When a company’s growth strategy includes expanding into new countries, one ofthe most essential business functions to take into account is international payroll. Becauseno matter where in the world an organization grows, employees must bepaid—accurately, promptly and compliantly.

Even if payroll is a well-oiled machine in U.S. operations, it’s important toremember that paying workers across borders is a far from simple operation.Extra care must be taken when going global to consider diverse currencies,languages, customs, legal requirements and data privacy regulations.

How can U.S.-based companies adapt their payroll strategies for amultinational workforce? It starts by keeping the following three insights inmind.

Compliance complications multiply

The first and probably most important difference between U.S. andmultinational payroll is how much more complex compliance becomes. Moreemployees in more countries means exponentially more regulations to followregarding taxes and withholdings, reporting and benefits.

The countries where a company does business affect the number of data itemsper employee that must be recorded and reported to local governments for taxpurposes. European and South American countries are often the most complex,with an average of 35 data items per employee that must be reported.

In addition to the current laws and nuances specific to each country,organizations also must be able to keep on top of any changes or legislationthat can affect employee data. One big example is GDPR, the European Union’ssweeping General Data Protection Regulations, which went into effect in May2018. Although most of the fanfare focused on the customer and vendor data,the legislation has a big impact on employee data —even forcompanies that don’t necessarily have an EU location. If a company hasemployees in the EU, even if they aren’t EU citizens, there could be fines forGDPR noncompliance.

Currency and pay frequency matter

Multinational companies must also consider how payroll is affected by currencyand pay frequency requirements in each of the countries where they dobusiness.

In many countries around the world, it’s required that employees be paid intheir local currency. For global companies, this means managing how the moneyis moved across banks, borders and time zones, and then converted to localcurrency. The currency conversion not only has to be accurate, it also has tobe prompt, so that all employees get paid on time. And this elaborate processhas to be replicated in every country where a company has an entity andemployees.

Just as important as what currency employees are paid is what cadence they arepaid. Some countries, whether by law or custom, have more frequent payintervals. France and Italy, for example, have the most frequent pay runs,with an average of 4.11 and 3 per month, respectively.

Transparency becomes even more crucial

With employees around the world, and myriad payroll systems to match,visibility into each country and understanding of payroll operation becomesessential. It’s likely that as people process payroll data in each of thecountries a company does business, they’re doing so in various languages.

Transparency across the entire payroll organization helps give multinationalcompanies insight into:

• Who’s being paid, and where
• How much and how frequently employees are paid
• Whether legal regulations and cultural norms are being followed
• What additional actions need to be taken to ensure compliance

The vast number of differences involved in multinational payroll often makesthe case for many businesses to outsource payroll. Though the services offeredcan vary by solution, they usually involve some or all payroll operationsbeing managed by a local, regional or global provider.

At Safeguard Global, our Global Managed Payroll solution combines innovativetechnology with human expertise on a local level—in virtually every corner ofthe world. So if a company is lacking expertise in a particular country whereit has expanded, or has limited or no staff to manage payroll there, withGlobal Managed Payroll, it can rest easy knowing that payroll is compliant,timely and accurate. Additionally, it gains a deeper understanding of itspayroll operation as a whole. Contact us today to speak with a globalpayroll expert.