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Legal and Compliance
Easily navigate local employment laws with our expert resources on tax and compliance.
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Welcome to the Playroll blog
Easily navigate local employment laws with our expert resources on tax and compliance.
In recent years, the gig economy has seen a sharp increase as employers enjoy the flexibility of hiring skilled workers on a project-by-project basis. However, between 10-30% of US employers are misclassifying their workers, according to the National Employment Law Project.
There are a few reasons the authorities take this especially seriously:
While this guide focuses on U.S. regulations, businesses operating internationally should be aware that employee misclassification carries similar risks across many countries, with varying legal frameworks.
There are several distinct differences between full-time employees and independent contractors. Here’s a summary of the key differences:
If an employer misclassified workers as independent contractors, they may be required to pay back taxes, penalties, and interest on unpaid taxes. Employers may also be subject to legal action by the Internal Revenue Service (IRS) or other US tax authorities. Misclassified employees may not get tax benefits like the earned income tax credit if they are labeled as independent contractors.
Here are all the potential consequences of employee misclassification:
Misclassifying employees as independent contractors can trigger IRS audits. If the misclassification is deemed unintentional, civil penalties include:
If the IRS identifies fraudulent intent, additional penalties may include:
Employees can sue for back wages, including unpaid overtime and benefits, if misclassified. This may involve costly retroactive compensation for benefits like health insurance and retirement plans that the employee was entitled to
Besides pure financial cost, the long-term effects of being found guilty of employee misclassification can be devastating. Bad press, drawn out legal battles and the impression that you are treating workers unfairly will impact your ability to attract new talent and retain your existing staff.
How have cases of misclassification played out in practice? These prominent legal cases highlight how hefty the consequences of misclassification can get:
So, how can you be certain that you’re classifying your workers correctly? It can get surprisingly complicated to distinguish correctly between employees and independent contractors.
There are a number of tests in the US that can guide employers to distinguish correctly between the two. Two of the most relevant tests that businesses can use include:
The IRS distinguishes between workers under common-law rules according to the categories of behavioral control, financial control and the relationship between parties. Some questions the IRS asks as part of this test includes:
Get more details on the questions the IRS asks for each of these categories here.
Companies and individuals can also file IRS Form SS-8, requesting that the IRS conduct an official audit to determine a worker’s status.
In January 2024, the Department of Labor (DOL) published a final rule revising how employees and independent contractors are classified under the Fair Labor Standards Act (FLSA). The final rule looks at these six factors when distinguishing between contractors and employees:
Get more details on the economic reality test here.
This test looks at how the courts and the IRS have classified similar workers in your company or your industry in the past, rather than examining the nature of the working relationship. There are several conditions in this test, that could mean you have a reasonable basis for classifying a worker as a contractor.
These include, for example:
Get more details on the reasonable basis test here.
Employee misclassification is not unique to the United States and is an issue in many countries around the world. Employers should be aware of the labor laws in the countries where they operate and ensure that they are correctly classifying their workers.
Many countries have laws and regulations that are similar to those in the United States, such as tax obligations for employers. In addition, some countries have specific laws and regulations related to worker classification that employers must follow.
Employee misclassification is a complex issue with significant legal and financial repercussions for US companies. One way to avoid the penalties of misclassification, is to partner with a team of experts that know the rulebook when it comes to compliance.
An Employer Of Record like Playroll removes the risk of hiring full-time employees and contractors alike, in the United States and beyond. Dedicated legal and HR experts will help you correctly classify your workers, and convert contractors to employees if needed.
Playroll helps companies expand their teams worldwide and keep talented employees, with a robust infrastructure of established entities in over 180 countries, ensuring ongoing compliance.
Read Time
September 5, 2024
The penalties for misclassifying employees as independent contractors can be steep, including fines, back pay, increased scrutiny by government authorities, potential lawsuits – and a ruined reputation. Here’s your full guide on the penalties of employee misclassification in the United States, and how to avoid it.
Despite the ongoing debate over what constitutes an adequate minimum wage, it is a widespread tool in labor regulation, adopted by over 90% of countries globally:
Source: Statista, 2024
Worldwide, minimum net monthly wages vary from almost 2,500 U.S. dollars in Luxembourg to 68 dollars in Nigeria as of January 2024. Minimum wages must be seen in relation with price levels in a country. One popular way to measure purchasing power is the Big Mac Index.
Minimum wage regimes vary extensively worldwide, shaped by a complex mix of laws, institutional arrangements, and collective bargaining. They are not randomly assigned values but the outcome of negotiations involving a country's social and political forces—trade unions, employers' associations, and governments.
International discourse often emphasizes increasing minimum wages to counter in-work poverty, a sentiment that gained momentum during the COVID-19 crisis as essential workers' low wages came under scrutiny. With each country's approach reflecting its unique economic and labor landscape, the ongoing challenge is to strike a balance between protecting workers and fostering economic health.
Picture this: in some places, there's a single minimum wage that covers everyone, no matter the job—pretty straightforward, right? This is what we call a universal regime. It's like having one rule for all, usually set by the national government.
Now, in the European Union, for example, most countries follow this universal approach with a one-size-fits-all minimum wage. But then, there are places like the United States or Canada, where things get a bit more local. States or provinces set their own minimums, which can be higher than the national floor. So, if you're in California or Ontario, the minimum wage might be different than in Texas or Quebec.
And then, there's the sectoral approach—think of it as custom-tailored wages for specific industries. Maybe you're a barista, a construction worker, or a nurse; your minimum wage is decided by the norms of your particular field.
Whether it's a universal rate that blankets the entire workforce or varied sectoral wages, the idea is to ensure you get a fair shake for a hard day's work, no matter the zip code or job title.
Of the G20 countries, Argentina saw the largest increase of the net minimum wage from January 2023 to January 2024, with wages increasing by almost 140 percent. This must be seen in relation to the country's soaring inflation rates. The same can be said of Turkey, where minimum wages almost doubled from 2023 to 2024.
Source: Statista, 2024
Of the G20 countries, Argentina saw the largest increase of the net minimum wage from January 2023 to January 2024, with wages increasing by almost 140 percent. This must be seen in relation with the country's soaring inflation rates. The same can be said of Turkey, where minimum wages almost doubled from 2023 to 2024.
When it comes to minimum wage, it's not always a one-rule-fits-all situation. In many places, especially across Europe, how much you should get paid at the very least might come from a national law, but it's not just plucked out of thin air. The government usually chats with employers and unions to figure it out. Sometimes, when everyone can't agree, the government steps in and sets the wage itself.
Now, let's take a quick trip north. In countries like Denmark and Sweden, instead of one blanket minimum wage, they have special pay rates for different job sectors. Think of it like a menu of wages tailored to each industry. Even in countries like Germany, which jumped on the national minimum wage bandwagon in 2015, this sector-specific approach was the go-to for ages.
And then there's Uruguay, a standout place where sector-level bargaining sets the pace, even with a national minimum wage in play. These special cases show that when it comes to ensuring fair pay, there's more than one way to bake the cake.
Navigating miminum wage and staying compliant with ever-changing employment laws can be complex, but it doesn't have to be. Playroll is an EOR service that can help you employ, pay and manage international workers in 180+ countries. Our team of experts ensures on-time payroll for your remote workforce, every time, and ensures compliance with all local labor laws so you can focus on scaling your business.
Book a demo with our team to find out how we can help scale your remote team.
While a home office offers many work-life balance benefits, it exposes both the employees and businesses to a range of new cyber security and working from home risks.
That's due to many remote work applications and devices plugging into the company systems to access and share information.
Thus, businesses need to give serious thought to how to maintain security when employees work from home to protect their sensitive data and information from slipping into the wrong hands. That creates the need to develop robust cyber security work from home measures.
Remote work has been on the rise since the pandemic and has become an essential part of modern business operations. According to StandOut CV, 16% of UK workers work full time from home, with 44% embracing a hybrid work week.
So, how do you maintain security when employees work from home?
This article lays out common cyber security work-from-home risks, practical steps that businesses can take to provide a secure remote work environment, and how Playroll secures your sensitive data in an environment rife with cyber security work from home risks.
The first step to ensure robust remote work security is to understand what you're up to. common cyber security work from home security threats include:
Once you’ve understood your remote work security risks, the next step is to conduct a thorough risk assessment to identify potential security threats and vulnerabilities. Then, implement security controls and secure communication channels to safeguard sensitive information and mitigate the identified risks.
Since remote workers use software applications and remote worker tools to interface with your company systems, focusing on application security is a powerful security control to guarantee information security.
So, how do you ensure application security for remote workers?
Below is a rundown of top cyber security work from home best practices for application security to ensure secure access to company systems and resources.
A secure remote working policy should be top of mind when thinking of how to maintain security when employees work from home.
That's because as an employer, you can only go so far in providing remote work security. Most of the cyber security work from home measures are still left to your employees.
Therefore, you need to provide a clear remote working policy that outlines the following:
You can start with a 30-day remote work security plan that provides a step-by-step guide on how to enhance security within the first month.
Make sure your remote working policy addresses all the security protocols and is well communicated to all remote employees to ensure compliance.
Playroll's uncompromising data and platform security adheres to the most comprehensive data security standards to ensure the safety of your data and information.
Cybercriminals never relent in their efforts to cause harm, so you shouldn't. Once you've ensured application security and put in a robust remote working policy, you need to conduct regular security audits and continuous assessments. That helps identify vulnerabilities and fix them to ensure that your cyber security work from home security controls are working.
That will help you to:
With over half of UK employers offering remote work, full-time and hybrid remote workweek arrangements are only expected to continue rising.
That underscores the need for businesses to implement robust cyber security work from home measures to provide secure remote worker environments and protect their sensitive data.
In general, full-time employment refers to an employee who works full-time hours each week, typically ranging from 35 to 45 hours, depending on the employer’s policies and local labor laws. Full-time employees are often eligible for a wide range of benefits, including health insurance, paid leave, and retirement plans.
Part-time employment typically refers to employees who work fewer hours than full-time employees, often around 20 to 30 hours per week. These roles offer more flexibility but may come with fewer benefits and less job stability compared to full-time positions.
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Full-time employees often enjoy more comprehensive benefits than part-time workers. These benefits can include:
Full-time employees generally experience more predictable and stable work schedules, as their hours are set for the week. This stability can be attractive to employees seeking job security and to employers looking for a more stable workforce and consistent coverage.
In contrast, part-time employees may have more flexible schedules, which can be a benefit for workers seeking flexibility, but may result in less predictable hours for both the employee and employer.
Employee misclassification occurs when an employer incorrectly classifies a worker as an independent contractor or part-time employee (rather than a full-time employee) or fails to properly classify the worker's exempt or non-exempt status under the FLSA. Misclassification can lead to violations of labor laws and a range of legal and financial consequences for both the employer and the employee.
Misclassifying employees as part-time when they should be full-time can lead to serious legal ramifications. For instance, employers who fail to provide health benefits under the ACA to employees who work 30 or more hours per week could face penalties.
Misclassification can also result in failure to pay overtime wages to workers who are entitled to them, violating laws laid out in the FLSA. This can lead to fines, back pay, and lawsuits.
Avoid costly misclassification errors. Playroll automates payroll, ensuring your team is properly classified and compliant with all regulations.
Speak to an Expert.png)
Misclassification can have significant financial consequences. These include:
Misclassification can damage the employer’s reputation, leading to:
The employment type (full-time vs. part-time) plays a critical role in determining how payroll is structured and managed.
Employers must carefully track employee hours, classification, and benefits eligibility to ensure accurate payroll processing and compliance with labor laws.
Managing employee classifications and payroll across diverse global workforces can be complex, especially when dealing with evolving labor laws, tax regulations, and benefits requirements. Playroll’s suite of tools simplifies this process, ensuring compliance and cost efficiency for employers with international teams.
Playroll’s platform offers powerful all-in-one solutions, such as global payroll, for managing global workforces, helping employers stay compliant with local labor laws, tracking employee hours and compensation, and optimizing payroll costs. By automating payroll processes, offering real-time compliance monitoring, and providing detailed reporting, Playroll ensures that businesses can confidently manage employee classifications and compensation, no matter where their teams are located.
Book a chat with our team to find out how we can simplify global employment and payroll for your team.
Read Time
December 10, 2024
Globalisation has paved the way for borderless employment, and companies around the world are grabbing the opportunity!
Aside from cultural diversity, having a mix of international employees helps attain various skill sets. But before diving head first into the global talent pool, a host of compliance boxes need to be checked to ensure that you are on the right track from the get-go!
1. Obtaining certification
If you are based in certain countries like the US, you would need to apply for certification from the United States Department of Labor which states there are insufficient qualified local talent to perform a specific job function at the prevailing wage.
2. Advertise the Job Vacancy
To hire compliantly in certain countries, you must meet specific employment regulations. This may be subject to race, gender, and location. Therefore, it is wise to research the countries you are looking to hire in before starting the interviewing process.
3. Don’t forget the tax man
The saying is true - the tax man never sleeps, and hiring internationally means that companies must comply with country-specific taxation laws. Therefore, tax implications on foreign-sourced income must be planned for. While a company will likely be taxed on profits in its home country, additional taxes will typically be owed to the foreign country you are operating in.
One challenge in tax planning and PE is that every country has the power to create unique standards and criteria for PE. In most cases, an international entity is liable for double taxation on their profits and employee tax.
Tax treaties and foreign tax credits are sometimes made available to soften the blow, but this depends on the country of business operation and headquarters tax policies.
4. Visa Applications
If you require a candidate to relocate, bear in mind that some new hires will need time to clear immigration issues and apply for visas. Due to the Covid-19 pandemic, many emigration offices across several countries are working against a backlog - meaning that it could take months to successfully obtain a visa.
5. Get in Tune with Salary Increases and Employee Benefits
In America, for example, salary increases are mandated. However, some countries like Canada do not mandate salary increases.
In Brazil, union agreements dictate salary changes, while increases are needed only for employees making the minimum wage in Colombia.
Most Asia-Pacific countries do not insist on salary increases. Indonesia, Thailand, and India are among these countries.
Other benefits include things such as the following.
There's no doubt that employing and managing international teams is challenging.
Regulatory pitfalls and employee classification are not the only boxes to check when employing international talent. Businesses hiring overseas also need to prepare for:
Hiring internationally demands more than just compliance knowledge. You must also understand local cultures, politics, and languages to achieve employee satisfaction, especially for remote work. But, let's face it; it's time-consuming and difficult to gain these insights for every country you choose to hire in!
If reading this makes hiring internationally feel increasingly out of reach, take comfort in that most of these challenges can be significantly smoothed out by partnering with an Employer of Record like Playroll.
An Employer of Record partner absorbs all legal responsibility for the international talent you hire and relocate, effectively acting as the legal employer (at least on paper).
EOR partners are responsible for:
Expanding your recruitment strategy internationally opens the door to attracting talented international employees who could help your business reach new heights. However, when doing so, it is important to comply with local and international hiring laws ensuring that both the company and your new talent are kept happy (and compliant!) in the long run!
In general, full-time employment refers to an employee who works full-time hours each week, typically ranging from 35 to 45 hours, depending on the employer’s policies and local labor laws. Full-time employees are often eligible for a wide range of benefits, including health insurance, paid leave, and retirement plans.
Part-time employment typically refers to employees who work fewer hours than full-time employees, often around 20 to 30 hours per week. These roles offer more flexibility but may come with fewer benefits and less job stability compared to full-time positions.
Full-time employees often enjoy more comprehensive benefits than part-time workers. These benefits can include:
Full-time employees generally experience more predictable and stable work schedules, as their hours are set for the week. This stability can be attractive to employees seeking job security and to employers looking for a more stable workforce and consistent coverage.
In contrast, part-time employees may have more flexible schedules, which can be a benefit for workers seeking flexibility, but may result in less predictable hours for both the employee and employer.
Employee misclassification occurs when an employer incorrectly classifies a worker as an independent contractor or part-time employee (rather than a full-time employee) or fails to properly classify the worker's exempt or non-exempt status under the FLSA. Misclassification can lead to violations of labor laws and a range of legal and financial consequences for both the employer and the employee.
Misclassifying employees as part-time when they should be full-time can lead to serious legal ramifications. For instance, employers who fail to provide health benefits under the ACA to employees who work 30 or more hours per week could face penalties.
Misclassification can also result in failure to pay overtime wages to workers who are entitled to them, violating laws laid out in the FLSA. This can lead to fines, back pay, and lawsuits.
Avoid costly misclassification errors. Playroll automates payroll, ensuring your team is properly classified and compliant with all regulations.
Speak to an Expert
Misclassification can have significant financial consequences. These include:
Misclassification can damage the employer’s reputation, leading to:
The employment type (full-time vs. part-time) plays a critical role in determining how payroll is structured and managed.
Employers must carefully track employee hours, classification, and benefits eligibility to ensure accurate payroll processing and compliance with labor laws.
Managing employee classifications and payroll across diverse global workforces can be complex, especially when dealing with evolving labor laws, tax regulations, and benefits requirements. Playroll’s suite of tools simplifies this process, ensuring compliance and cost efficiency for employers with international teams.
Playroll’s platform offers powerful all-in-one solutions, such as global payroll, for managing global workforces, helping employers stay compliant with local labor laws, tracking employee hours and compensation, and optimizing payroll costs. By automating payroll processes, offering real-time compliance monitoring, and providing detailed reporting, Playroll ensures that businesses can confidently manage employee classifications and compensation, no matter where their teams are located.
Book a chat with our team to find out how we can simplify global employment and payroll for your team.
As 2025 approaches, UK employers should prepare for a series of regulatory and budgetary changes that will impact their responsibilities and payroll costs. Below are the most important updates from the Autumn Budget and the upcoming Employment Rights Bill that employers need to know.
The Autumn Budget also introduced tax incentives designed to stimulate investment and growth in certain business areas, which may benefit employers looking to expand or modernize.
Employers in these sectors or those considering capital investments can leverage these tax reliefs to offset potential payroll cost increases in 2025.
The UK Employment Rights Bill, as introduced to Parliament, proposes significant changes affecting employee protections, flexible work arrangements, and dismissal rights. Here’s what employers should prepare for:
Employers should begin assessing the financial impact of these updates on payroll, benefits, and operational policies. To stay compliant, adjustments to payroll systems, employment policies, and potentially even hiring budgets may be necessary. By adapting promptly and staying informed on shifting regulations, employers can stay ahead of the curve.
Here’s how to get started:
Plan for increased payroll costs due to NI and minimum wage changes and review any potential tax incentives that may help offset costs, such as R&D credits or full expensing.
Ensure employment policies reflect new flexible working rights, guaranteed-hour contracts, and dismissal protections. Update your onboarding process to clarify probation terms and new rights from Day 1.
Strengthen policies against workplace harassment, with clear measures in place to prevent third-party harassment and ensure compliance with the Equality Act amendments.
For large employers, begin gathering data and establishing action plans to meet gender pay gap reporting requirements and support for menopausal employees.
Update sick leave policies and payroll processes to accommodate SSP from Day 1 and prepare for changes to the Lower Earnings Limit in SSP calculations.
By proactively addressing these changes, employers can minimize disruptions, avoid any penalties and stay in line with the UK’s evolving employment landscape.
It doesn't have to be complicated to stay compliant. Playroll's on-the-ground employment experts can do the heavy-lifting to ensure compliance with shifting employment regulations, and inform you how these policies impact your organizations. Book a time with a UK employment consultant to learn how we can support your business.
GDPR is a global data privacy framework that prioritizes the protection of personal data protection and enforces strict data handling standards. An Employer or Record, or EOR, is a third-party service provider taking on the responsibilities of an employer ensuring cost-effective and compliant solutions for companies setting up distributed workforces.
In a world where digital information is everywhere, protecting personal data has become more important than ever. The General Data Protection Regulation, or GDPR, which was put into effect in 2018 within the European Union and globally, is an important milestone in the age of data privacy, introducing clear guidelines on how to treat personal data carefully and transparently. The primary focus of GDPR is to protect the privacy and personal data of citizens within the EU, irrespective of where that data is used or stored. GDPR is a strict regulatory framework that dictates how companies manage and store personal data, how data breaches should be reported on and the penalties that may come into play in situations of non-compliance.
Navigating the regulatory and compliance landscape can be overwhelming and complex. Questions like "Who is responsible for what under GDPR?" are common.
Using an Employer of Record (EOR) service like Playroll, can shield you from compliance risks associated with the employment of your workforce or contract talent. An Employer of Record takes on the compliance burden, which is why we pride ourselves on our commitment to upholding privacy and compliance.
This blog is designed to guide you through the ins and outs of GDPR responsibilities, equipping you everything you need to stay compliant in a complex and ever-evolving regulatory landscape.
An Employer of Record (EOR) serves as a third-party company which becomes the legal employer of a client companies workforce, including full-time employees, contractors, or remote workers. EORs manage employment and HR tasks including:
An Employer of Record is the go-between for a company and its employees, making sure that employees are hired compliantly in line with local laws and regulations and can streamline the intricacies involved with international employment, without needing to establish legal entities.
Employer of Record services frequently handle sensitive information, including payroll, taxes and HR information for customers and employees on a global scale. GDPR serves as a protective measure, ensuring that entities like Employer of Record services prioritise the privacy rights of employers' data protection. Let's explore the specific guidelines Employer of records need to follow to adhere to GDPR standards:
GDPR has become an important framework that shapes how companies manage personal information, and for businesses that use Employer of Record services to manage their global workforce, GDPR is both a legal obligation and an essential element of ethical workforce management.
In the world of Employer of Record (EOR) services, GDPR compliance is about striking a balance between safeguarding data and cultivating trust to ensure both data security and competitiveness within the market. Let’s explore the responsibilities in more detail:
EOR Clients play an important role in maintaining GDPR compliance which involves careful data management, obtaining employee consent to process data and ensuring that the right systems and protocols are put in place for secure data transfer and security. Here’s a detailed list of the data management and processing responsibilities that businesses need to implement to remain compliant.
By adhering to GDPR, companies can proactively reduce the risk of legal hiccups, build trust among their workforce, enhance their reputation, and offer a competitive edge, particularly in areas where data privacy is top priority.
GDPR compliance significantly impacts employees by enforcing superior data protection measures, providing greater transparency in how data is processed and managed - giving employees enhanced control over their personal data. Companies that adhere to GDPR compliance build trust within their workforce which contributes to a more secure and transparent work environment.
Here's how GDPR supports employees:
The General Data Protection Regulation (GDPR) lays out a strict framework that organisations must follow to safeguard the personal data of their employees. Here's a snapshot of the key GDPR requirements:
Basically, any information that can be used to identify a person must be handled in accordance with GDPR, and any company in control of personal data is subject to these regulations. Simply put, any company in any industry operating outside the EU must comply, as this regulates the export of personal data intra and extra-eu.
While the standards of the GDPR are high, the fines and penalties for violations and non-compliance with GDPR are even higher. Fines for a single violation can run as much €20 million, or 4% of global annual revenue – whichever is higher.
This means that even the largest multinational corporations with significant revenue streams can find themselves on the hook for eye-watering fines if they fall short of GDPR requirements, so
Legal costs can quickly mount when dealing with GDPR violations, because organizations often need the support of legal experts to navigate the intricate regulatory landscape, which can in many cases lead to extensive and costly legal disputes. The damage of GDPR violations also extend beyond penalties and fines and can significantly harm a company's reputation, undermining trust and potentially resulting in the customer churn which can have longer term financial implications. What's more, because of GDPR's global reach, non-compliance can also hurt a company's operations outside the EU, potentially leading to further financial damage and marginalisation.
It comes as no surprise that businesses are taking a proactive approach to preparing for GDPR regulations, with many organisations across multiple sectors now investing in robust data protection infrastructure, staff training, and reliable cybersecurity measures.
Employers of Record Services (EORs) play a vital role in helping clients achieve GDPR compliance and avoiding pricey violations. EORs implement strong data security measures to protect employee data, preventing unauthorized access and data breaches and can protect employers from the significant costs of hiring full-time regulatory experts to take on the responsibilities that GDPR compliance presents. With fixed monthly fees, an EOR service like Playroll can take the sting out of navigating the complex GDPR Compliance maze that comes with Global expansion, saving time and money and giving businesses the bandwidth to focus on their core operations with confidence that their customer and employer data is secure at all times.
Here's how Playroll goes the extra mile to secure global compliance - safeguarding customer and employee data at all times:
Employer of Record (EOR) services play a critical role in helping organizations to achieve GDPR compliance, by implementing strong data security measures, consent management, and conducting regular compliance audits. To ensure GDPR compliance while using Employer of Record services, clients make sure to follow these best practices:
At Playroll data security is seamlessly woven into every facet of our operations. Because we take security seriously, we’ve built a robust GDPR programme committed to protecting the data and privacy of our customers and their employees.
Despite the ongoing debate over what constitutes an adequate minimum wage, it is a widespread tool in labor regulation, adopted by over 90% of countries globally:
Source: Statista, 2024
Worldwide, minimum net monthly wages vary from almost 2,500 U.S. dollars in Luxembourg to 68 dollars in Nigeria as of January 2024. Minimum wages must be seen in relation with price levels in a country. One popular way to measure purchasing power is the Big Mac Index.
Minimum wage regimes vary extensively worldwide, shaped by a complex mix of laws, institutional arrangements, and collective bargaining. They are not randomly assigned values but the outcome of negotiations involving a country's social and political forces—trade unions, employers' associations, and governments.
International discourse often emphasizes increasing minimum wages to counter in-work poverty, a sentiment that gained momentum during the COVID-19 crisis as essential workers' low wages came under scrutiny. With each country's approach reflecting its unique economic and labor landscape, the ongoing challenge is to strike a balance between protecting workers and fostering economic health.
Picture this: in some places, there's a single minimum wage that covers everyone, no matter the job—pretty straightforward, right? This is what we call a universal regime. It's like having one rule for all, usually set by the national government.
Now, in the European Union, for example, most countries follow this universal approach with a one-size-fits-all minimum wage. But then, there are places like the United States or Canada, where things get a bit more local. States or provinces set their own minimums, which can be higher than the national floor. So, if you're in California or Ontario, the minimum wage might be different than in Texas or Quebec.
And then, there's the sectoral approach—think of it as custom-tailored wages for specific industries. Maybe you're a barista, a construction worker, or a nurse; your minimum wage is decided by the norms of your particular field.
Whether it's a universal rate that blankets the entire workforce or varied sectoral wages, the idea is to ensure you get a fair shake for a hard day's work, no matter the zip code or job title.
Of the G20 countries, Argentina saw the largest increase of the net minimum wage from January 2023 to January 2024, with wages increasing by almost 140 percent. This must be seen in relation to the country's soaring inflation rates. The same can be said of Turkey, where minimum wages almost doubled from 2023 to 2024.
Source: Statista, 2024
Of the G20 countries, Argentina saw the largest increase of the net minimum wage from January 2023 to January 2024, with wages increasing by almost 140 percent. This must be seen in relation with the country's soaring inflation rates. The same can be said of Turkey, where minimum wages almost doubled from 2023 to 2024.
When it comes to minimum wage, it's not always a one-rule-fits-all situation. In many places, especially across Europe, how much you should get paid at the very least might come from a national law, but it's not just plucked out of thin air. The government usually chats with employers and unions to figure it out. Sometimes, when everyone can't agree, the government steps in and sets the wage itself.
Now, let's take a quick trip north. In countries like Denmark and Sweden, instead of one blanket minimum wage, they have special pay rates for different job sectors. Think of it like a menu of wages tailored to each industry. Even in countries like Germany, which jumped on the national minimum wage bandwagon in 2015, this sector-specific approach was the go-to for ages.
And then there's Uruguay, a standout place where sector-level bargaining sets the pace, even with a national minimum wage in play. These special cases show that when it comes to ensuring fair pay, there's more than one way to bake the cake.
Navigating miminum wage and staying compliant with ever-changing employment laws can be complex, but it doesn't have to be. Playroll is an EOR service that can help you employ, pay and manage international workers in 180+ countries. Our team of experts ensures on-time payroll for your remote workforce, every time, and ensures compliance with all local labor laws so you can focus on scaling your business.
Book a demo with our team to find out how we can help scale your remote team.
In recent years, the gig economy has seen a sharp increase as employers enjoy the flexibility of hiring skilled workers on a project-by-project basis. However, between 10-30% of US employers are misclassifying their workers, according to the National Employment Law Project.
There are a few reasons the authorities take this especially seriously:
While this guide focuses on U.S. regulations, businesses operating internationally should be aware that employee misclassification carries similar risks across many countries, with varying legal frameworks.
There are several distinct differences between full-time employees and independent contractors. Here’s a summary of the key differences:
If an employer misclassified workers as independent contractors, they may be required to pay back taxes, penalties, and interest on unpaid taxes. Employers may also be subject to legal action by the Internal Revenue Service (IRS) or other US tax authorities. Misclassified employees may not get tax benefits like the earned income tax credit if they are labeled as independent contractors.
Here are all the potential consequences of employee misclassification:
Misclassifying employees as independent contractors can trigger IRS audits. If the misclassification is deemed unintentional, civil penalties include:
If the IRS identifies fraudulent intent, additional penalties may include:
Employees can sue for back wages, including unpaid overtime and benefits, if misclassified. This may involve costly retroactive compensation for benefits like health insurance and retirement plans that the employee was entitled to
Besides pure financial cost, the long-term effects of being found guilty of employee misclassification can be devastating. Bad press, drawn out legal battles and the impression that you are treating workers unfairly will impact your ability to attract new talent and retain your existing staff.
How have cases of misclassification played out in practice? These prominent legal cases highlight how hefty the consequences of misclassification can get:
So, how can you be certain that you’re classifying your workers correctly? It can get surprisingly complicated to distinguish correctly between employees and independent contractors.
There are a number of tests in the US that can guide employers to distinguish correctly between the two. Two of the most relevant tests that businesses can use include:
The IRS distinguishes between workers under common-law rules according to the categories of behavioral control, financial control and the relationship between parties. Some questions the IRS asks as part of this test includes:
Get more details on the questions the IRS asks for each of these categories here.
Companies and individuals can also file IRS Form SS-8, requesting that the IRS conduct an official audit to determine a worker’s status.
In January 2024, the Department of Labor (DOL) published a final rule revising how employees and independent contractors are classified under the Fair Labor Standards Act (FLSA). The final rule looks at these six factors when distinguishing between contractors and employees:
Get more details on the economic reality test here.
This test looks at how the courts and the IRS have classified similar workers in your company or your industry in the past, rather than examining the nature of the working relationship. There are several conditions in this test, that could mean you have a reasonable basis for classifying a worker as a contractor.
These include, for example:
Get more details on the reasonable basis test here.
Employee misclassification is not unique to the United States and is an issue in many countries around the world. Employers should be aware of the labor laws in the countries where they operate and ensure that they are correctly classifying their workers.
Many countries have laws and regulations that are similar to those in the United States, such as tax obligations for employers. In addition, some countries have specific laws and regulations related to worker classification that employers must follow.
Employee misclassification is a complex issue with significant legal and financial repercussions for US companies. One way to avoid the penalties of misclassification, is to partner with a team of experts that know the rulebook when it comes to compliance.
An Employer Of Record like Playroll removes the risk of hiring full-time employees and contractors alike, in the United States and beyond. Dedicated legal and HR experts will help you correctly classify your workers, and convert contractors to employees if needed.
Playroll helps companies expand their teams worldwide and keep talented employees, with a robust infrastructure of established entities in over 180 countries, ensuring ongoing compliance.
If you’re looking to add a talented international workforce to your operations, one of the greatest challenges faced by global businesses today involves upholding comprehensive procedures regarding recruitment, retention, compensation, benefits and compliance.
Global employer extending operations? You may run into complexities that your current global HR team may not handle efficiently. In that case, it may be time to consider an international professional employer organization (PEO) to take advantage of some of the following benefits:
Before jumping into the potential benefits of partnering with an international PEO, it’s worth touching on the differences between an international professional employer organization (PEO) and a domestic PEO. To that end, you’ll want to consider your:
Partnering with a certified PEO offers transformative benefits for businesses seeking streamlined HR services. Certified PEOs (CPEOs) undergo rigorous IRS certification, ensuring they meet high standards of compliance, financial stability, and operational excellence. By collaborating with a certified PEO, businesses can confidently delegate essential HR tasks like payroll, benefits administration, and compliance management.
Expanding your HR team internationally involves various services that will require effective communication within international employees. Fortunately, international PEOs offer better benefits and have several systems in place to help your business manage the following:
In short, rather than allotting employee management tasks to making additional HR hires and implementing training programs, business leaders can tap into an existing network of experts to streamline their expanding operations.
If you’re thinking of expanding your business internationally, you probably don’t want to wait an exorbitant amount of time before you dip into international markets. However, the paperwork alone will probably slow things down considerably. Also, if you have plans to expand into more than one country, there may need to consider additional regulations and requirements.
Local employment laws that apply to taxation and hiring can be complicated enough to keep your HR team consistently busy. Just being sure that you have the necessary knowledge to stay in compliance is a full-time job. Now you need to expand that internationally.
The likelihood of an error goes up exponentially as your company expands to more global markets, which may lead to:
Even the best training can’t equal the years of experience with international laws that you’ll have access to by working with an International PEO. For instance, at Playroll, we’re backed by VAT IT Group, which works with over 50% of Fortune 500 companies, culminating in the expertise of working with over 13,000 companies in over 180 countries.
International business expansion can be very expensive. If you choose to send an HR employee to a foreign country, rather than work with an international PEO, you may experience costs associated with the following:
International PEO services can help to streamline and, in some cases, reduce your expenses and improve your cost savings.
International PEOs have great knowledge of international law and compliance regulations, such as the UK’s GDPR and PAYE tax and National Insurance (NI) contributions. They also have great knowledge of all things HR, which a client company would usually outsource.
These responsibilities may include:
Basically, many of the things your HR team is already responsible for domestically can be handled internationally by a professional provider. This frees up time for your domestic HR team to focus on the tasks they’re experts in, while the provider handles global employees and international compliance requirements.
Expanding business internationally allows you to tap into the global hiring market. You can trust your provider to hire qualified candidates in-country and help you manage a global team with expertise.
Additionally, global employment organizations won’t need to establish a foreign legal entity. Instead, international PEOs can navigate international compliance risks and regulations to ensure your hiring processes meet the requirements and regulations of the new country you choose.
How can an international PEO help improve morale among your employees? The processes they put in place tackle payroll processing inefficiencies and align with international payroll criteria, systems, and procedures. This ensures that automated payroll will be handled smoothly, with minimal to no errors to ensure that employees are paid on time.
The best international PEOs won’t just ask you to trust them when it comes to your international hiring—they’ll give you the tools you need to monitor how their efforts are aiding your HR performance on a global scale.
At Playroll, we help you track employment contracts and compliance narratives within each new country you operate in to streamline your HR operations.
Find out How to Do Payroll for an International Business.
You may still be wondering if your company is the right fit for an employer of record partnership to help you expand globally. To help you decide, let’s look at some of the types of businesses that may benefit from partnering with an international PEO:
International expansion should be exciting. Tap into that excitement (and international markets) with Playroll.
Partnering with an international professional employer organization. Global peo provides your business with an opportunity to expand to new countries with the ease of knowing your hiring processes are within international employee compliance regulations. Additionally, they may help to fast track your expansion and cut costs of employee transfers.
Global PEO Services can provide a range of services, including hiring, payroll management, benefits administration, and compliance with local laws and regulations.
According to a U.S. Department of Labor report, about 10-30% of employers have misclassified some workers. Employers should ensure correct classification when employees may or may not be exempt from the Fair Labor Standards Act (FLSA) to avoid legal action and financial penalties.
Exempt employees are salaried workers paid a fixed income equally distributed over each pay period. They work following a standard 9-to-5 schedule and are not eligible for overtime pay regardless of hours worked.
On the other hand, non-exempt employees are workers paid on an hourly basis. They’re eligible for federal minimum wage and overtime pay for working more than 40 hours per week.
Proper classification of exempt or non-exempt employees is vital to avoid confusion when assigning job responsibilities, and determining salary structures and eligibility for overtime pay.
Employers should know the criteria for exempt and non exempt employee classification. These are outlined in the FLSA Act, and they relate to employee’s salary structure, salary level, federal minimum wage, overtime pay, and job duties.
The Fair Labor Standards Act (FLSA) establishes the legal framework differentiating exempt vs non exempt employees. It sets the salary and duties tests to help employers determine who qualifies for exempt status. The Department of Labor (DOL) makes regular updates on these criteria, so employers should stay updated to ensure compliance.
Pay structure and overtime eligibility make the key differences between exempt vs non exempt employees. To qualify for exempt status, an employee must meet the following salary requirements:
On the other hand, non-exempt employees are entitled to a minimum hourly wage and overtime pay. Per the FLSA overtime rule, non exempt employees are eligible for overtime pay at a rate of 1.5 times their regular rate for extra hours worked over 40 per week. If an employee isn't paid on an hourly basis, the hourly rate can be calculated by dividing the total pay by the number of hours worked.
Salary structure and overtime pay aren't enough to determine an employee's exempt status. To be classified as exempt, employees must pass specific job classification and duties tests set by the Department of Labor.
Exempt employees must be highly skilled professionals who perform office duties that require specialized education and experience. These employees typically perform duties in managerial, administrative, and professional roles, and have the authority to make decisions and exercise judgment.
Employees in outside sales, highly compensated workers making US$107,432 or more, certain computer professionals, and specific types of employees in unique industries are also exempt. Examples include jobs in movie theater sets, railroads, and agriculture.
Examples of exempt employees include:
Non-exempt employees perform manual or service-related job tasks and don't hold decision-making authority. These employees work under close supervision following established routines and procedures. They're sometimes called “blue-collar” workers because their job duties don't require specialized education or experience.
Examples of non exempt employees include:
Employers should remember that job titles alone can’t be used to determine exempt status. It's essential to consider the nature of work and the level of responsibility to ensure correct classification.
Wrong employee classification can turn out to be a costly payroll error, resulting in legal pitfalls and financial penalties. Common misclassification risks include:
Employers should prioritize adherence to the FLSA Act through regular audits and reviews of salary structures, overtime policies, and job duties to ensure they align with regulation.
Below are 3 companies that paid heavily for misclassifying exempt vs non exempt employees.
Differentiating exempt vs non exempt employees comes down to their pay structure, job duties, work schedules, and other legal considerations outlined by the Fair Labor Standards Act (FLSA).
Employers should work closely with payroll experts to ensure compliance and avoid penalties and reputational damage when hiring exempt and non exempt employees in different regions.
Playroll is a platform that offers employment solutions to help you hire and manage global teams in compliance with global labor regulations. We help you avoid misclassification risks through:
Payroll compliance is crucial for accurate payroll processing, ensuring adherence to legal and regulatory requirements. Expert services ensure workers are paid on time, and taxes are correctly deducted and remitted.
Savvy business owners resort to outsourcing or working with payroll experts to ensure compliance, thus avoiding errors, hefty penalties, fines, and possible lawsuits.
Playroll.com emerges as one of the most reliable payroll management platforms out there. We keep a team of payroll experts in-house to offer expert insights and valuable guidance, helping you navigate the complexities of payroll compliance.
In this article, we lay out key compliance tips to help you stay on top of labor laws and tax regulations – ensuring an accurate, compliant payroll process.
Labor laws, tax regulations, and national insurance contributions change often. Thus, it can be difficult for businesses, especially multinationals, to keep up with the ever-changing laws and employment practices in different countries.
Employees can be classified as part-time, full-time, contractual, etc. That forms the basis of their employment rights, legal protections, and the compensation & benefits they're entitled to.
Ensuring proper employee classification helps avoid misclassification risks, including penalties, fines, unpaid taxes, time-consuming tax audits, and legal action from workers seeking additional pay or benefits.
Playroll.com's payroll experts offer expert advice and insights to help you accurately classify your employees to steer clear of misclassification and associated penalties.
On-time tax submissions help your business avoid late payment penalties, legal fees, interest charges, time-consuming audits from tax authorities, and costly errors or inaccurate payments.
Playroll.com's global payroll experts help you understand and avoid the financial liability of late tax filing.
Payroll carries important employee data like bank account details, national insurance numbers, and more. Thus, a limited company is obligated to collect, store, process, and share data in compliance with data protection laws, like the UK GDPR.
Playroll.com offers guides on safeguarding sensitive payroll data in compliance with data protection laws. Our expert payroll services feature robust payroll software with top data security features.
Accurate payroll management requires thorough record-keeping to ensure compliance and keep everything organized and easily accessible. To keep accurate documentation, our experts recommend the following:
Different countries impose overtime regulations and leave management policies to protect workers. Employers should be aware of employee rights and protections relating to holiday pay, overtime, statutory annual leave entitlements, parental leave, and other forms of time off.
Playroll.com's global payroll management system ensures auto enrolment of overtime hours and leave plans in line with country-specific regulations to avoid legal pitfalls.
Accurate payroll management is the backbone of legal compliance. Playroll.com recommends leveraging payroll software for error-free payroll processing to ensure compliance.
Regular training for payroll staff empowers them to run an accurate, compliant payroll process.
Playroll.com recommends implementing a payroll training program that incorporates real or simulated payroll scenarios, cases, and problem-solving exercises. Payroll training can be delivered via online courses, workshops, podcasts, webinars, manuals, or videos.
Implementing regular audits enables you to review and verify payroll data, identify and correct errors or discrepancies, and ensure that your payroll process aligns with the latest employment practices.
Playroll.com expert payroll services incorporate guidelines on conducting thorough and effective compliance checks. We help you understand local laws, automate payroll tasks, and conduct payroll compliance training.
Payroll management isn’t an easy task. That's why Playroll.com recommends seeking help from global payroll experts. Different ways to build a network of compliance resources include:
Playroll.com's global payroll experts offer expert payroll services to help businesses maintain a steadfast commitment to payroll compliance and accuracy.
Supercharge your payroll! Discover expert tips for compliance excellence at Playroll.com.
With a vast labor force exceeding 1.3 billion, India struggles with low wages and exploitation issues. To address this, the government introduced India's minimum wage system in 1961, as a solution to improve the standard of living and reduce exploitation of workers. While this system has improved living conditions and reduced exploitation, challenges remain, including difficulties with enforcing the minimum wage system and regional wage disparities, requiring ongoing efforts to maintain a fair and equitable labor market in India.
India is a country with a diverse and complex labor market. With a population of over 1.3 billion people, the Indian labor force is one of the largest in the world. However, despite its size, the labor market in India is plagued with issues such as low wages, exploitation, and lack of regulation. In an effort to address these issues, the Indian government has implemented a minimum wage system. In this article, we will explore India's minimum wage system, its history, and its impact on the labor market.
A minimum wage is the lowest amount of remuneration that an employer is legally required to pay to their employees for the work performed within a specified period. It is set by the government and is intended to protect workers from exploitation and ensure a decent standard of living. The minimum wage is usually determined based on factors such as the cost of living, inflation, and the overall economic conditions of the country.
The concept of a minimum wage was first introduced in India in 1948, with the passing of the Minimum Wages Act. This act aimed to provide a basic standard of living for workers and prevent the exploitation of labor. However, the implementation of this act was limited to only a few industries and did not cover the majority of the labor force.
In 1957, the Indian government established the National Commission on Labor to review and recommend changes to the existing labor laws. The commission recommended the implementation of India's minimum wage, which would cover all industries and sectors. This led to the passing of the Minimum Wages Act of 1961, which established a national minimum wage for all workers in India.
The minimum wage in India is determined by the Central Government, in consultation with the State Governments. The Central Government sets a national minimum wage, which is applicable to all industries and sectors. However, the State Governments have the authority to set their own minimum wage, which cannot be lower than the national minimum wage.
The minimum wage is determined based on the cost of living, the level of skill required for the job, and the prevailing wage rates in the industry. The government also takes into consideration the recommendations of the Indian Labour Conference, which is a tripartite body consisting of representatives from the government, employers, and workers.
The implementation of India's minimum wage has had a significant impact on the Indian labor market. Here are some of the key effects of the minimum wage system in India:
One of the primary objectives of India's minimum wage system is to ensure a decent standard of living for workers. By setting a minimum wage, the government aims to provide workers with a basic level of income that can cover their essential needs such as food, shelter, and clothing. This has helped to improve the living conditions of workers and their families, especially those from low-income households.
Before the implementation of India's minimum wage system, many workers in India were subjected to exploitation and forced labor. Employers would often pay workers below the market rate, and workers had no choice but to accept these low wages to support themselves and their families. The minimum wage system has helped to reduce this exploitation by ensuring that workers are paid a fair wage for their work.
With a higher minimum wage, workers have more disposable income, which they can use to purchase goods and services. This has led to an increase in consumer spending, which has a positive impact on the economy. Increased consumer spending also leads to an increase in demand for goods and services, which can create more job opportunities in the market.
While the minimum wage system has had a positive impact on the labor market in India, it also faces several challenges. Here are some of the key challenges faced by India's minimum wage system:
One of the biggest challenges faced by the minimum wage system in India is the enforcement of minimum wage laws. Many employers, especially in the informal sector, do not comply with minimum wage laws and continue to pay workers below the minimum wage. This is due to ineffective enforcement mechanisms and high monitoring costs.
The minimum wage in India is determined by the Central Government, but the State Governments have the authority to set their own minimum wage. This has led to regional disparities, with workers in some states earning significantly lower wages than workers in other states. This can create an imbalance in the labor market and lead to labor migration from low-wage states to high-wage states.
Small businesses, especially those in the informal sector, may struggle to comply with minimum wage laws. This is because they may not have the financial resources to pay their workers the minimum wage. As a result, they may be forced to reduce their workforce or shut down their business, which can have a negative impact on the economy.
The minimum wage system in India has played a crucial role in improving the standard of living for workers and reducing exploitation in the labor market. However, it also faces several challenges, such as enforcement issues and regional disparities. To address these challenges, the government must work towards effective enforcement mechanisms and ensure that the minimum wage is set at a level that is fair for both workers and employers. By doing so, the minimum wage system can continue to play a vital role in creating a more equitable and fair labor market in India.
As a leading Global Employer of Record, Playroll helps you navigate the complexities of India's minimum wage landscape effortlessly. Leveraging our in-depth knowledge of the Indian market, Payroll empowers your business to handle payments, management, and top-tier talent recruitment in strict accordance with local regulations and compliance standards.
While a home office offers many work-life balance benefits, it exposes both the employees and businesses to a range of new cyber security and working from home risks.
That's due to many remote work applications and devices plugging into the company systems to access and share information.
Thus, businesses need to give serious thought to how to maintain security when employees work from home to protect their sensitive data and information from slipping into the wrong hands. That creates the need to develop robust cyber security work from home measures.
Remote work has been on the rise since the pandemic and has become an essential part of modern business operations. According to StandOut CV, 16% of UK workers work full time from home, with 44% embracing a hybrid work week.
So, how do you maintain security when employees work from home?
This article lays out common cyber security work-from-home risks, practical steps that businesses can take to provide a secure remote work environment, and how Playroll secures your sensitive data in an environment rife with cyber security work from home risks.
The first step to ensure robust remote work security is to understand what you're up to. common cyber security work from home security threats include:
Once you’ve understood your remote work security risks, the next step is to conduct a thorough risk assessment to identify potential security threats and vulnerabilities. Then, implement security controls and secure communication channels to safeguard sensitive information and mitigate the identified risks.
Since remote workers use software applications and remote worker tools to interface with your company systems, focusing on application security is a powerful security control to guarantee information security.
So, how do you ensure application security for remote workers?
Below is a rundown of top cyber security work from home best practices for application security to ensure secure access to company systems and resources.
A secure remote working policy should be top of mind when thinking of how to maintain security when employees work from home.
That's because as an employer, you can only go so far in providing remote work security. Most of the cyber security work from home measures are still left to your employees.
Therefore, you need to provide a clear remote working policy that outlines the following:
You can start with a 30-day remote work security plan that provides a step-by-step guide on how to enhance security within the first month.
Make sure your remote working policy addresses all the security protocols and is well communicated to all remote employees to ensure compliance.
Playroll's uncompromising data and platform security adheres to the most comprehensive data security standards to ensure the safety of your data and information.
Cybercriminals never relent in their efforts to cause harm, so you shouldn't. Once you've ensured application security and put in a robust remote working policy, you need to conduct regular security audits and continuous assessments. That helps identify vulnerabilities and fix them to ensure that your cyber security work from home security controls are working.
That will help you to:
With over half of UK employers offering remote work, full-time and hybrid remote workweek arrangements are only expected to continue rising.
That underscores the need for businesses to implement robust cyber security work from home measures to provide secure remote worker environments and protect their sensitive data.
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