What Is Global Payroll?

Managing payroll across multiple countries can be complex. But what exactly is a global payroll system? It’s a solution where a dedicated provider manages your international payrolls, ensuring streamlined and efficient payroll processes across countries. This system guarantees consistent payroll management, no matter where your employees are located.

In this guide, let Aniday take you on a journey through the world of global payroll systems, exploring how they operate and the benefits they can bring to your business.

What Is Global Payroll?

Global payroll is the process of handling onboarding and the payrolls of employees who are located worldwide, such as international employees or contractors. The following are the critical activities performed by global payroll management:

• Calculate wages.
• Distribute pay slips.
• Follow compliance with labor laws.
• Manage bonuses and benefits.
• Tax payment withholding.
• Track paid time off.
• Track the working hours.

However, the payroll service process depends on where the international employees are located, including the rules and regulations.

How Does Global Payroll Work?

Global payroll operates in three distinct ways depending on the company's location. Let Aniday break down these methods for you. 

Employer Of Record (EOR)

An Employer of Record (EOR) is a service in which a specific third-party company handles your company's payroll process in a foreign country.

Hence, you can hire international employees without considering each country's legal entity. The provider will cover the formalities during the hiring and payroll processes.

Professional Employer Organization (PEO)

Professional Employer Organization (PEO) is the process where you agree to a co-employment relationship with the employee and PEO. Both parties can hire the same person, and the PEO will handle the HR-related activities.

In this case, a PEO will be like your HR department. However, in a PEO agreement, you need to have a legal entity in the country or region where you are hiring.

A PEO can be a local or global provider. But suppose if  you have only a local legal entity and want to hire international employees, you need to work with a global PEO, as they will handle your legal responsibilities on your behalf.

In-House Payroll Operations And Workforce Management

In-house payroll operations are where you handle the payroll activities through an in-house department or team.

If you want an in-house team, you need the ideal professionals with the expertise to handle legal entities, payroll process, provide local legal representation, benefits, and manage taxes in each country.

Benefits Of Global Payroll Providers

Instead of handling all the payroll activities by yourself, you can partner with global payroll providers to ease your tasks. Here are the benefits of hiring global payroll providers:

• Global payroll complies with laws in many countries: If you have an EOR provider, your provider will handle all the paperwork while following each country's legal regulations. Hence, you can hire talents from a wide range of countries.
• Consist in-house payroll knowledge: Your provider will handle all the payroll customs, withholdings, and payments as they know each country where you get to hire.
• It saves time: You can reduce all your paperwork and risk of non-compliance and fines. Your provider will handle them for you while saving you time.
• Saves money: Hiring a global payroll management is less expensive than opening a new international entity. Thus, it saves you thousands of dollars.
• On-time payments: While working with a global payroll, they will make accurate and on-time payments. Hence, you don't need to worry about payment delays or payroll mistakes.

Partnering with Aniday allows you to enjoy these listed benefits all while freeing up time for your strategic goals.

How To Choose The Right International Global Payroll Provider

Choosing the right provider can be a challenge, but by considering key factors, you can find the perfect fit for your needs. Here’s the checklist Aniday recommends for finding the right international global payroll provider:

• Identify your business goals.
• Identify the targeted countries where you want to hire talent and the count of the candidate's requirements.
• Narrow down the list of global payroll providers based on the countries you target and your goals.
• Ensure the provider knows country-specific tax, labor laws, and more based on your requirements.
• Ensure your payroll provider has sufficient experience, as your employees will also work with them.

Final Thoughts

In conclusion, you can decide what type of payroll provider you require based on your business requirements, goals, where you want to hire, and other factors.

The labor landscape in Vietnam, Singapore, or Indonesia can be challenging. If you need guidance, reach out to Aniday for comprehensive support through our Headhunting and Employer of Record services. We're here to help you every step of the way!

We hope this guide was helpful in understanding global payroll management!