Payroll compliance isn’t just the goal of every global payroll professional to achieve every single pay period; often, compliance is the greatest challenge.
The working world has transformed in recent years, primarily due to the COVID-19 pandemic. This transformation created new problems, such as introducing new legislation in various countries, the explosion of remote work and the gig economy, The Great Resignation, and more.
In the webinar, “Achieve Compliance Excellence: Strategies for Global Payroll Leaders,” sponsored by CloudPay, Alice Tyson, Solutions Consultant for CloudPay, and Robyn Torgius, Global Head of Payroll for IFS, discussed these and other trends impacting compliance and shared some best practices to ensure global payroll compliance.
Macro Trends Affecting Payroll Compliance
Many reactive changes occurred during the pandemic, which impacted payroll compliance, said Tyson. As a result, payroll professionals worked feverishly just to keep up with many of those changes.
The pandemic and the subsequent changes created payroll compliance pitfalls that payroll professionals have learned to watch for in recent years.
The six commonly encountered payroll compliance pitfalls include:
- Ever-changing global regulations, which varied in complexity and frequently changed payroll, taxation, and employment laws in several locations
- Increased administrative volume and filing deadlines
- Flexible/remote workforce, which created compliance challenges
- Security risks that may compromise data due to unsecured internet connections
- Heightened data protection requirements
- Safeguarding the employee experience, which could be compromised through poor payroll records management
Many compliance issues were caused by remote workers who crossed state lines in the United States or international borders in Europe, Asia, or Africa without sharing the information with payroll.
This didn’t just impact compliance; these issues also jeopardized corporate security and operations.
“It should go without saying that the management of sensitive information is always going to be central to our roles as payroll professionals,” Tyson said. “I read an article of a worker who was taking ‘hush trips,’ and getting away without notifying their employer … If they cross state borders in the U.S. or an international border and are working on an unsecure network, that can create risks.”
Meanwhile, there are international compliance changes that have already taken place this year or will be enacted before the end of this year in the following countries:
- Argentina: A new president is suggesting major economic changes that include closing the country’s central bank and switching the national currency to the U.S. dollar
- Australia: Employers will be required to contribute to employee retirement savings plans, which will increase to 12% by 2025
- Canada: Minimum wages increased; however, every province has a separate minimum wage
- France: Enacting simplified payslips, which may increase payroll’s workload
- Germany: Health insurance thresholds are increasing for public health insurance premiums and employee incomes are to be assessed against health insurance thresholds
- Ireland: Enhanced reporting requirements for tax-free payments to employees and pension auto-enrollment
- United Kingdom: General elections took place this past June, which many believe will lead to new payroll legislation
- United States: New versions of the Employment Eligibility Verification Form have been issued as a response to post-pandemic increases in remote/hybrid working
Torgius, speaking for IFS, said having knowledgeable global payroll professionals is the key to payroll compliance.
“One of the things that concerns us [at IFS] is that when you have a global setup, you could have limited global payroll experience,” Torgius said. “Compliance is one of the most important factors for us. Limited knowledge is a concern … when you can’t support all operating locations.”
Poor data visibility is another concern, with manual data management methods and fragmented, error-prone reporting delivering unclear insights for finance.
Best Practices for Compliant Payrolls
Most organizations that operate globally do not have payroll teams in every country, so it’s imperative that their teams do have the correct country requirements and adhere to those requirements.
“Compliance isn’t just paying employees on time, it’s also adhering to those rules and regulations linked to those employees,” Torgius said. “We need to make sure we do our due diligence on each country’s payroll.”
According to an informal poll of webinar attendees, 63% of respondents said they were only somewhat confident in their organization’s compliance protocols, while 17% said they were very confident.
Organizations that are looking for a global payroll provider should consider the following:
- Make It Easy: Ensure your payroll provider fulfils day-to-day operations of running accurate, timely payroll and delivers managed service with monthly reviews
- Future Focused:Proactive attention to upcoming changes, preparing systems before they happen, and showing where and when to act
- Real-Time Reporting: On-demand access to global reporting and analytics so you can easily demonstrate correct processes and accurate results
- Data Security: Data security processes, policies, and certifications that meet your expectations and needs
- Robust Resolution: Procedures to follow when things go wrong, and a willingness to be open and honest to discuss
“You don’t want to be having sleepless nights over this. You want the process to be pain-free,” said Tyson. “Your provider should be using analytical tools to provide an overview of approvals and any payroll errors. As well as guiding you on best practices whenever you might need it.”
Register today for this free on-demand webinar available until 31 May 2025.