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- Entity Set-up: With a divestiture, new entities need to be created in each country; therefore if the entity is not set-up yet, payroll can be delayed.
- Benefit Changes: When new entities are created, they may have smaller populations than the parent company and therefore may have difficulty replicating current benefit structures. If the benefits are not accepted by the employees, payroll launches can be delayed. There is special sensitivity to benefit changes in Europe.
- Registration of Tax and Social Programs: Once an entity is established, it needs to be registered for tax and local social programs. Sometimes this can be a lengthy process which may delay a payroll launch or cause penalties.
- Payroll Harmonization: At the time of divestiture, there is an opportunity to harmonize payroll processes and pay dates across multiple entities and countries. Celergo helped this client to determine best pay dates internationally and encouraged the use of standardized payroll processes from the initial payroll delivery.
- New Time Reporting and HR Systems: Often new technologies for time reporting and HR are deployed to support the new organization. These launches are also under extreme time pressure and often are working with the same limited resources as the payroll launch team. Interfaces need to be reviewed from a time and cost benefit perspective to determine which ones are necessary and which can be delayed until a later date.
Celergo helped this client determine what steps needed to happen to ensure a quality payroll transition. Celergo’s expertise with divestitures significantly helps clients through this process as each country has its unique issues and each divestiture has its own challenges.
A technology company was rapidly expanding internationally and selected Celergo to help launch payrolls in each new country it entered. In most cases, the location was a Greenfield operation and required full payroll set-up from company registration as a payroll entity, to social insurance registration, to full payroll processing.
Greenfields have different challenges than acquisitions or divestitures. This company was faced with finding and managing employees in each new market with limited Human Resource expertise. Celergo was able to support this client by providing the local payroll expertise including understanding new hire forms and paperwork requirements, local employee social insurance registrations, education on statutory withholdings and local compliance requirements, and disbursement advice and support.
By partnering with Celergo, the client was able to reduce their start-up time and improve their compliance in new locations. The client advised with the Celergo team regarding the new countries to be launched, and Celergo helped the client determine if there were any potential roadblocks from a payroll perspective to hiring initial employees. Typical challenges included legal entity and bank account requirements by some countries, social registrations for the company and benefits set-up. Celergo works hand-in-hand with this company to provide worldwide payroll expertise as it continues to expand internationally.
Expatriate payroll administration is a nightmare for most companies. A manufacturer selected Celergo to manage its expatriate workforce to improve compliance while reducing complexity, and to provide understandable pay slips to its expatriate employees. Celergo utilizes a technique to separate tax payrolls at both the home and the host locations from the cash compensation received by the expatriates. This unique set-up allows Celergo to manage all the inputs to expatriate compensation including interfaces from benefit providers, relocation providers, internal accounting, and human resources to build up the expatriate compensation packages for delivery and to calculate the applicable taxes in the home and host locations.
Expatriate compensation packages may require cash delivery in the home, host or in both locations. Celergo creates online pay slips for these employees which match the amounts delivered by Celergo in the various currencies and bank accounts worldwide. For this client, Celergo managed the compensation calculations and delivered split payments to employees in multiple jurisdictions and currencies.
After the expatriate cash payrolls are completed, additional income data, such as expenses paid on behalf of the expatriates, is sorted for host tax calculation. Celergo manages the host tax calculation process to ensure the appropriate information is included and the host taxes generated are captured for home reporting. These host taxes are then included in the home tax calculation for countries which tax on worldwide income. By managing these payrolls in the proper sequence, data is captured properly and taxes are calculated on an efficient and timely basis, which almost completely eliminates the need for the year-end scramble!
By employing this unique approach to expatriate payroll, the client increased its compliance, improved its data integrity and consolidated all its expatriate payroll data to support worldwide income tax reporting.