How to Run Remote Global Payroll: Legal, Efficient Payment for International Teams
Imagine this: your company has team members located across the globe, and after months of hard work, they finally complete the project you've all been working on for weeks. Now, it's time to pay them for their efforts. But as you prepare to send these employees their well-earned payments, a nagging thought comes to mind. Will my next move put me at risk of trouble with the government? This scenario can challenge even the most experienced business owners as they consider their options for managing remote global payroll. Fortunately, if your company works with a reputable employer of record, you can navigate these complexities with confidence.
In this article, we'll explore remote global payroll, how to pay global teams legally and efficiently, and how Cercli's global HR system can help you achieve this.
How to Pay Global Teams Legally and Efficiently
Remote global payroll is the process of paying employees or contractors who work in different countries while ensuring compliance with:
- Local tax
- Employment
- Reporting laws
Unlike local payroll, which refers to managing salaries, deductions, and reporting within a single legal and tax system, global payroll must account for a diverse set of:
- Regulations
- Payment processes
- Employment classifications
The rise of remote teams has made global payroll a growing concern. According to recent data from Gallup, 5 in 10 of full-time employees in the United States now work remotely, with comparable trends emerging globally. As more companies expand their operations across borders, the need to handle payroll legally and efficiently in multiple countries becomes increasingly important.
Understanding Worker Classification: Employee vs. Contractor vs. EOR
It is also essential to distinguish between payroll, global employment, and contractor payments:
- Payroll typically refers to the process of paying full-time employees, which involves compliance with local employment laws, tax deductions, and the administration of benefits.
- Global employment often involves using an Employer of Record (EOR) to legally employ someone in a country where a business does not have a physical presence or a legal entity. Contractor payments are handled differently.
Common Challenges in Global Payroll
While contractors invoice for their work and manage their taxes, companies still need to follow proper classification rules and ensure correct, timely payments.
Without a structured approach to global payroll, businesses may face:
- Compliance issues, including penalties for incorrect tax filings or misclassification.
- Payment delays can be particularly challenging when dealing with currency conversion or international banking systems.
- Administrative burdens from managing multiple vendors, platforms, and processes.
A remote global payroll solution addresses these issues by:
- Streamlining payments across borders
- Aligning with local compliance requirements
- Supporting multi-currency transactions
Key Challenges of Remote Global Payroll
Understanding Global Payroll Compliance
Processing payroll for remote teams, whose members are distributed across various global locations, adds a layer of complexity to the payroll process. Here are some of the challenges global organisations should prepare for.
Different Tax Rules, Payroll Laws, and Foreign Authorities
The leading challenge organisations with a remote payroll face is navigating the different tax rules and payroll regulations that apply in every country. To ensure global payroll compliance, the business’s payroll operations must align with the local requirements and laws in each country.
This includes ensuring the correct pay period is selected, as well as respecting compensation laws regarding minimum wages and overtime pay. Every jurisdiction has its own tax and social security authorities with which the business must liaise to establish its local payroll and fulfil monthly payroll obligations.
Paying Taxes and Contributions on Time (Everywhere)
Calculating gross and net pay is a key aspect of the payroll process for accurately paying remote employees. The process of following deductions is equally important. In most jurisdictions, employers are responsible for reporting and remitting the taxes and social security contributions deducted from employees to the respective authorities. They must do so according to country-specific deadlines, and the payment often accompanies a matching declaration. The more countries an organisation covers with its remote payroll, the more difficult it becomes to keep track of the varying deadlines and avoid fines for late payments. Businesses should therefore establish a payroll and compliance calendar that consolidates important deadlines for all payroll countries.
Processing Payroll Across Different Time Zones
Working with a globally distributed team means working across different time zones. Although asynchronous communication can help companies address this issue in many areas, it is generally not effective for payroll matters.
Whether it is communicating with a local payroll service provider to correct a payroll mistake or reaching out to remote employees abroad to remind them to submit timesheets on time, waiting for a reply when deadlines are tight to finalise the pending payroll run or resolve an issue can be frustrating.
Setting Salaries for Remote Employees
Deciding how much to pay remote workers may not be part of the traditional payroll process, but since the primary purpose of payroll is to ensure timely and accurate payment, setting salaries for remote workers is certainly a relevant consideration. Businesses working with remote employees based in different regions, states, or countries must consider that the cost of living varies significantly by location, which is a valid argument for location-based pay.
Others might argue that pay equity in remote teams means paying employees in similar roles the same salary, regardless of their location. Furthermore, due to the varying tax rates and social security levies applicable in different countries, an employee’s net wage may differ significantly from that of their colleagues, even though they all receive the same gross salary.
Paying Employees in Different Countries and Multiple Currencies
The key step in payroll is the payment of employee salaries and wages. While this is usually the easiest part of the payroll process for businesses with a local workforce, paying employees can become difficult with a remote payroll.
When paying remote employees who are based abroad, relying on SWIFT payments can be challenging because they can be slow, transaction fees are high, and currency exchange fees can further increase costs. Managing payments in multiple currencies creates additional complexities for the payroll department.
Data Security and Confidentiality
Strong security measures, such as data encryption and malware protection, are essential when sensitive personal information is transmitted through multiple systems. It is essential to note that most countries have varying data privacy laws, so organisations need to implement diverse security measures to comply with these standards.
For example:
- The GDPR (General Data Protection Regulation) applies to EU countries.
- California's CCPA (California Consumer Privacy Act) governs data privacy for its residents.
- Singapore's PDPA (Personal Data Protection Act) outlines its data privacy requirements.
Cercli: Simplifying Workforce Management for the Middle East and Beyond
Cercli is designed for companies in the Middle East that need a flexible, compliant, and reliable way to manage their workforce, whether teams are local, remote, or across multiple countries. Built for the realities of doing business in the region, Cercli helps companies in the UAE, Saudi Arabia, and across MENA simplify HR operations, stay compliant with local regulations, and run payroll with confidence.
From managing WPS (Wage Protection System) registrations in the UAE, processing GOSI in Saudi Arabia, handling DEWS contributions, and ensuring contracts and benefits are compliant, Cercli simplifies regional payroll and HR. As companies hire remote employees, contractors, and global teams, Cercli provides comprehensive support for global workforce management.
A Unified Approach to Global HR: Centralised Management and Comprehensive Support
Companies can pay contractors or full-time employees in over 150 countries through multicurrency payroll, Employer of Record (EOR) services, and compliant international contracts, all through a single platform.
Cercli gives HR teams a centralised system to manage every part of the employee lifecycle:
- Onboarding, asset management
- Leave tracking
- Time off calendars
- Payroll processing
- Offboarding
With one source of truth for all employee data, companies can eliminate manual processes, reduce payroll errors, and ensure complete visibility across the entire organisation.
Related Reading
- Best Employer of Record Companies
- Employer of Record vs Staffing Agency
- Employer of Record Payrolling
- Challenges of Managing a Global Workforce
- Consequences of Payroll Errors
Options for Managing Global Payroll
In-House Payroll: A Direct Approach to Global Payroll
If your company has a substantial presence in a foreign country where it employs staff, it may be able to manage its payroll. With in-house payroll, companies typically subscribe to professional payroll software to help manage global payroll.
The features of payroll software can automate manual tasks, such as generating payslips and calculating leave. It is important to note that an organisation will still need to employ in-house HR personnel to use the software and manage payroll.
Global Payroll Provider: An Established Alternative to EORs and PEOs
Partnering with a global payroll provider is typically a cost-effective alternative to using Employer of Record (EOR) or Professional Employer Organization (PEO) models, but this approach is usually only viable if your business has already established a legal entity in the country where you employ staff.
Starting costs tend to be lower, but this requires investment in establishing and maintaining the entity, including:
- Internal HR team
- Legal support
- Account support
Working with a global payroll provider can eliminate the need to hire in-house HR specialists while also providing access to local experts.
Global EOR Provider: A Streamlined Path to Global Payroll Compliance
If an organisation lacks any local presence, no local entity, and no HR team, and it aims to establish operations in a new country quickly, then an EOR is an effective solution. Partnering with an EOR typically costs more than working with a payroll provider, but these solutions handle additional areas, such as:
- HR
- Local compliance
- Accounting
- Support with elements of employee relocation (e.g., compliance and documentation), though full relocation services generally require a dedicated provider
The EOR is responsible for local employment and supporting clients in maintaining compliance. This option saves months and significant operational costs associated with setting up an entity.
Related Reading
- Payroll and Compliance Challenges
- Payroll Outsourcing Costs
- Payroll Internal Controls Best Practices
- Employer of Record vs PEO
How to Evaluate and Choose the Right Global Payroll Solution
As companies expand internationally, their payroll becomes increasingly complex, and the volume of data generated also increases. To effectively manage global payroll costs, businesses require access to accurate and comprehensive global payroll reporting.
Detailed insights from payroll reports help inform business decisions as they navigate new markets.
Adaptability to Business Growth: Future-Proofing Your Payroll
Every business strives for growth. An organisation may still be in the early stages of global expansion, with only a small remote team maintaining operations in the various target markets. Still, employee populations in multiple regions are likely to continue growing in the future.
It is essential to select a payroll provider that can efficiently process payroll as employee numbers increase significantly.
Data Security: Safeguarding Sensitive Information Across Borders
Payroll data is highly sensitive and requires stringent protection, regardless of whether payroll is processed in one country or multiple countries. Data security becomes even more complex when running a multi-country payroll, since data is collected in different jurisdictions and then transferred to one or more platforms for analysis and storage.
Businesses should always ask about the payroll vendor’s data protection and security standards.
Integration: Streamlining Payroll Management Across Multiple Countries
Businesses operating in multiple countries often rely on software solutions that enable them to streamline the management of their global teams. Consequently, it should be possible to integrate the provider’s payroll system with other HR and management tools.
When working with multiple in-country payroll partners, organisations should consider investing in a global payroll solution that can connect the different vendor systems and provide a centralised interface for global payroll management.
Employee Experience: Enhancing Payroll for the Workforce
Ease of use is a general selection criterion for service solutions. Still, especially in payroll, a system that is complex for HR, Accounting, and Finance teams to use or that limits their access to data is inadequate.
Payroll is an essential part of the employee experience, and self-service functions for employees are an effective way to enhance this aspect. Payroll providers should offer an interface that enables employees to view their payslips and update their bank details.
Navigating Middle Eastern Compliance and Regional Payroll Complexities
Cercli is designed for companies in the Middle East that need a flexible, compliant, and reliable way to manage their workforce, whether teams are local, remote, or across multiple countries. Built for the realities of doing business in the region, Cercli helps companies in the UAE, Saudi Arabia, and across MENA simplify HR operations, stay compliant with local regulations, and run payroll with confidence.
From managing WPS (Wage Protection System) registrations in the UAE, processing GOSI in Saudi Arabia, handling DEWS contributions, and ensuring contracts and benefits are compliant, Cercli simplifies regional payroll and HR. As companies hire remote employees, contractors, and global teams, Cercli provides comprehensive support for global workforce management.
Integrated Solutions for Comprehensive Employee Management
Companies can pay contractors or full-time employees in over 150 countries through multicurrency payroll, Employer of Record (EOR) services, and compliant international contracts, all through a single platform.
Cercli gives HR teams a centralised system to manage every part of the employee lifecycle:
- Onboarding, asset management
- Leave tracking
- Time off calendars
- Payroll processing
- Offboarding
With one source of truth for all employee data, companies can eliminate manual processes, reduce payroll errors, and ensure complete visibility across the entire organisation.
8 Best Practices for Effective Remote Global Payroll: Understand International Legal Requirements
Remote global payroll involves employees working from anywhere in the world. The first step to managing payroll for this type of arrangement is understanding the compliance obligations associated with remote work. Employment laws can vary from one region to another, so you may be required to follow the local regulations in various work locations.
This may include:
- Employee retirement plans
- Work hours
- Types of contracts
- Minimum wage
- Work visas
Address Tax Considerations
Proper tax compliance helps avoid legal and financial penalties. Familiarise yourself with the tax obligations in each jurisdiction where your remote workers reside and ensure that withholding and reporting are done accordingly.
Tax and payroll policies may be updated and revised, as recently seen in Canada and New Zealand.
Calculate the Salaries
Consider averages and market practices when calculating salaries for international employees. Access regional salary databases like Payscale, Glassdoor, and local government wage reports to understand average salaries for each country.
Partnering with an Employer of Record to calculate salaries for international employees can streamline this process because they often have access to comprehensive local salary data and can manage complex payroll calculations.
Choose the Best Payroll Software
If you manage remote global payroll directly, invest in software tailored to your specific requirements, including the number of employees, regions, and salaries.
Look for platforms that offer features such as:
- Automated calculations
- Direct deposit options
- Remote access for employees
Offer Proper Compensation
Creating effective compensation packages can include more than legally required benefits. To maintain high retention rates, it is essential to make employees feel valued, particularly since research indicates that remote workers are less likely to receive advancements such as promotions and salary increases.
Consider benefits such as paid time off, flexibility for family and childcare, support for education and professional development, and performance-based rewards.
Ensure Data Security
Protecting remote global payroll information is of utmost importance, especially in environments where data may be accessed from various locations. Implement robust security measures to safeguard payroll data, including:
- Encryption
- Multi-factor authentication
- Regular security audits
Educate remote employees on best practices for data security and ensure compliance with relevant privacy regulations. Data breaches and fraudulent activities can become frequent without proper security management in place.
Outsource Processes
When needed, you can work with a payroll outsourcing provider to reduce administrative complexity and streamline operations. Payroll outsourcing is typically an option if your company already has a legal entity in the country, as the provider will manage tasks such as payroll calculations and reporting on your behalf. For companies without a local entity, an Employer of Record (EOR) is the compliant alternative to hiring and paying employees legally.
You can outsource part of your payroll responsibilities, which is also known as “payroll co-sourcing”, or fully outsource your requirements to a reliable outsourcing provider. Although outsourcing fees can be agreed upon in various ways, such as a flat fee for the project or a percentage of the processed payroll, they are typically a sound investment, considering the time and resources saved.
Automate as Much of Your Payroll as Possible
Processing payroll manually is not a viable option, especially for a small team or a remote payroll system supporting a globally distributed team. Instead, businesses should invest in payroll software to automate manual processes.
Automating payroll has several advantages. It saves the business time and money, increases payroll security, and simplifies the entire payroll process, which is especially helpful when managing payroll across multiple regions.
Related Reading
Book a Demo to Speak with Our Team about Our Global HR System
Cercli is a global payroll system and HR management platform built specifically for companies in the Middle East. Our robust solution ensures compliance, enabling businesses to streamline their international operations and manage both local and remote workforces effectively.
With Cercli, organisations can simplify global payroll and HR processes to remain compliant with local regulations while achieving greater efficiency.
Streamlining Global Payroll in the MENA Region with Cercli
Organisations must prioritise compliant global payroll to mitigate the risks of international expansion. Cercli helps businesses support their objectives by enabling straightforward, compliant payroll across the UAE, Saudi Arabia, and the wider MENA region.
Our platform incorporates local tax regulations and employment laws, helping your HR team automate calculations and stay compliant with every international payroll run. This ensures your employees are paid accurately and on time, reducing the risk of overpaying, underpaying, or missing payments altogether.
Managing Employee Records and Global Compliance Across Borders
Cercli simplifies employee onboarding and record-keeping while helping businesses manage global compliance. Our platform enables you to effectively track and manage remote employee documents, including contracts, tax forms, and non-disclosure agreements, ensuring compliance with local labour laws.
With Cercli, you can efficiently onboard international employees, helping you streamline your global expansion and maintain business continuity.
