Global Payroll Strategy: Why You Need One

A global payroll strategy is the key to international expansion

Firstly, and most obviously, going global means paying a global workforce. The talent you’re looking for is distributed across borders, so you need a way to pay across borders.

Without a global payroll strategy, international hiring means constantly returning to the starting line: selecting a local payroll vendor, setting up new processes and troubleshooting new problems.  These aren’t responsibilities for the payroll back office. 

That’s why it makes sense to outsource to specialists who have the appropriate infrastructure to handle this for you. Global payroll providers can equip companies with solutions that are easy to replicate for each new country. Ideally, you want a payroll provider with its own fully-owned global employment infrastructure. 

Unifying payroll under a single global payroll strategy also leads to more comprehensive reporting. In place of multiple, siloed sources of information, a centralized source facilitates real oversight of the size and cost of a company’s distributed workforce. 

Navigating the minefield of international compliance

When you hire in multiple jurisdictions, you need to comply with the employment and tax regulations in each of them. This requires sophisticated legal expertise that keeps up with regulatory changes. Ensuring and maintaining compliance is an indispensable part of a successful global payroll strategy because mistakes can have catastrophic consequences.

The perils of employee misclassification

For example, misclassifying employees as contractors incur heavy penalties in almost all countries. In the United States, companies can be held liable for unpaid employment taxes upon discovery of errors of this kind. Similarly, Australian law imposes heavy fines on corporations or individuals for sham contracting.

The picture gets more complicated the more you look. Beyond fines, some jurisdictions impose stop work orders for companies that violate classification rules, not to mention the serious reputational damage that follows incidents like this.

Scary, isn’t it? And that’s not all.

How does GDPR affect payroll?

Classification isn’t the only minefield for global payroll. The European Union’s General Data Protection Regulation (GDPR) affects payroll in a number of ways, from the way you send payslips to your methods of storing employee data.

If you have employees or contractors within the European Union, your payroll partner takes on the responsibilities of a data processor, sharing some of the exposure to legal risk. 

When navigating these challenges, the legal and financial expertise of a global payroll provider can truly make or break your organization.

Harness the power of automation to mitigate payroll fraud

Payroll fraud is one of the most common forms of accounting fraud, and it affects companies of all sizes. It’s also notoriously hard to detect, precisely because it usually comes from within the in-house payroll process.

Payroll fraud schemes typically unfold over years, and the resulting damage can be colossal. Fraudsters often falsify timesheets, expense claims and wage records to gradually bleed companies from within. Manual processes provide fertile ground for this kind of activity, as do in-house processes that have not been updated or refined to prevent theft.

A welcome benefit of a successful global payroll strategy is that it makes this kind of fraud more difficult to commit.

Cloud-based payroll solutions make it easier to regulate role-based access to sensitive data. For example, sophisticated software can keep roles like processing and data entry completely separate, as they should be. This leads to centralized, third-party oversight that leaves less room for people to cheat the system.

Boost retention with smoother payroll processes

Let’s face it: employee dissatisfaction is a major challenge for HR and cumbersome or inefficient HR processes are themselves, the source of a lot of that dissatisfaction. In the midst of “The Great Resignation”, retaining talent is more important than ever. When employees feel that they don’t have adequate tools, they’re far more likely to leave.

Partnering with a global payroll provider that emphasizes user experience and customer service is critical to improving employee satisfaction. This is especially true for employees who work remotely, and whose only point of contact with your organization is a digital one

Hassle-free onboarding and robust employee self-service options are features you should look out for when selecting a global payroll provider to assist your global expansion plans. 

Playroll: your strategic partner for global payroll

Needless to say, these are all challenges we’ve thought through very carefully. Through decades of experience in managing remote teams - long before it was the “new normal” - we’ve developed solutions that enable our clients to make the transition to global payroll.

Let’s talk about how Playroll can turbocharge your global payroll strategy.