Multi-country payroll refers to paying employees who reside in countries other than the entity’s home country. Companies can use multi-country payroll platforms with payroll, time, and analytics capabilities to pay their workforce compliantly, no matter the employee’s location.
Multi-country payroll is important when companies hire employees in different countries, each with its own laws and regulations. The more global a company is, the more they need to pay attention to tax, legalities, and cultural norms to avoid non-compliance.
What do companies need to run multi-country payroll?
Processing payroll can be challenging when employees are spread out all over the world. This is where the right solution comes in. A powerful multi-country payroll platform helps businesses manage payroll for employees across different countries, automating important tasks and remaining up to date on compliance regulation.
Multi-country payroll platforms take the guesswork out of working with foreign governments and keep all payment records or necessary paperwork in one central place. This way, both payroll and HR teams can access payroll requirements and stay in the know when communicating updates to employees.
When should companies use multi-country payroll?
There are several situations where multi-country payroll is important, including:
- Businesses can operate legally after transitioning from an EOR: Businesses often use multi-country payroll to establish entities in other countries. When a company partners with a global employer of record (EOR), the EOR manages global payroll on the company’s behalf in various countries. A multi-country payroll provides consistent and accurate pay as the company transitions from an EOR to establishing an entity.
- The business is transitioning through a merger and acquisition: A multi-country payroll platform allows expanding companies to hire and pay employees in locations where the business does not have an entity.
- The company wants to consolidate payroll vendors: Some businesses choose to hire local payroll providers in each country, but this can be confusing, time-consuming, and costly. Consolidating each payroll vendor into one multi-country payroll provider helps the payroll and HR team save time and money by centralizing data.
- The company wants to close knowledge gaps: At times, HR and payroll teams can’t run or manage payroll on their own. In this situation, they may need to manage several international payroll providers, which takes time away from their daily duties and can create knowledge silos. Multi-country payroll helps consolidate all knowledge in one place, closing any holes.
What are the benefits of multi-country payroll solutions?
Aside from helping companies remain compliant, multi-payroll solutions offer other benefits including:
- Helping businesses avoid opening new entities
Creating new entities can be a long, costly, and complex process. An alternative to opening an entity is partnering with a global payroll platform that specializes in global workforces. These platforms handle the logistics and compliance aspects of operating in a foreign country, decreasing overhead costs, while the businesses can focus on other strategic efforts.
- Saving time
A global payroll platform automates manual, time-consuming tasks usually saved for payroll teams, such as tax calculations, foreign currency exchange, and compliance reporting. Automations not only save payroll employees time, but also reduce human error, ensuring employees are paid on time and in correct sums, wherever they are based.
- Maintaining compliance
Compliance is an essential element of international payroll, but it’s also one of the most complicated. A global payroll solution handles all country-specific compliance laws from sick day entitlements to social insurance and other withholding obligations. An end-to-end global payroll service can also track tax law changes, employment regulations, and data privacy requirements and implement them into the payroll process.
- Saving money
A reliable multi-country payroll solution helps companies abide by local laws without needing to build an in-house team dedicated to compliance. Some of the most powerful solutions hire local compliance experts who stay informed of legislative changes in their designated country, adjusting payroll to meet those needs. This saves businesses from non-compliance and having to pay expensive legal and administrative fees.
- Centralizing data
A central global payroll solution where all documents, processes, and information are stored streamlines the payroll process and maintains accuracy. It’s also easier to protect and secure sensitive data when employees don’t need to email files or links to access it.
Alternatives to Multi-Country Payroll
If using one system for multi-country payroll isn’t right for an organization, employers have several options to pay their international employees, such as:
Using multiple payroll providers: Employers can use several solutions or providers to pay their domestic and international workers.
Continue using an EOR: An EOR is responsible for a worker’s employment and ensuring the company complies with local labour laws fulfils administrative requirements.