With global payroll, compliance is not optional. It’s mandatory.
Making sure your internal payroll operations - and those of any global payroll service providers you partner with - are fully compliant with all relevant legislation not only ensures smooth processing, but it’s an insurance policy against costly mistakes that arise from non-compliance.
And these mistakes can be costly for your employees as well as your organisation, so it’s especially important that you do things right.
This article introduces some compliance best practices to help your organisation keep up to speed, and to avoid common mistakes.
Why you Should Stay Compliant with your Payroll
Businesses always practice due diligence when expanding their operations, to ensure that planned changes are sensible, feasible, and sustainable. Monitoring developments and ensuring compliance with relevant changes in legislation and tax policy carries the same benefits. It is sensible and keeps your ongoing business practices sustainable.
In real terms, ongoing compliance carries myriad benefits. To name but a few -
- It allows for prompt and complete payment of your employees around the world.
- It ensures correct deductions in line with tax and employment law, meaning no mistakes in your payslips and no lengthy resolutions required to fix issues.
- It gives you peace of mind. Knowing that your business is compliant removes the niggling doubt at the back of your mind that something might go wrong.
While maintaining compliance involves work to achieve, the benefits more than outweigh the cost.
One of the most vulnerable times for encountering issues with compliance is during the transition from domestic to international payroll systems. This scaling-up of operations, and the act of doing so across borders and jurisdictions, carries a previously-unprecedented series of challenges for an organisation.
Tips For Compliance And Payroll Best Practices
With challenges present throughout the payroll process, especially in an international context, building awareness of, and adhering closely to best practice is vitally important.
1. Keep up to date with relevant legislation
If you keep things in-house, invest the required time and resource in keeping your team’s skills in top condition. This means everything from reading industry publications to acquiring formal qualifications and credentials to validate their expertise.
Slipping behind developments in the legislative landscape is a recipe for failure, regardless of whether this occurs domestically or internationally. It’s easy to become non-compliant with laws your processes formerly complied with if you don’t keep internal knowledge and systems in line.
2. Keep good records
Good record-keeping is essential.
For employee records, every piece of information needs to be up to date. That means role, pay level, address, identifying information, and more. Accurate and complete data is the foundation of effective payroll, and keeping on top of this nips many potential issues in the bud.
Also, audit trails should be kept to ensure your wider accounts are accurate and accountable. Audit trails involve the linking of transactions with relevant documentation to give context and offer validation if an auditor ever asks to take a look at your processes.
3. Process all changes correctly
Things change. An employee might move house within the same tax jurisdiction, or they may move abroad to work for your organisation in a different country.
Whatever the change in data, process them correctly. This ties into the point above: Good records are built on accurate data.
When a change requires amendments to your payroll processes, it’s especially important that it’s recorded properly. Considering the potential fallout from dragging your heels in updating records - however small the change - it’s not worth the risk.
4. Observe data security laws
The storage, use, and transfer of data pertaining to employees is placed under increasingly strict and complex data protection legislation, and the penalties for flouting such laws can be enormous.
Don’t fall into the trap of thinking that your internal systems that knowingly violate data protection won’t be noticed. Instead, invest time in ensuring that such protection is present at every level of your internal processes.
Also be aware that with international payroll, things become even more complex. With the high likelihood that you’ll be transferring data abroad, and potentially storing data about individuals on servers outside their home countries, you need to ensure full and mutual compliance at every step.
5. Set clear expectations
Your employees should know which responsibilities fall at their feet, along with the potential issues that could arise from failure to meet them. Mutual respect and clearly communicated internal policies can prevent a surprising number of issues from ever arising at all.
This point refers to everything from when your employees must submit timesheets, to how formal grievances must be raised and resolved.
6. Ask for feedback
There doesn’t have to be an ‘us and them’ dynamic between an organisation and its employees. While communication between payroll and the staff on the ground may not be famously exciting, there is merit to mutual exchange of information and opinion.
By asking your employees for feedback on your organisation’s payroll processes, you stand to gain insights from the people most affected by them. You’ll likely be made aware of issues you didn’t know about, and you may find that the conversation leads to sweeping improvements in how things are done.
7. Be timely
Although this tip is seventh in our list, we’re tempted to say it’s one of the most important. Paying your staff on time, in full, every time is the heart of a positive and respectful professional relationship. And although this may not feel directly related to issues of compliance, the problems arising from non-compliance can quickly engulf internal resources and put new hurdles between you, your employer, and their paycheck.
Striving to remain timely with payroll processing is a good motivator for ensuring ongoing compliance.
8. Work with the experts
Perhaps the best practice in ensuring full compliance across the board with your global payroll, we recommend partnering with a specialist global payroll company.
Tapping into the infrastructure, systems, and expertise of a specialised agency removes many administrative burdens from your organisation. Instead of investing large amounts of time and cash into upskilling your in-house team in an ever-evolving legal landscape, you can retain the services of experts whose careers rely on building and maintaining this expertise.
Outsourcing covers many of the tips in this list at a stroke, and is definitely a worthwhile consideration for organisations operating - or soon to be operating - internationally.
Maintaining compliance with the tax and employment legislation that affects your business, wherever it operates, is an essential part of ensuring the ongoing strength and success of your organisation.
In international payroll, where your operations are subject to multiple and ever-changing legal jurisdictions, observing compliance becomes that much more difficult.
Avoid the trap of considering compliance optional, or thinking that you can get away with flouting the rules unnoticed. Such a brazen business decision is not worth the risk.
Instead, build effective and compliant payroll systems - or work with an external global payroll services company who can build, implement, and manage such systems for you.
Compliant international payroll sits at the heart of international business operations, so make sure to get it right.