and more companies are hiring talents from all over the world to work remotely. This can be a reason behind the rising popularity of global payroll.
Looking at the terms, global payroll is the process of managing payroll on an international scale. According to Papaya Global, global payroll includes the process of consolidating and standardizing all payroll data streams from all over the world to be processed in one place. Furthermore, it means delivering timely and accurate payments to employees across the globe in their local currency.
If your company is about to do a worldwide expansion or hire international staff, you will have to get to know the global payroll system. At first, things might seem overwhelming. Because global payroll clearly contains more complexities than the usual/local payroll process.
Handling Global Payroll
There are a number of factors to consider when running a global payroll. For example currency exchange rates, local tax codes, local labor laws, and calculating the cost of living in different countries. Not to mention other common payroll tasks including employee classification, calculating wages, and distributing pay slips.
In short, there will be different payroll steps for employees in each country. As a result, global payroll will have to be processed simultaneously. As there are many responsibilities and challenges in the process, Remote recommends companies and payroll professionals look at the options available to handle the global payroll process.
First, companies can manage global payroll internally. Important to note, for this option, the company needs to have the time and resources, or at least software that will automate some of the processes. The second option, companies can work with partners such as payroll solution providers, Employers of Record (EOR), or Professional Employer Organizations (PEO).
Between all the options, companies need to review the management methods that work best. But whatever the choice is, People Managing People reminds us that there are several key features to look for in the system’s final result.
Key Features in a Global Payroll System
With so many elements to pay attention to in the global payroll process, companies and payroll professionals need to find a solution that suits all the requirements, as noted by Top Source. Here are some elements that need to be there to help companies get comprehensive global payroll coverage.
Centralized Data Management
To make global payroll easier, the system has to be able to consolidate all the data in one centralized dashboard. Because somehow, there will be a lot of sensitive employee data involved. This means the system has to be secure and able to comply with international data regulations. All of this piece of information should be available to access in a standardized, usable format so that everything is secure and can be accessed from one place.
As the main focus of global payroll is to execute the payroll process for employees in countries all over the world, the payroll system has to be able to understand the payroll customs in every country where you hire.
There are a lot of things in each country that needs expert opinions. For example employment laws, tax regulations, local culture, legislative changes, minimum wages, and many more. The global payroll system has to consider where to get all of this expertise from. Either to build a network of reliable partners, place in-country personnel, launch legal entities, or point a designated company in each country.
Financial Coverage Abilities
After processing payroll data from employees across the world, there will be times when you have to pay your international workers. To be able to do this seamlessly, your global payroll system has to be able to cover the financial requirements of each country.
This includes currency exchange rate data, the payment methods available in each employee’s country of residence, the type of bank fees and transfer fees, and the time necessary for the money to be transferred until your employee can receive the payment. Additionally, you might need the system to create invoices or transaction statements to prove that the transaction is legitimate.
Tools for Different Employment Types
A global payroll system needs to be able to handle all the types of employees that you hire. This will give your company the flexibility to hire many types of employees, such as freelancers, part-time, contractors, as well as full-time employees. Each type of employee may have different payment intervals, benefits packages, bonuses, and commissions. It will be easier for you to manage it all when you have a system that adapts to the types of employment your business needs.
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