First when beginning a global payroll project analyze your company’s payroll requirements such as pay frequency, pay dates, entities, employment contracts, compensation types, bonus practices, employee types, etc. Through understanding the consistencies, inconsistencies and volumes within your payroll requirements you will have a smoother transition process leading to reduced risk for pay errors post go-live.

Analyze the data quality of your employer and employee pay data within the countries you intend to move forward with. The more complete, accurate and accessible the data is the faster the project progresses. The more complete and accurate the data meets local payroll and tax requirements also provides for project success. Data examples that should be reviewed are: bank account(s) information; National ID; employment contract; work address; residence address, etc.

Pre-position dedicated project team members setting clear roles and responsibilities. Many times projects are supported by team members who already have full time jobs doing other tasks. So the addition of this project to an already full list of deliverables will create project risk. If fully dedicated project resource(s) is not an option, using a part-time project team member can be mitigated with clear and agreed to priority sets and timing. Supportive management for the team will be needed through the life of the project, making sure team members are set-up for success and see the project through to the end.

Proactively review your current level of tax compliance risk. Tax laws vary country to country and are open to interpretation. Project leadership will need to work with organizational leadership to assess the level of risk the organization is willing to take. The level of organizational risk aversion when compared to the current level of tax risk will drive how much work will be needed on current tax practices. Non-compliant tax practices may require lengthy jurisdictional interaction, require additional document refilling and could have a financial impact.

Engage the right level of company leadership to champion decisive decision making and priority setting. Within a project like this, it is inevitable that company policy and practice decisions will need to be made timely. Using appropriate project management disciplines such as a scope document, Issue Log, Risk Log, communication plan and a formal project plan will keep all key stakeholders involved as needed.

But is globalization of payroll the real answer or just the latest trend?

Let’s face it, at a minimum, payroll is required to meet local compliance and statutory requirements of cities, provinces, states, and/or countries. Few, if any, of these local statutory bodies have any interest in what is occurring outside of their local domain and even less with regard to multiple countries, regions or the entire world. Payroll rules, requirements, and remittances are dictated by local governing bodies and frequently change in accordance with local customary practices. Equally important, companies that are operating in these areas have a desire to assimilate to the local pay customs of their surrounding areas to attract and retain the best possible talent to remain competitive. Adopting payroll practices and nomenclature that are consistent with other local companies allow the biggest companies to “feel local” and ensures their local employees clearly comprehend their compensation structure.

So why does there continue to be so much momentum toward the globalization of payroll services? Transparency and control are two of the predominant driving forces. Let’s explore each of them further.

Transparency

Multi-national organizations are subjected to a broader array of legal and financial regulations than companies based in a single country. These broader obligations require compliance within the local areas in which they hire, retain, and pay employees. Failure to achieve compliance can result in highly visible penalties, fines, and even criminal prosecutions which also can lead to public embarrassment. Visibility and transparency by the corporate entity into the payroll activities occurring within each country provides multi-national organizations with greater comprehension on their risks and their ability to remain compliant with local requirements. In addition, transparency allows companies to comprehend how their payroll dollars are being applied differently across multiple geographies. Tracking items such as cost of headcount, employer related costs, social benefits, and supplemental payments allow the business to develop HR and payroll strategies that are globally and locally competitive which can motivate employee performance and improve employee retention.

Control

Multi-national companies also want to know that the proper controls exist within their local payroll practices and processes to ensure compliance and accuracy. Defining and managing global payroll standards and practices allow companies to establish more consistent controls over the end to end process of payroll activities thereby improving transparency, accuracy and quality. These types of controls and oversight reduce the risk that payroll activities are being conducted locally without proper division of authority and/or appropriate checks and balances. They also provide insight into areas in which payroll results may be negatively impacted by “upstream” factors such as completeness, timeliness and accuracy of payroll related data provided to the payroll team. This can include HR demographic information, internal subsystems that supply pay data such as commission or bonus feeds, and/or third party data feeds. By applying proper controls to these environments, the accuracy of payroll processing improves while the overall cost of processing is reduced. A “win-win” scenario for the employer and employees.

In summary, to develop an effective strategy to “think globally and pay locally”, multi-national companies are seeking more centralized oversight, transparency and control of the local payroll performance by developing global payroll standards and practices. These standards and practices are not designed to hinder the company’s ability to “pay locally” according to compliance or competitive standards in the respective country. But, they are designed to lower financial risks and improve accuracy while controlling costs more effectively.

These are things I keep in mind as an International Client Account Manager. The payroll services industry fosters a diverse business environment, not only from a geographic but also a psychographic perspective, so it is also of crucial importance to understand how to cater to the different of personality types you’ll encounter while working with clients as you seek to build solid relationships with other businesses. For example:

There is the fundamental type who clearly understands his goal and the vision he wants to achieve for his organization. These personalities are very concise and straight to the point. They want a solution to a problem without making a big fuss or long friendly conversation. It is not that they are rude they just want to get things done.

Then there is the communicative type, the larger than life kind of personality. This personality will capture your attention when they talk. Often times they like talking about themselves or ask me a question and relate it to them. They are fun people who value to be valued. Great optimism is usually a prodigious character trait displayed by these clients.

Moving on to the introverted type, these personalities’ love the numbers. They want to know every single statistic, every process detail and how it works. In other words they are very analytical. These clients will usually weigh their decisions very carefully and take their time before reaching a premature conclusion.

Lastly there is also the interpersonal type. These clients are genuine concerned with their business or relationships maintained with others. They can reflect a situation on the other party and sound very neutral to not offend anyone involved. They will not openly speak their mind but will tell me what they think if I ask.

There are more personality types out there than just the ones listed here but these are the main four and these can of course overlap. Understanding these personalities and how to interact with them is great way to foster a positive relationship and earning trust which can in turn lead to business generation.

But challenges in building interpersonal relationships do arise and there is often no easy way to handle them. So I apply the C.A.R.E principle which I can apply to any of the personality types my clients display.

Concentrate and listen to the person what they have to say, do not interrupt and let them finish.
Anticipate their needs from what they told you.
Repeat the information back to them and ask questions at this point.
Empathize with the situation and make sure, you will take care of the challenge.

With that in mind a challenge can be mastered in no time.

In conclusion all companies and payrolls are very unique. We at Celergo approach each and every client as such; companies are more than just a number to us. This focused approach has enabled me to understand challenges in an organization and optimize payrolls. After all a company is only as good as its people.

My last day at work was the day I went into labor; on June 17 2011, I gave birth to my beautiful son. Starting from the day of his birth, I was fortunate to take 10 weeks to spend 24 hours a day with him.  It was only when I became pregnant that I was educated on the maternity leave policy or lack thereof that exists in the United States.  I knew that by law an employer could allow me up to 12 weeks of unpaid leave before terminating my position.  This was the only provision guaranteed to me as a new mom (this even depends on the size of your employer).  I decided to take 10 weeks off because the thought of my inbox flooding with thousands of emails became a lingering nightmare.  My first day back at work was emotional to say the least.

Based on my own experience and out of curiosity, I spent 2012 looking into the Maternity/Parental leave policies of various countries around the world.  Below are examples of the durations of leave in various parts of the world:

France: The length of the maternity leave varies based on the number of children expected and the number of children already born. The typical paid leave (mother of two or less children expecting a single child) is 16 weeks, 6 before and 10 after the birth).

Netherlands: The entitlement to pregnancy and maternity leave is a minimum of 16 weeks paid.  You can take pregnancy leave from six weeks before the date the baby is due.  After giving birth you are always entitled to at least ten weeks’ maternity leave, even if the baby is born later than it was due.

Singapore: All female employees including expats who have served their employer for 3 months or longer are entitled to 16 weeks paid maternity leave under the Children Development Co-Savings Act provided the child is a Singapore Citizen; 4 weeks immediately before and 12 weeks immediately after delivery.

Poland: The duration of maternity leave depends on the number of children born at one time and equals: 20 weeks paid when one child is born; 31 paid weeks when twins are born, 33 paid weeks when triplets are born.

India: Working mothers-to-be are entitled to a maternity leave period of 12 weeks paid. While the first six weeks of maternity leave is to be taken before delivery, the remaining six weeks of leave will be granted immediately after the child is born.

Kenya: A female employee shall be entitled to 3 months paid maternity leave with full pay.  The maternity leave can be extended with the consent of employer.

Chile: Employees are entitled to 6 weeks paid of maternity leave prior to the birth of the child and 12 weeks paid thereafter.

My son is 2 years old now and I find that I balance the life of a working mom very well.  I love my job and more than anything I love being mother.  But needless to say, I do wish I could have spent more time with him after birth but paid leave is not the norm in the US which can sometimes make the decision to take additional time off more difficult.

The racial categories include:

• African (Black)
• Coloured (refers to an ethnic group of people who possess some degree of sub-Saharan ancestry, but not enough to be considered Black under South African law.)
• Indian / Asian
• White

Every country has fascinating facts. And South Africa is a beautiful and fascinating country!

Canadian Payroll: Facts to Keep You in the Know
By Janet Roome, CPP; Carole Sanchez, CPP; and Jeff Hill

Setting up payrolls in other countries can be challenging and very different from country to country. There can be many differences between work hours, tax rates, sick & vacation pay, holidays and benefit plans to name a few. And payroll in Canada has some unique issues you may want to be aware of.

Read the full article (PDF).

Also read:

UK Payroll: Employment Facts to Keep You in the Know

For example, the French Social Security System consists of a very complex network of schemes, covering virtually the entire population of France, and provides a wide variety of benefits.

The French Social Security system is divided into four categories called Regimes. The Regime General covers 80% of the French Citizens and covers private sector employees, public servants (benefits-in-kind), as well as different categories of people who were not originally covered by a scheme (for example, students, war veterans, persons benefiting from certain guaranteed minimum incomes such as certain family allowances).

The Regime General (Régime général) has thus been used over the years as a “catch-all” scheme, to provide access to medical coverage for the entire population. It divides up into 4 sectors: health insurance and accidents at work; retirement; family income support; and the collection of contributions. Its family support programs are accessible to all eligible claimants, without requiring employment or personal contributions. Contributions are collected by URSSAF (Union de recouvrement des cotisations de securite sociale et d’allocations familales) which has 105 offices around the country. The URSSAF then passes the money on to ACOSS (Agence centrale des organismes de securite sociale) for distribution to the various funds, called caisses, which are responsible for paying out the benefits and making reimbursements.

This system includes social security basic coverage shared between the Employer and Employee; on average the employer’s share of contributions represents 45% of the gross salary; the individuals share 15%. Contributions are assessed using various ceilings. The above figures give you an idea of how costly it is to employ persons in France. Social Security is considered the first social protection pillar. Institutions offering voluntary supplementary coverage comprise the second pillar. Unemployment Insurance is separate from Social Security for historical reasons. All these components are part of what in France is called the “Social Protection System”.

*For more information visit French Social Protection System.

SOURCES

Expatica’s 2012 Expat Survival Guide

“The French Social Protection System” by ADECRI (PDF)

“New Business Hiring Employees” on URSSAF.fr

Now you are thinking – so what? My payrolls are all in stable countries – well here are some more scenarios to consider: civil strife, labor strikes, power outages, provider failures, flooding, earthquakes, employee turnover, system crashes, network failures, hurricanes, bank closures and the list goes on. All of the above situations have happened in some of the most “stable countries” in the world – US, Switzerland, Japan, India, Kenya, Argentina, France, and the list goes on.

So when you are considering your BCP/DR plan, make sure you cover all of the important IT items, but also consider the practical day to day payroll operations. How am I going to run payroll and ensure my people get paid if the local office is down? Who needs to be involved from a communication standpoint? How am I going to manage the calculations? The payments? The taxes?

There are many more considerations for a truly global payroll BCP/DR plan than those stated above. But it is important for companies to consider the situation over and above the IT infrastructure to truly understand what is needed to support global payroll operations in the case of a crisis.

183-day rule:

During the first 183 days, the assignee is generally exempt from paying taxes in the host country. However, countries have different rules on how the 183 days are counted. Some countries use a calendar year, some use a rolling 12 month period, and some take into consideration time spent in the host country from 1 to 2 years prior. There are also countries that consider an employee to be taxable much sooner than 183 days.

Short Term Assignments

Generally, a short term assignment is shorter than one year but longer than 183 days. This type of assignment does not usually include a move, but is considered an extended business trip. There could be some tax advantages for this type of assignment that vary from country to country.

Long Term Assignments

Long Term assignments usually exceed one year, with most assignments in the two to five year range. The employee moves to the host country which becomes their ‘tax home’, meaning that they are taxable in the host location.

If an assignee is in their host country for more than 5 years, they typically need to be treated as a local employee with all the taxes, benefits, social cost of the host country. At this point the employee can either return to their home country or become localized. Localization is the process through which an assignee transitions from an expatriate assignment to a local employee in their host country. Localization can occur as part of the initial expatriate policy or as an extension to the assignment.

Curious about what other companies are doing? According to a recent study conducted by Brookfield Global Relocation Services, the vast majority of participating companies have policies for employees on long-term assignments. Short-term assignments are slightly less prevalent but still very common.

As part of the payroll process, employers and pension providers will submit electronically to HMRC information about all payments and deductions they make to employees or pension recipients each time they are made. The previous reporting was yearly at year end. The HMRC launched a pilot program starting in April 2012 to begin testing the new system. Employers could volunteer to participate. Information about joining the pilot program can be found here.

http://www.hmrc.gov.uk/rti/joining-pilot.htm#3

Benefits of RTI

Moving to RTI will simplify the PAYE process, making it easier for both HMRC and employers to administer payments and reporting.

• It will provide early detection of errors, such as under or over payments and the issues can be resolved more quickly.
• It will help to simplify the employee starting and leaving process.
• Support the introduction of Universal Credits when the Department for Work & Pensions (DWP) introduces it in October, 2013.
• It will help to reduce fraud and ensure that employees are properly credited for the benefits they will be entitled to.
• It will facilitate setting up a new tax code more quickly assuring that the employee is paying the correct tax rate which will make yearend easier.

Changes to Year End

RTI will change the way yearend works. Employers will still be required to provide employees with yearend wage reporting statements (P60s and P11D and P11D (a) forms for taxable benefits and expenses). Under this new process employers will no longer be required to complete annual filings of PAYE tax and National Insurance contributions. Also, P14 and P35 submissions and P38A returns for Casual employees will no longer be required.

UK Employers and service providers need to be ready to comply with this new initiative. It will take some planning and some IT initiatives. The change is coming so are you ready?

Additional information can be found at: http://www.hmrc.gov.uk/rti/index.htm