As the COVID-19 pandemic swept the world in 2020, the number of companies hiring remote workers increased as employers looked for ways to cope with the global economic crisis. Today, remote work is the new normal, with 16% of businesses globally working entirely remotely.
Despite the popularity of remote work, it comes with some challenges, especially if you’re hiring internationally. A major challenge is international payroll as you will be dealing with people from different countries and under different currencies, labor laws and tax regulations.
International Payroll Processing
International payroll refers to all your company’s measures to pay employees abroad. International payroll allows your company to keep your employees happy and content when done right. It is also a compliance requirement in many countries.
While international payroll mainly revolves around payments, it also touches on other aspects such as:
- Ensuring correct deductions (student loans, life insurance premiums, mandatory union dues, etc.)
- Compliance with wage and working time regulations when hiring abroad
- Withholding of income and wage taxes, if any
- Submit wage and income taxes to the relevant authorities
- Keep accurate records of all payments
How to Process International Payroll Efficiently
While it is possible to process payroll for multiple employees in-house, the process becomes more complex as the workforce grows. Below are some options you can use for international payroll.
Determine what kind of payroll help you need.
Your global payroll options depend on whether you own a business in the country where you want to employ someone. If you don’t own a business, you need comprehensive global recruitment services from a company like Remote. If you own a business, localized payroll services are your best bet. Most global employment solutions companies can offer both.
Be careful about worker misclassification.
If you pay someone to be a contractor, but by law that person is an employee, you are putting your business at significant risk. This contractor may be able to sue your company for back wages, benefits, and more. It’s bad enough being dragged into court at home, but it gets even harder when the disagreement takes place abroad. Familiarize yourself with local labor laws and follow them closely. If you don’t have your own business, make sure your global payroll provider has the legal expertise to protect your business.
Make your salaries competitive.
Defining compensation for remote workers isn’t easy. Do you all pay the same or are your offers based on the cost of living at the applicant’s place of residence? Different companies have different answers to this question. Your global payroll provider can help you create competitive offers for different regions, but ultimately it’s up to you to decide what your compensation philosophy should be.
Keep your IP and invention rights close.
Just as each country has its own laws on payroll and employee classification, each country has its own laws on intellectual property rights and invention rights. In some cases, you could inadvertently lose your intellectual property if you don’t write an employment contract correctly. Global payroll providers that rely on third parties instead of owning their own businesses are passing your intellectual property from one place to another, exposing your business to unnecessary risk. No matter where you hire, protect your intellectual property by working with the right global payroll solution and structuring your employment contracts properly.
