International Global Payroll

The remote work revolution has led many companies to hire new talent across the globe. For HR, this has introduced a series of challenges, especially when it comes to international global payroll.

When companies based in one country want to start hiring talent in another one, they must learn how to navigate local labor, payroll, and tax laws in order to remain compliant. To make payroll more complicated, each country has local state and provincial laws that must be followed as well.

Here’s a look at everything you need to know about international global payroll services.

What is international global payroll?

Your HR management team is an expert in your country’s local labor laws, but that isn’t enough when it comes to managing global payroll. As you hire across borders, you will need to pay employees and freelancers in different currencies, manage benefits and payroll taxes across borders, onboard employees seamlessly, and terminate an employee compliantly.

Why is navigating international global payroll and HR so challenging?

For companies looking to grow their business and hire top talent, going global makes sense. However, setting up payroll processes in a new country can be a daunting task.

You will need to hire an in-house HR unit or third-party payroll team and build out new processes. You will need to put strategies in place for working around different time zones.

When it comes to paying your workforce, it’s essential to understand what currency they need to be paid in, and whether or not you can legally quote them a US salary if they are living abroad.

If your business or company runs into a mishap while managing payroll and HR abroad, such as missed payments or non-compliant labor practices, you might face steep fines, lengthy and costly lawsuits, and, in the worst case scenario, a suspension or ban on doing business in the new county.

In addition to navigating the technical side of payroll, you will also be responsible for clearly communicating processes to new employees, whose first language might not be English.

What is an international payroll solutions provider?

An international payroll solutions provider is usually a PEO or EOR (employer of record) services like Via that provides services for onboarding employees, managing benefits and salary, and sending payments in local currencies. The best international payroll solutions providers offer robust employee contracts that are personally tailored to each country, so that your business or company can safeguard its intellectual property as well.

With a international payroll solutions service like Via, you receive the following support:

• All-in-one platform for managing and paying your workforce in multiple countries

• Employee/employer contracts

• Benefits management

• Local legal experts

• Payroll taxes and deductions

• Payments to employees and/or contractor

• Work visa/work permit support, sponsored by the employer

• Access to an established entity

• Building compensation and benefits packages

• Sick pay

• Holiday pay

• Bonus pay

• Other HR processes

• Other employer-based benefits

With the right international payroll solutions partner in place, you can better monitor how your employees are paid and make the process of running payroll across borders predictable and seamless.

International payroll taxes

If you do not set up international payroll correctly, you will miss key payroll tax deductions, which can lead to non-compliance and heavy legal penalties. Each country has different deductions for each payroll tax, so hiring local HR experts can help to alleviate risks.

Payroll taxes generally cover social security, pension, basic healthcare, and other state-mandated benefits.

Localized payroll for global companies

Offering hyper-local payroll services is challenging, especially if a company does not have on-the-ground accounting, HR, and legal experts. In an ideal world, workers in each country should be paid as if they were working for a local employer. This means your team in Mexico will have different experience with payroll than your team in Canada. For this reason, even companies with a foreign entity might choose to outsource their payroll to a local provider who can ensure compliance every step of the way.

International contractor payments

Many companies choose to onboard foreign workers as contractors to simplify payroll, but this isn't always the best idea. Sending contractor payments across borders can be complicated, especially since international payments can be subject to hidden fees, poor exchange rates, and delays.

If your international global payroll provider has local infrastructure, such as a bank account in the country where your contractors live, making contractor payments becomes much simpler. Via offers both end-to-end employment solutions for full-time employees, as well as international contractor payment solutions.

Before deciding to send contractor payments, make sure that your workers are properly classified. Misclassifying full-time employees as contractors can lead to fines, lawsuits, and more.

Opening an entity vs. partnering with a PEO/EOR services for payroll

Maybe you’re hiring one employee in Canada and another in Ireland. Or perhaps you want to hire a whole team of marketers in Colombia. Either way, needing to establish payroll in each country where you operate can slow down business growth.

Businesses looking to offer employees competitive in-country salaries and benefits while remaining compliant have two options. They can take on the responsibility of opening their own entity in the country, which takes months, costs thousands of dollars, and requires a significant amount of research into local payroll regulations. Or they can run payroll by partnering with an EOR services provider like Via, who owns an entity in the target country.

The challenges of opening an entity

If you decide to build your company’s HR team in house to run payroll, you will need to open an entity. This time-consuming process can lead to headaches. Your company will need to establish a permanent address in the target country, open foreign bank accounts, register with public institutions like social security, and navigate provincial and state payroll laws.

Missing a deduction or misclassifying a full-time employee can lead to steep consequences. Paying your workforce across borders can be quite a complicated task as well, especially if you do not have payroll up and running in the country. Depending on the size, wire transfers and other methods of moving money from one country to another can take longer than expected. Plus, you’ll be working in a currency that might be less stable than one you’re used to, which can lead to difficulties forecasting finances for the next year, or even quarter.

Building an HR and payroll team also means that, as an employer, you will be responsible for understanding the country’s unique culture, including holidays, language, values, and sudden changes in the country’s labor laws. For instance, bonuses are optional in countries like the US and Canada, whereas a 13th-month salary is required for countries like Colombia, Mexico, and the Philippines.

If you’re hiring employees in multiple countries, opening an entity and navigating the nuances of local labor and payroll laws can quickly become unsustainable, especially without a local HR team in place.

EOR

If you’re looking to hire talent seamlessly and quickly–in days as opposed to months or weeks–partnering with an EOR services provider like Via can expedite the process and allow you to onboard employees without setting up payroll yourself. By working with Via, you will not need to open an entity or navigate the nuances of local labor and tax laws. Our in-country legal experts ensure that every step of the employee lifecycle–from onboarding to offboarding–is managed compliantly.

With Via, you can start with as few as 1 employee and scale up at your convenience. If you’re sourcing candidates from across multiple countries, partnering with an EOR will save you the time and effort of opening entities across the globe.

PEO

If your company already has a significant presence in the target country and plans to expand further, they might already have an established entity or be planning to establish one. In this case, a localized payroll service such as a PEO might make sense.

With a PEO, your company enters into a co-employment relationship, which means that the international global payroll provider handles administering benefits and making payments, while your business is on the hook for maintaining compliance with in-country employment laws and regulations. Businesses that choose this option will need to local support for HR, legal, and accounting

Choosing the right international payroll services provider

When choosing the right international payroll services provider, you will run across two different types of services: international payroll providers that outsource services to other organizations or international payroll providers that maintain control of their entire entity.

Outsourcing payroll to in-country third-parties

Many global employment solution providers don’t manage payroll, benefits, compliance, and taxes themselves. They actually hand these processes off to third-party providers in their home country, which can lead to mis-communication among every employee navigating local HR processes. It also puts you more at risk for issues relating to compliance and intellectual property.

If your international payroll solutions provider is outsourcing most or all of its services, they will not be able to help you if something goes wrong.

Full-service EOR

EOR services like Via own their entities, which means they provide full-service solutions for payroll, benefits, and compliance in the countries where you’re hiring new employees. With this approach, the international payroll solutions provider does not need to outsource their services. Employees tend to like this approach more, since they are quickly able to get all of the answers they need in one place.

In addition to understanding the nuts and bolts of payroll, your company’s on-the-ground team should help you overcome communication barriers and cultural differences. Communication styles, especially in the workplace, vary greatly from country to country. Having in-country experts helps to ensure that you’re both managing expectations and the emotional side of administering benefits.

By sticking to one international payroll solution provider, you can keep your global HR team agile and reduce unnecessary tech debt.

What are the advantages of partnering with an international payroll solution provider?

In most cases, partnering with an international payroll solutions provider has more advantages than disadvantages.

Increase productivity. 

By letting local experts navigate the red tape, your team and company can focus on what matters most: running your business, building products, and delivering services to customers.

Keep your workforce happy. 

When employees receive the right benefits and are paid on time, they are more likely to stick around. Payroll shouldn’t be what’s holding your business back.

Manage employees from multiple countries in one platform. 

By partnering with an EOR like Via for payroll and benefits management, you can keep track of employees and contractors from over 140 countries–all in one location.

International payroll solutions and data management regulations

Finally, you’ll also want to make sure that your international payroll service provider is compliant with data regulations like GDPR in Europe.

FAQ 

What is global payroll?

Global payroll is the process of managing HR processes, payroll, benefits management, and compliances for all employees across the globe in one centralized place. From small startups to major corporations, businesses of all sizes end up paying full-time employees and contractors in different countries.

How do you do international payroll?

If you want to build out your international payroll, there are a few different approaches.

• Open an entity in each country where you have employees

• Partner with an EOR services provider like Via to pay your employees and administer benefits.

What is a global payroll solution?

Your global payroll solution is more than just a platform. It is a strategic partner that helps your business administer HR benefits, onboard new talent, pay your entire workforce in their local currency, and maintain compliance across borders.

What is multi-country payroll outsourcing?

Multi-country payroll outsourcing is the practice of payroll management for employees in multiple countries on one platform. With Via, you can pay contractors and employees in over 100 countries, all on the same platform.