Whether you already have a multinational business or are expanding outside the U.S. for the first time, you need employees who can conquer the challenges that come with having a global presence. And one of the biggest potential pain points lies in handling international payroll.
Why do you need a global payroll specialist?
When hiring employees or contractors in other countries, an international payroll professional brings the knowledge and expertise to help your company with a variety of complex issues.
- Labor laws — Every country has regulations governing the way remunerations are handled — not just wages but also bonuses, benefits and reimbursements. And you need to ensure that your company and employees are correctly registered with regional and national tax authorities and that you have a process in place for withholdings and remittances. In addition, each locale may have its own laws regarding minimum wage, overtime and other labor practices.
- Local customs — Employees around the world have varying expectations about work hours, vacation time and other aspects of professional life. For example, in some countries it’s common to divide salaries into 13 payments so workers receive twice their normal monthly pay in December, which people typically put toward holiday purchases. And in some places, most notably in a few European countries, the standard workweek spans between 30 and 35 hours.
Another regional variation is the role of collective bargaining. Trade unions can be very powerful in Asia and Europe, and it’s important to know how such groups might impact employee relations. A global payroll specialist can help your business successfully navigate local practices.
- Compliance — Regulations and laws vary wildly from country to country, and an international payroll specialist ensures that your overseas offices follow them. Compliance is often a matter of good recordkeeping, so you should have a reporting system in place before you start hiring abroad.
There are also cross-border rules, notably ones around data privacy. Europe’s General Data Protection Regulation (GDPR) places restrictions on transmitting personal data outside the EU, which can impact your company if your U.S. operation handles payroll.
- Payment logistics — One of the most important parts of global payroll is making sure your workers around the world receive the earnings they’re due — and on time — but this process isn’t always straightforward. Here are some potential issues to keep in mind:
- It can take several days to transfer money internationally, and currency exchange rates can fluctuate during that time.
- International payments may be subject to transaction fees, some of which are substantial.
- Payments from abroad are often subject to greater scrutiny due to anti-money laundering laws.
- The expected payment method varies by region, from direct deposit to paper checks or even cash.
An experienced global payroll specialist knows plenty of ways to work around these issues to ensure employees are paid correctly.
What to look for in an international payroll pro
If your headquarters are in the U.S., it makes sense to work with a U.S.-based specialist in international payroll. Here are some of the most important qualities to look for when you’re ready to hire:
- Extensive experience — Global payroll isn’t something that an entry-level clerk is equipped to handle. Recruit professionals with a work history that includes several years of international experience in the country or countries you’re planning to enter.
- Global payroll certification — Another way to know that a candidate has the requisite knowledge is to look for industry accreditation. The American Payroll Association offers two certifications: global payroll management and advanced global payroll management. Professionals who have these credentials in good standing are up to date on legislation and best practices in international payroll.
- Language skills — Although English is the world’s business language, it’s still an asset for your global payroll specialist to speak the native language of your international locations. Not only does it allow them communicate directly with local workers and governmental entities, it also helps them stay current on local compliance issues.
- Soft skills — Look for candidates who can write and speak clearly, as they’ll need to communicate effectively with a wide range of employees — as well as with people in banking and revenue agencies. Your international payroll professional should also welcome diversity and have a solid understanding of the cultures where your company has a presence.
A successful international expansion requires many parts of the puzzle to come together, and one of the biggest pieces is global payroll. Get this right, and you improve your chances of growing your organization.