The global pandemic has introduced a variety of different challenges when it comes to the processing of global payroll at multinational companies around the world. As we are now six months into the pandemic, many global payroll departments have adapted very well and are successfully delivering global payroll remotely, despite upheaval and challenges.
Some of their biggest challenges include accessing global payroll data remotely, switching tasks between colleagues in different countries, on boarding new payroll vendors along with handling requests for enhanced reporting around global payroll costs.
However, at Payslip, we have been in regular touch with all our clients as well as leading figures in the global payroll industry. During these conversations, a common theme has emerged around a new layer of complexity that can potentially have a major impact on global payroll calculation and delivery in the future. In this article, we will take you through this unexpected new development and the likely implications it has for the global payroll team at multinationals around the world.
Does location matter anymore?
With most office employees around the world currently delivering their duties at home or from a remote location, it has been proven that global payroll along with services in many other business units can be delivered successfully in a remote environment.
The unexpected global pandemic has tested digital tools and modern technology to its limit, and in most cases, the technology has proven robust and resilient. This has resulted in a series of questions around the future of service delivery in business units or departments where it has now been established that innovative digital tools and flexible technology is capable of delivery in a non-office-based environment.
Important discussions are happening between leadership teams, HR managers and globally dispersed employees around the future of work along with the location in which this work is delivered. If it has been proven that location is now less of an issue thanks to modern technology, then is there a requirement for global payroll employees to return to the office and deliver services from a fixed location? This is a question many employees themselves are putting to their employers as the new working situation has led many to believe that they are now more than capable of delivering on their contractual duties from their homes are preferred countries. In essence, they feel that physical location has diminished in importance and that service delivery should no longer be dependent on location in a specific country. Global employers everywhere may well be forced to examine this question in detail over the coming months.
New thinking
Globalization and workforce mobility have resulted in multinational companies comprising of dozens of different ethnic nationalities within their workforce. This has been very positive from a diversity and inclusion perspective but has also resulted in huge numbers of people feeling that they are perhaps unable to return to their home countries for the foreseeable future.
Remote delivery during COVID-19 has raised the question - If I can deliver in a remote environment, then why can't that remote environment be in my home country? Let's take as an example a Spanish person working in UK global payroll who has been delivering services remotely for the last number of months. This person may now feel that asking to continue to deliver services from their home country of Spain is a valid and justifiable request. Their view would be that if they're not traveling to the office, then what does it matter where remote delivery takes place? They will also likely point to the fact that they will be happier and more productive with the work life balance achievable in their home country so the employer could also end up benefiting. If the global employer values the employee and chooses to agree with them, then such a relocation becomes feasible.
New Implications
While all of this sounds very plausible and even reasonable in theory, we also have to consider the logistical and payroll accounting complexities that such a shift in thinking and process could introduce -particularly when it comes to calculating and validating global payroll payments. If we continue with the example above, does the Spanish global payroll professional continue to be paid based on the contract they have in the employer location? Do they receive payment into a UK bank account, and remain subject to UK tax law and regulation or, does their salary payment move back over to Spain and become subject to the laws in that country?
What if the UK company does not have an entity in Spain and what if the Spanish employee needs to access social services in their home country but the tax that would entitle them to these services has all been paid back in the UK for the last number of years, making them ineligible? Can the UK employer allow an employee to work in and be paid in Spain while still remaining compliant with UK regulation? Such new implications bring with them a whole new level of complexity that many global employers may prefer to avoid.
A key range of stakeholders within a multinational need to sit down and consider these implications as they develop a plan to respond to inevitable questions from employees around country location when it comes to delivering remote services. All companies have adapted to the remote delivery of services, yet this has all been predicated on the assumption that the employee will deliver remotely within the same country where the employer is based. Many of the recent conversation we have been having with global payroll professionals point to a new reality where this may not be the case.
Logistical headache
This is a fluid situation and subject to a lot of change - discussions are already taking place at multinationals everywhere about becoming a fully or partially distributed workforce for the foreseeable future. It is also a case that some of the current remote workers may be merged into a global mobility program that enables them to work from their home countries under similar contracts to the ones they currently have.
There is nothing particularly easy about this, but a well-funded company with a strong and experienced HR department can find solutions to these challenges. Smaller businesses however, are in a much more challenging position- many of these businesses do not have fully operational HR departments, nor do they have budget to employ global mobility professionals along with legal and tax experts to ensure that they are in a position to accommodate requests for employee relocation. This could turn out to be a massive headache from many companies out there and global payroll professionals are also very concerned about a new level of complexity being introduced to the calculation and validation of global payroll figures and data.
The Payslip view
Payslip technology supports the delivery of global payroll in a remote environment while also helping global payroll professionals manage a range of complexities associated with global payroll data. Our innovative digital tools were designed to be flexible and help global payroll professionals deliver services while working in a complex payroll landscape. We developed our technology in response to very specific needs within global payroll and many of the features on our platform have arisen from direct conversations with global payroll professionals.
We feel strongly positioned to help global payroll professionals and global employers handle new challenges coming down the line. It is likely that some of the challenges outlined above will require a platform like ours to respond effectively.
Setting up new global payroll payrun elements in a cloud based remote environment is something our software lets you do. Standardized data and workflows mean improved accuracy and country specific compliance while automation features ensure that any repeat manual payroll elements can be automated for future payrolls, relieving payroll professionals of the burden of continuous manual input and adjustment.
We understand that global payroll is an industry undergoing significant change and our position remains the same -namely, that a digital transformation needs to take place within global payroll departments to ensure that this business critical service is equipped with the right digital tools to handle both existing complexities and intricate country specific or employee nuances that are likely to emerge due to these new discussions taking place around remote delivery and employee location.
Now is the right time to talk to a member of our team about the way in which our platform can strengthen the position of your global payroll service delivery and help you manage the varied and complex challenges that global payroll processing will face very soon.