100% Local Employment Compliance. Here’s What it Actually Means
Alex Margolin| Mar 29, 2023
When it comes to global legal compliance, there is no room for shortcuts. Violating local tax or labor laws could result in fines, reputation damage, and even limits on a company’s ability to operate in certain countries.
Misclassification is the illegal practice of labeling workers as independent contractors – usually to reduce labor costs – when they should be classified as employees. It denies people access to critical rights they are legally entitled to, including minimum wage, overtime compensation, and medical leave.
Ultimately, compliance is where global payroll companies show their expertise. And that’s where Papaya Global shines most brightly. Right from the start, even before you onboard your employees, both our experts and technology are there to ensure compliance on a local level, whether it’s a legal requirement, tax payment, or even cultural obligations.
From Onboarding to Payments (and Everything in Between)
Papaya’s complete, cross-organizational commitment to compliance starts with the first moments our clients begin their global journey. Our legal team and global employment experts are there to support the full hiring life cycle – onboarding, offboarding, and all the issues in between.
Some payroll companies believe compliance can be automated, that you can simply download viable employment contracts from your payroll platform. They believe that a “good enough” approach will keep you from being fined for non-compliance. Sometimes, they even apply the same practices internally as well.
It might appear to save time and money in the short term. But when it comes to ongoing global compliance – fast and cheap has a price. It’s only a matter of time before legal issues arise. Then you’re on your own to navigate the complex and ever-changing local legislation without the guidance and support of real experts.
Here a breakdown of Papaya’s approach, that ensures compliance to all local laws:
Contracts – One set of interchangeable contract templates simply will not work for companies over a certain size. Companies large and diverse workforce have many layers of seniority. That means greater variance in contracts – all of which are essential to the employee experience. Always validated by our own legal experts and local partners, we also offer a contract lifecycle management tool so you can tailor your contracts to your needs in a secured, streamlined environment.
Center of Excellence – Our COE guides you through your employment offer to employees and the onboarding to ensure mandatory benefits are being provided according to local regulations.
Global Expertise – Our in-house experts cover the legislation you need – from termination laws, PTO, and employer payroll contributions, to trial periods, family leave, and much more. You can’t be an expert on all the laws for every country where you hire, but you can work with people who are, ensuring that compliance is ongoing.
The entire process is overseen through our 3-Tier Governance Model, consisting of Papaya’s team of in-country partners – who provide the local knowledge; in-house legal – who ensure all agreements meet the letter of the law; and the Center of Excellence – which provide support to ensure 100% compliance with local employment law.
In addition to all expert involvement, Papaya’s platform includes a built-in AI-based compliance engine to automatically validate and audit whether payroll is processed compliantly.
Finally, Papaya’s payments are embedded in our payroll platform. Since we hold money transfer licenses in multiple markets, our operations are subject to rigorous reporting and regulation. We are obligated to and do maintain the highest standard of compliance in order to maintain these licenses.
Avoiding Contractor Misclassification
Misclassifying contractors is not just bad for the employees who are denied their rights. It can be bad for your company’s bottom line.
In one notable case, a federal investigation of contractor misclassification in the U.S yielded $700,000 in back wages, damages, penalties, and other guarantees for more than 1,000 construction workers who were wrongly classified as independent contractors.
Papaya’s in-house experts evaluate your contractor situation to determine if you are at risk of misclassification. In borderline cases, Papaya offers suggestions, such as hiring through an EoR (Employer of Record). That eliminates the possibility of misclassification, ensures the employees receive full rights, and governments receive their employment taxes.
Your Choice for Global and Compliant Payroll and Payments
Contact one of our reps to see how you can ensure local compliance everywhere you hire and boost your productivity and performance – while saving time and money on your global payroll.