You don’t have to be an enterprise company to employ a global team. In 2021, any business can hire anyone in the world. But how do companies manage global payroll for their international teams?
Global payroll isn’t just about ensuring employees receive their paychecks on time (although it is that, too). At a high level, your global payroll solution insulates your business from the risks that come with international employment while providing a great experience for your employees.
Not all global payroll providers are built the same, of course. Companies without experience managing global teams can easily end up paying too much for a third party to manage functions like compliance, taxes, and benefits administration. Even savvy employers can get caught in a bad situation by working with a global payroll provider that outsources its services to a third party.
Global payroll is a valuable strategic asset, not an administrative checkbox. Treat it like one, and you risk letting all your competitors retain the best talent. Additionally, if you don’t get your global payroll house in order, you could end up on the wrong side of employment law in a foreign country.
Manage your global payroll more effectively by following these helpful tips:
Determine what kind of payroll help you need.
Your global payroll options vary depending on whether you own an entity in the country where you want to employ someone. If you do not own an entity, you will need full global employment services from a company like Remote. If you do own an entity, localized payroll services are your best bet. Most global employment solutions companies can provide both. No matter what your situation, always choose a global payroll provider that owns an entity in the country over one that outsources to third parties.
Put your employees first.
Do you want your employees to feel like outcasts or like real members of your team? How you treat your global payroll tells your employees a lot about how you feel about them. Late checks, incorrect payment amounts, insecure transactions, mishandled taxes, and other problems can easily sour your relationships with your team members. Evaluate your options for providers based on whether they prioritize your employees’ well-being.
Be careful about worker misclassification.
When you pay someone as a contractor, but that person is actually an employee by law, you put your company in significant danger. That contractor might be able to sue your company for back wages, benefits, and more. It’s bad enough to get dragged into court in your home country, but it becomes even harder when the disagreement happens overseas. Understand the local labor laws and stick to them closely. If you don’t have your own entity, make sure your global payroll provider has the necessary legal expertise to protect your business.
Make your salaries competitive.
Defining compensation for remote employees isn’t easy. Do you pay everyone the same, or do you vary your offers based on the cost of living where the applicant lives? Different companies have different answers to this question. Your global payroll provider can help you come up with competitive offers for different regions, but it’s ultimately up to you to decide what your compensation philosophy should be.
Create an entity only if you really need one.
Opening a new entity in a foreign country is extremely difficult. You need thousands of dollars, months of time to prepare, relationships with local legal counsel, and a solid understanding of the bureaucracy where you want to do business. That said, it may be worth it to open your own entity if you intend to establish a long-term, multi-employee presence in the country. In either case, your global payroll provider can help you employ workers in the short term while you weigh your options, then provide long-term guidance if you’re ready to take the next step.
Keep your IP and invention rights close.
Just as every country has its own laws regarding payroll and worker classification, every country has its own laws on IP and invention rights. In some cases, you could accidentally lose your IP if you do not write an employment contract correctly. Global payroll providers that rely on third parties instead of owning their own entities pass your IP from one place to another, exposing your company to unnecessary risk. No matter where you hire, keep your IP protected by working with the right global payroll solution and structuring your employment contracts correctly.
Are you ready to pay and manage your global team? With these tips and the right provider at your side, you have everything you need to get started. Check out the Global Workforce Revolution Report to learn more about what’s happening in the world of international employment.
