Payroll and finance leaders know the headaches of global expansion firsthand. As a company scales internationally, once-straightforward processes like paying employees on time or enrolment in localised benefits programmes become flooded with new regulations, languages, currencies, and reporting requirements, making global payroll compliance a complex challenge.
As an EOR (Employer of Record) provider enabling global workforces, we deeply empathise with the distractions and frustrations these nuances create. For every new country entered, new payroll-related obstacles arise, demanding time and attention to avoid missteps. For most companies, this is an immense undertaking piled onto an already full workload.
But global growth and opportunity need not bring added risk, distraction, or struggle. EORs were created to liberate companies from the minutiae of global employment, payroll, and compliance. In this post, we’ll explore the top difficulties faced when taking on global payroll, and we will then show exactly how EORs provide turnkey solutions to overcome them.
The Challenge: Each country has its own intricate maze of payroll tax laws, social security regulations, and filing timelines that could trip up many companies. For example, Brazil requires paying a “13th month” salary while Australia mandates employer superannuation contributions. If you miss deadlines in the UK or forget French profit-sharing contributions, you could risk fines.
Yet few payroll teams have mastered the twists and turns of compliance across multiple countries. Even fewer have the bandwidth to continually track new policies and amend their processes as regulations evolve. This leaves major vulnerability for missteps as companies expand globally. Even though they may be accidental, errors can lead to penalties, legal complications, and reputational damage. Understanding and managing global payroll costs is crucial for maintaining compliance and avoiding unexpected expenses.
How EORs Overcome It: Employer of Record services take on the responsibility of managing local payroll compliance. They file and pay taxes and contributions calculated on employees’ salaries, ensuring that all local obligations are met accurately and on time. EORs also stay updated with ever-changing regulations, so you don’t have to. This means you can operate confidently in multiple countries without the administrative burden of mastering each locale’s payroll laws.
The Challenge: Paying employees on time and distributing accurate payslips gets surprisingly tricky across countries. Different bank systems, pay schedules, regulatory requirements and even public holidays can obstruct smooth payroll delivery, causing costly frustration.
Efficient payroll processing is essential for timely payment and accurate payslip delivery. Late or confusing payments lead to decreased morale, plus major issues for individuals needing proof of income for mortgages and loans. Yet coordinating reliable global payroll often can fall through the cracks, especially as companies first expand.
How EORs Overcome It: EORs ensure that your international employees are paid accurately and on schedule, no matter where they’re located. They have established processes and relationships with local banks to navigate different banking systems efficiently. EORs also handle mandated payslip documentation unique to each country, ensuring that each employee receives the necessary payslips on time. This reliability enhances employee satisfaction and trust in your organisation.
The Challenge: Paying employees globally means handling multiple currencies and their unpredictable swings. Let’s say you’re a UK-based company and you budget £1 million GBP to pay employees in Germany and France, only to have the Euro suddenly spike and inflate your actual costs. At these levels, even tiny exchange rate fluctuations can have outsized impacts on payroll expenses from month to month. These currency volatilities make forecasting incredibly difficult and strain financial planning.
How EORs Overcome It: At Boundless, we pay employees seamlessly in local currencies, handling all foreign exchange and international payment complexities behind the scenes. We also absorb short-term exchange rate fluctuations between invoice payment and employee salary distribution, always relying on midmarket exchange rates. This prevents unexpected budget surprises from intra-month currency swings.
The Challenge: Year-end means payroll teams need to tackle complex tax calculations and filings that vary across every country. This includes accurately quantifying income tax and social security liabilities, submitting documentation to tax authorities, and it can also mean providing employees with records for their personal declarations.
Miscues like missed deadlines can bring late filing penalties and harm workforce trust if employees don’t receive their tax documents on time. Yet individual country nuances make accurately closing up end-of-year activities exceptionally tricky. In fact, many countries have unique tax years that are not aligned with the calendar year. For example, the UK’s tax year runs from 6th of April to the 5th of April, and from the 1st of July to the 30th of June in Australia.
How EORs Overcome It: EORs handle all aspects of year-end tax calculations and reporting. They ensure that all activities—such as calculating taxes, reporting to authorities, and providing tax statements to employees—are completed accurately and on time. Their expertise in local tax laws minimises the risk of errors and penalties, and gives employees the information they need to complete their tax declarations, fostering a sense of security and compliance.
The Challenge: On top of payroll, providing suitable benefits that align to local regulations gets complex fast as your company expands globally. In the UK, pension auto-enrollment rules require you to assess employees for eligibility and facilitate their entry at specific milestones. In Singapore, employers must provide healthcare to all Singaporean citizens. If you have employees in Canada, you need to provide employment insurance to all employees.
As a result, it’s no real surprise that few companies can manage localised benefits seamlessly across multiple countries. Understanding requirements, integrating with providers, facilitating payments, and tax reporting are all time-consuming and challenging tasks. It's easy for things to slip through the cracks when you self-manage, opening up compliance risks.
How EORs Overcome It: A key value EORs provide is taking on your global benefits management, country by country. EORs handle everything from enrolling eligible employees into mandatory programs to understanding and organising the disbursement of non-mandatory benefits that have become local norms that would be expected by talent.
For example, most employers in Portugal provide a meal allowance to employees as a voluntary benefit to help with meal costs during working hours. This holistic support ensures you stay compliant and competitive as teams grow globally.
The Challenge: When employees have payroll questions, they expect prompt, accurate answers from someone familiar with local policies. Without in-house local expertise, providing thoughtful responses becomes time-consuming. In some cases, you may even need to consult expert help from local payroll providers or even lawyers to ensure you are giving correct information. Remember, even well-intentioned guesses can misguide employees and cause significant issues (in terms of compliance and employee experience).
Yet the alternative - diverting HR and finance teams to resolve individual inquiries - hampers productivity. This leaves companies expanding globally in a tough spot, unable to deliver the responsive payroll support that talent expects.
How EORs Overcome It: EORs serve as your international workforce's local payroll experts. If needed, they can become the primary point of contact for all questions related to pay, taxes, deductions, and benefits policies for global remote employees.
With an in-depth understanding of regional payroll nuances, well-equipped EOR teams provide employees with swift, reliable guidance. This prevents misinformation and shows the internationally dispersed teams you are invested in their well-being.
As leaders in payroll and finance, you likely never expected to become experts in deciphering compliance rules across continents or masters in delivering multi-currency payslips worldwide. Yet these operational distractions inevitably pile up as companies expand, demanding more internal bandwidth.
Valuable time gets rerouted from progressing financial strategies to fighting daily administrative fires and answering repetitive employee questions. And with limited in-house global payroll expertise, the risk of missteps increases, causing even more pressure.
With Boundless as your partner, you can hand over localised payroll duties and compliance monitoring. This clears room for the initiatives that matter most: streamlining systems, forecasting more reliably, and doubling down on employee satisfaction.
You drive the strategy - we de-risk the hiring and employment part.
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