Having a global workforce on your payroll can be a challenging situation. Find out how to process international global payroll and embrace your growth!
All around the world, startups, multinational companies, and every type of organisation in between are moving towards global business models. Thanks to unprecedented advances in technology, it is now possible to surround yourself with a talented international, multilingual, and multicultural team to help you tap into new markets.
While the benefits of having a global workforce certainly outweigh the drawbacks, this model does come with new issues, international global payroll being an especially complex one. Hiring in multiple countries means that you need to understand local payment methods, laws, taxes, and more to make sure your international payroll system is compliant.
Here is all you need to know about global payroll and how to make it work for your organisation. With the right knowledge and the most appropriate tools at your disposal, you can focus on your growth by hiring the best and most qualified staff, regardless of where they are based.
Global payroll – also known as international payroll, or international global payroll – is the process of paying independent contractors or employees in different countries for the tasks they perform for your organisation.
What makes international payroll complex is that you cannot just add foreign workers to your current payroll process, because it would not be compliant with the practices of the countries in question. Hence the need for a dedicated approach, which takes into account local laws and regulations, employee compensation practices, taxes, exchange rates and bank charges, human resources, etc.
Processing payroll in a single country is relatively straightforward and most businesses are able to handle it internally. When foreign workers are involved, however, additional complications arise.
It is important to keep in mind that not all countries share the same approach when it comes to how, how much, and how often workers are compensated.
International global payroll involves adapting your payment methods to the habits and customs of the countries where your foreign staff is based. Processing times and exchange fees can vary and direct deposits, paper paychecks, digital wallets, money transfers, etc. don’t all demand the same precautions.
Pay periods are also unique, which means you won’t be able to pay all your workers on the same schedule. Depending on local employment laws, you may have to process payments monthly, weekly, or potentially even daily. In addition, independent contractors are likely to send you invoices either on a periodical basis, or after the completion of each project (or project milestone).
Each country also enforces its own regulations and market standards in terms of how much you should expect to pay employees and independent workers. Most have a minimum wage system in place, which you need to understand before you begin the hiring process. Keep in mind that the same gross salary will not translate into the same take-home pay everywhere in the world.
Employment laws play a great par in any international payroll method. No international global payroll system can be sound without taking into account the definition of an employee and that of an independent contractor, minimum wages, statutory employee benefits, maximum weekly working hours, as well as tax rates and deadlines.
Global payroll implies that you will be performing multinational transfers, which do have a cost in and of themselves. SWIFT transfers (one of the most widely used networks for safe international transfers), for example, can require a $25 to $50 fee every time you send money to a member of your team.
Another challenge international businesses face is the fluctuations of currency exchange rates. If you need to pay your staff in local (fiat) currency, then any change in exchange rates could affect your payroll budget significantly.
Diversifying your team means that you may need to expand your human resources department to include people who understand the ins and outs of managing, administrating, and onboarding international workers. With the right solution at their disposal, the members of HR can handle your international global payroll process seamlessly and become a point of reference for every member of your team, regardless of where they are based.
Incorporating new countries into your payroll management means making sure to follow best practices, so you can enjoy an effortless experience while nurturing your relationship with your workers.
Every organisation has its own specific needs and methods, which is why it is well worth finding an international global payroll partner who understands your process and your goals. Depending on how many different countries are involved, you might opt for a global or localised payroll service provider, or a software solution. Delegating payroll management will allow you to focus your energy on your core business while ensuring your process is entirely compliant.
Guaranteeing that your employees and independent contractors have a great experience working with your regardless of where they live protects your relationship with them, and therefore the quality of their work. This means every single payment should be processed in a timely, error-free manner. Select the right international global payroll partner or software solution from the get-go, so you never have to undo the damage caused by a late or incorrect payment.
Before you start working with someone in a different country, it is crucial to clarify the relationship this person will have with your company. Establishing these boundaries in writing may prevent you from having to engage in international legal battles, which would prove costly and time-consuming for your organisation. With the right international global payroll provider, you can circumvent potential issues and have fruitful relationships with employees and contractors alike.
Not every country has the same stance on intellectual property rights, and you may be surprised to learn that these may default to the creator rather than the client. Protecting your intellectual property abroad and making sure you do not expose it to potential risks requires the right know-how. In this regard as well, turning to an international payroll provider is a sound precaution.
The latter carries out the assignment as stated in the original contract and has the customer sign a timesheet to serve as proof. This can be done on a monthly basis or whenever a task is completed. Refunds can be claimed for business expenses, which the portage company will duly check to ensure legal compliance.
The client then receives an invoice from the portage salarial company in France and pays the organisation directly. The umbrella company covers all taxes and contributions, which are deducted from the contractor’s revenue, along with management fees.
Finally, the portage salarial company pays the contractor in the form of a monthly salary and provides them with a fully detailed payslip, which can serve as proof of employment.
As your international workforce grows, the payroll process becomes increasingly complex and demands an approach that will both cover your immediate needs and future-proof your processes.
To help you distribute payments to your workers everywhere all while organising and monitoring the entire process, payroll software can constitute a viable solution. If you need to scale things up and start generating multiple payments, you will find this type of tool particularly accommodating. International global payroll software allows you to retain control and responsibility over the payments made to your international workers all while speeding up the process and making it easier to manage and track.
Software solutions reduce the possibility of manual error and boast a range of time-saving automated features. With that said, it is important to remember that it is not a self-operating tool and that, depending on the size of your global workforce, you will need the right number of in-house payroll specialists to operate it.
Entrusting a third-party company with the handling of your international global payroll is an interesting solution if you do not wish to hire in-house payroll specialists or to have your current team gain new expertise. Thanks to this partner, your company doesn’t need to make any payments, to process and keep its own payroll records, to manage payroll taxes, etc.
One of the main benefits of using a payroll service provider is that you don’t need to look into all the payroll regulations observed worldwide. Instead, payroll experts take on this responsibility and pay salaries and invoices, all while making sure that your company is compliant with local taxes and other obligations. Select a partner that offers the type of coverage you need, so you won’t have to find as many payroll companies as countries you want to hire from.
An employer of record is a third-party organisation that can hire a local employee or independent contractor on your behalf. What makes this solution appealing to businesses is that it allows them to operate in a host country without having to set up a legal entity there.
An in-between service also exists, where you enter a co-employment relationship with the organisation in question, also known as PEO.
Among the benefits of EORs is the fact that you can put your entire hiring process and payroll in their hands and surround yourself with the best experts worldwide without the hassle of managing all the contracts in house. This reduces compliance risks and minimises potential errors on your part.
Although it is possible for companies to make direct payments to contractors anywhere in the world, it can become complex when dealing with several experts based in numerous countries. If you wish to hire foreign employees, the process is a more delicate one still, as you may not even be able to do so without opening subsidiaries in the countries in question. If you choose to set up additional legal entities or to resort to independent workers only, a powerful international global payroll software solution should be sufficient for your in-house payroll team to manage the process. It is also possible to entrust a third-party company with the entire operation, saving you the hassle of dealing with it in-house and the risk of compliance issues (which are common when managing a global team).
Employer tax, social security, pension funds, contribution to social programmes, statutory benefits… Regardless of the country where your employees are based, there is more to payroll management than meets the eye, and local practises can vary greatly. Working with an international payroll company is the best way to make sure your organisation complies with all its obligations.
How much to pay your foreign employees very much depends on the model your organisation follows, the cost of living in said countries, their level of skill or expertise, etc. To this should be added the various taxes and contributions that apply locally, and any additional benefits you wish to grant them. International global payroll companies have access to all this information and can help you offer the right wages to your global staff.
In most cases, foreign workers are governed both by the laws of their own country, and yours. This means that being compliant with the laws of the country where you are based is not enough to be able to hire workers globally. Different countries have their own requirements for employers, demand different levels of worker protection, and apply different penalties. The best approach to account for all these laws consists in relying on an international global payroll company.
There is much more to global payroll than simply paying your employees or independent contractors for a job well done. But don’t let compensating your global workforce become an obstacle. Instead, it is worth considering international payroll as part of your overall business strategy and to use it as an asset to build the best and most talented team of workers from around the world. By giving them a great experience working with you, you can turn payroll management into an opportunity to drive your organisation’s growth and success. With the right tools, resource, and partners, you will make your payroll process more straightforward and more efficient, all while using your own time to focus on what you do best: looking towards the future and moving towards your goals.