We know the future of work is global. But managing global talent isn’t always easy — and neither is global payroll operations.
From unexpected tax regulations to complex labor laws, companies will face plenty of compliance obstacles during expansion. It’s important to know how to navigate the challenges of international payroll before hiring in new markets.
Let’s explore how companies can partner with a reliable Employer of Record (EOR) to run global payroll.
What are the top 5 global payroll challenges for your business?
Payroll affects everyone at a company, but only 15% of organizations identify their payroll strategy as highly critical. Yet, with a strong payroll software management system in place, you can simplify your global growth journey.
Let’s explore the five most common payroll challenges companies face — and how to solve them.
| Global Payroll Challenge | EOR Payroll Solution |
| Understanding local tax laws and regulations | Pay close attention to minimum wage increases and contribution rate changes |
| Incorrect worker classification | Customize contracts based on worker type |
| Establishing policies to protect data | Pick a payroll partner with a valid security accreditation |
| Providing benefits to employees | Leverage an EOR partner to tailor benefits plans to each country |
| Ensuring accurate payroll and currency | Automate payments with one global partner |
1. Understanding local tax laws and regulations
Every country enforces specific requirements to pay international employees compliantly. When running payroll across countries, a few key differences include:
- Overtime pay.
- Social security and healthcare contributions.
- Tax regulations.
- Statutory minimums for sick time and/or paid time off.
- Unemployment and/or employee severance benefits.
- Employee vs. independent contractor classification.
Local payroll teams need to follow tax payment rules to compensate employees correctly in each country. To ensure compliance, HR teams must stay updated on any policy changes set by international governments in real time.
Pay close attention to minimum wage increases, worker classification rules, and contribution rate changes.
Maintaining compliance with new and evolving labor laws isn’t easy. But G-P can help. Pay your team with confidence anywhere in the world — our legal team keeps up with country-specific labor laws so you can grow swiftly and compliantly.
2. Avoiding incorrect worker classification
HR teams must know the differences between worker types, including independent contractors vs. full-time employees. It is illegal to treat individuals as independent contractors while they act as full-time employees.
If you treat your contractor as an employee, legal documents that state the contrary will not have any validation. Independent contractor misclassification can also trigger potential corporate tax issues. Make sure you classify your workers properly to mitigate risk, avoid fines, and maintain compliance on an international scale.
3. Establishing policies to protect data
Employee payroll information is very sensitive and requires strong data protection measures. You may be familiar with data security regulations in your home country. However, running global payroll means having to comply with data legislations in different locations. For example, Europe adheres to the GDPR while the PDPA applies in Singapore.
Some companies lack the resources to build out an internal legal team to track evolving data privacy laws. Consider working with a vetted global payroll partner with the highest compliance and security standards. Pay close attention to risk profiles, app security training, and other encryption-related certifications.
A reliable partner like G-P can offer a centralized, global payroll system that meets data security requirements globally.
4. Providing benefits to employees
Companies must pay careful attention to the different statutory benefits in each global worker’s country. Pension requirements, sick leave, health insurance, and maternity leave can vary significantly country to country. For example, France funds a gratuity pension program by taxing a percentage of employee income.
HR, analytics, finance, and legal teams must be aligned on all relevant benefits including employee time off, bonuses, promotions, and severance to avoid payment inaccuracies.
5. Ensuring accurate payroll and currency
A smooth back-end experience is key to long-term employee retention. Be clear how you’re paying employees in different countries when scaling globally. Key factors such as location can influence currency used and relevant employment laws.
Inaccurate payroll due to human error can have legal and financial ramifications. Pay close attention to the exchange rate and make timely payments in the local time zone and currency. International exchange fees can also be an obstacle in different markets.
Having multiple payroll providers in different countries can be a challenge. The solution is to streamline with one global provider. As part of our G-P Meridian Suite™ of global employment products, G-P Meridian Contractor™ allows you to make fast payments to contractors in your choice of currency – so you can hire and pay anyone, anywhere, anytime.
Overcome global payroll challenges with a reliable Employer of Record (EOR) partner.
Global organizations need to be ready to overcome complexity, compliance, and consistency challenges from day one. With the right EOR partner in place, you can guarantee both team members and independent contractors are paid on time and error-free.
According to G-P’s 2023 Global Growth Report, leaders believe figuring out payroll and taxes is a top barrier to building global teams. To overcome legal hurdles and data privacy concerns, consider the following:
1. Partner with a global expert.
Paying employees quickly and accurately can be time-consuming, especially across time zones. Does your payroll team lack the resources to track regulation changes? Many companies partner with an expert like an EOR to ensure compliance. This is the best option to save time and learn from the expertise of a global guide.
A quality global payroll partner like G-P can guarantee on-time, error-free payroll with flexible payment options. Fund payroll in the manner you choose, pay in 150 currencies, and even add bonuses, commissions, and manage expenses in just a few clicks.
Our industry-leading Global Growth Platform™ streamlines global payroll and payments by partnering with best-in-class payroll leaders for the continued development of products and features.
2. Avoid misclassification errors.
With a reliable partner, you can pay your entire global workforce seamlessly on a single platform. With us, you can access multiple payroll reporting tools and insights all in one place. Plus, handle bulk payroll changes with G-P Meridian Prime™, our newest premium EOR package. Handle one-time bonuses, salary increases in bulk for multiple employees, and more.
You can rest assured that employment contracts issued through G-P will be locally compliant and enforceable. Our Employment Contract Generator allows companies to create customized employment contracts in minutes.
Easily customize contract templates depending on the worker classification status to get the contract that suits your needs. And with our equity payroll management feature, you can simplify the process of managing taxable events related to equity-based compensation.
3. Protect employee data from day one.
Security remains the most important element of global payroll. When handling data management challenges, pick a reliable payroll partner like G-P that is ISO, SOC2, and CCPA compliant.
G-P’s Global Growth Platform has been designed and built following the highest security and compliance standards in the industry — keeping all workforce data safe. Our testing, compliance, and privacy are constantly assessed.
Invest in added features that prevent unauthorized users from accessing data. For example, protect user login with multi-factor authentication (MFA). Then, secure access to all accounts with single sign-on (SSO) access.
G-P’s Global Growth Platform™ is designed following the highest security and compliance standards in the industry.
4. Streamline onboarding and benefits with an EOR partner.
Reduce the risk of payroll disruptions by picking a flexible solution with proven global payroll options . EORs handle benefits administration, including contributions to private health insurance and specific government programs like social security and workers compensation.
The best Employer of Record (EOR) providers help companies offer competitive benefits packages that improve the employee experience. With G-P’s support, you can offer benefits that align with country-specific labor laws and employee expectations. G-P makes it easy to build your benefits plan of choice in a matter of minutes.
5. Pay in local currency quickly and compliantly.
Determining payroll currency can be difficult. Accuracy and reliability — that’s what you need from mission-critical services like international payroll management. According to 2024 global talent trends, enhancing pay practices is a top priority for 41% of HR professionals this year. Our platform automates payroll with timely payments in 150 currencies.
With a reliable partner in place, you can pay contractors and full-time employees in the local currency. When you choose a global employment product like our G-P Meridian Prime™ EOR package, you can seamlessly manage payroll for your entire global workforce including biweekly pay, bonuses, and commissions.
Streamline your compliant global payroll system with G-P.
Don’t let payroll slow your plans for global success. We’ll handle the complexities of compliance and payroll, so you don’t have to. Our Global Growth Platform™ pairs compliant Employer of Record (EOR) products with best-in-class payroll and HCM solutions to ensure smooth business ventures anywhere in the world.
With us, it’s easier than ever to plan, hire, and manage global teams in 180+ countries, without setting up new entities. G-P takes care of the hard part, so you can focus on the best part — growing your business globally.
