How to Manage Global Employee Payroll

Did you know that 65 percent of Fortune 500 companies have an international presence? If your company is considering expansion, you may be looking at growth on the international stage. Part of expanding into a global market is determining how you’ll handle global payroll.

There are a lot of factors that go into selecting a global payroll service for your company. Read on to learn more about how to choose a payroll service that will work for you.

Decide What Sort of Payroll You Need

One of the first things you’ll need to do when moving your payroll to a global scale is to decide what sort of payroll you need. If you own a company or organization in the country you’re expanding to, you can choose to use a local payroll manager in that country. However, if you don’t own an organization in that country, you’ll need a payroll manager that works on a global scale.

In most cases, global employee payroll providers will manage their services in the countries they serve. This saves you from having to own another organization yourself. No matter which payroll provider you choose to work with, make sure they do, in fact, own an organization in the country you’re working in. 

Consider Your Compliance Needs

Once you’ve determined what sort of payroll services you need, it’s a good idea to take a look at your compliance needs. One of the most complicated parts of running a global company is maintaining compliance in all the different countries. One area’s laws will differ from another’s, and you have to make sure you stay compliant in all those areas.

Before you decide on a payroll service, check on the payroll regulations for your company in the area you’re expanding to. You’ll need to choose a payroll provider who will keep you in compliance with those regulations. Often, payroll providers who are working in that country will already maintain those compliance standards or will be able to advise you on how to meet them.

Figure Out How to Classify Your Employees

How you classify your employees will make a big difference in how their payroll is managed, especially depending on what country you’re in. Different countries have different standards for whether someone is an employee versus a contractor. Paying them as a contractor if they are, in fact, an employee could get you in major trouble.

Check with your legal team and/or your local payroll provider on what constitutes an employee versus a contractor in your new location. Most of the time, your payroll provider will be able to advise you on how to classify your employees. You want to make sure they have the legal expertise to protect you from a costly international lawsuit.

Determine a Competitive Salary

Once you’ve narrowed down your payroll provider, it will be time to start getting down to the brass tacks of how you’ll pay your employees. Paying employees in one country on the same scale as you do in your home country may not be a reasonable option. Inflation, exchange rates, and other such factors may mean a competitive salary is far more or less than in your current country.

Research salaries in your industry in the country where you’re planning on opening a new location. Search competitors’ recent job postings for salary ranges, and talk to your payroll provider about appropriate payroll scales. Keep in mind that you’ll need to account for retirement, PTO, and other such benefits that may be appropriate in that country.

Talk to Your Team

Before you implement your final plan to manage global payroll, it’s a good idea to sit down with your team and talk about their concerns. Your managers may be worried about how payroll changes will impact them, and your employees might worry about what shifting to a new system will mean to them.

They may be concerned that a new system will cause delays or cause overtime hours to get lost.

It’s a good idea to hear what your team worries about before dropping them into a new payroll system. You can make sure that your new system can address all of those concerns, and you may wind up with some additional questions to ask the payroll service. You can also strategize on how to implement the new payroll system on the ground with all your teams.

Coordinate with HR

The other critical group to talk to during your new payroll discussions is your human resources department. HR is, for obvious reasons, closely linked with your payroll management. You need to make sure the system will work both for their work strategies and with their existing software systems.

In addition, you can start exploring options for new and better optimization. You may be able to harvest and use company data to improve your workforce efficiency. You can make sure everyone is getting the appropriate training, avoiding skill gaps, and getting properly engaged in their jobs.

Learn More About Global Payroll

As your company expands, figuring out global payroll will be a critical part of establishing your new operation. Start by deciding what sort of payroll you need and then determine your compliance needs.

Decide how you’ll need to classify your employees, figure out what a competitive salary will be in that country, and then talk to your teams about their needs and concerns with the new system. 

If you’d like to learn more about implementing a global payroll system, check out the rest of our site at Bradford Jacobs. We are your gateway to global talent, and we can help you employ remotely and grow globally.

Request a proposal from us today and find local support for your global opportunities.