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Webinar Reveals Complexity of Maintaining a Global Payroll

By Kerry Cole

In order for multinational organizations to be efficient, accurate, and compliant, they must implement a global mobility strategy, a senior human resources executive said in the GPMI webinar "The Complexity of Maintaining a Global Payroll.”

Priya Adhikari Licht presented the webinar on behalf of Blue Marble, a cloud-based, global payroll management provider, during Global Payroll Week in early May.

A global mobility strategy includes three areas she called global compliance factors:

  • Employment law compliance—local laws, contracts, official assignment letters, etc.
  • Immigration and work permits compliance—visas, work permits, and relocation packages
  • Tax and social security withholding and payment requirements—these differ greatly from country to country and might need to be covered in your home and host locations

“For the majority of global employers, the complexities of maintaining global payroll compliance originate mostly from a lack of understanding of tax and labor laws and inadequate documentation of payroll services,” Licht said. “Your success as a global employer in terms of payroll compliance depends on understanding the different rules and regulations as they apply to you in that particular region.”

She provided an overview of global payroll compliance by region.

Asia-Pacific

  • Region with the lowest payroll complexity; only Russia is in the top 20[LL1] most complex countries for payroll
  • Fewest potential legal/taxable/fringe benefits
  • Lowest number of payroll runs

Europe

  • Overall payroll complexity across several payroll aspects is the highest
  • Managing employee benefits is complex
  • Government reporting requirements are more than twice the average

Middle East and Africa

  • Payroll complexity is lower than average but increasing
  • Relatively nondependent on government
  • Higher than average number of languages that impact payroll processing

Latin America

  • Overall payroll complexity is slightly higher than average
  • Regulatory reporting and data analytics are a challenge
  • No fixed pattern to tax changes

North America

  • Overall payroll complexity is slightly lower than average
  • Employee data is easy to manage
  • Fewer legal/fringe benefits available compared to most other regions

Areas of Risk

Licht cited these five areas as the biggest potential risks to a global payroll operation:

  • Local laws
  • Documentation of procedures and policies
  • Taxation policies of different countries
  • Dilemma of “long-tail” countries with few employees
  • Lack of visibility and control over the payroll processing chain

Attendees took surveys during the webinar, revealing they were split about evenly in handling their global payroll in-house, with individual in-country providers, and with a global payroll service.

Licht laid out options for global payroll compliance, including hiring local staff and engaging a global payroll provider.

“A global payroll service can provide HR and payroll teams priority over processes, a clear view of payroll deductions, and better integration with national tax and social insurance authorities,” she said. “This helps build employee trust in the accuracy of payroll and, hopefully, contributes to a happier and more motivated workforce.”

The webinar is available on-demand until April 2020.

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KerryCole

Kerry Cole is Senior Editor of Membership Publications for the American Payroll Association and the Global Payroll Management Institute.