Global payroll – a realisable or risible goal?
Jo Victoria Russell, freelance writer, explores the current landscape of global payroll and the challenges that employers potentially face when taking their payroll policies and practices on an international level
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aying a global workforce in a timely, accurate and compliant manner is no easy feat – the complexities of international payroll are daunting for a business of any size. But with an increasing number of organisations expanding their operations abroad, having to implement and manage a global payroll solution is now commonplace for many businesses.
Current state of play Today’s international payroll landscape is a medley of various payroll solutions, from organisations using separate local in-country providers in each territory (where payroll coordination and reporting is managed in-house) through to those who have fully outsourced both their payroll management and operations to a third party provider. Lee Hamilton, Director of International Mobility Services at Crowe Clark Whitehill LLP, elaborated: “In my experience, there is no single ‘right solution’. For some companies with dedicated in-house payroll expertise, using separate providers in each international
location is viewed as a ‘tried and tested’ solution that achieves the organisation’s objectives. For others, managing many different payroll providers or even managing payroll in-house over several overseas locations is a constant struggle and leads to many issues such as compliance failures and lack of adequate reporting.”
Outsourcing a global payroll solution to an established payroll provider is also a viable option that a growing number of organisations are employing. Jeremy Levene, Head of Marketing at Ceridian, argues that there is a growing trend to move away from running payroll in-house over a number of locations. He believes that outsourcing a solution is a more cost-effective option unless the company is a very large employer with thousands of employees in each country and running it in-house is more scalable. Jeremy identifies a number of drawbacks to running payroll in-house in a variety of geographical locations, the main one being expense. He highlights the
...HIGHLIGHTS THE IMPORTANCE OF HAVING THE RIGHT PERSONNEL WHO HAVE KNOWLEDGE OF LEGISLATION IN EACH COUNTRY...
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importance of having the right personnel who have knowledge of legislation in each country (either centrally in one location or in each location) and the technology (either one that has the functionality to pay employees in each country or separate solutions for each country that need to react to the pace of expansion) – both of which can be very costly.
He continued: “Outsourcing will mean you do not need to employ resources to run the payroll for each country, you do not need to invest in the technology and you remove the risk of having to be compliant by meeting the legislation in each country; as this varies from country to country. In addition, you do not need to scale to match the company’s growth plans as you can leave that to the outsourced vendor.” With a number of various options to choose from, one would think that organisations could easily find a global payroll solution to best suit their needs. But with the plethora of choices come a number of challenges, which will be different for every company in each of the various jurisdictions they operate in.
Challenges facing global payroll Unfortunately, it seems that one of the main challenges facing global payroll today is apathy. An insightful survey published in April 2013 by Ernst & Young titled Global Payroll: Myth or reality? investigated the
technical
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