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One big reason is the way human capital management (HCM) services have evolved, with different areas of employee management entrusted to different arms of the company, each with different goals and ideal workflows. The upshot is that many companies suffer from an efficiency bottleneck where their HR software meets their payroll pipeline More and more businesses are opting to integrate HR and payroll structures, hoping to see major gains in efficiency in return. The rewards for streamlining the business’s HR software pipeline can be great, but only if the change is implemented properly by management that knows exactly what they want to get out of the transition.

For example, in France, local pay slips can be no more than two pages long because they provide all of the social insurance payment details social insurance payments and they are considered legal documents. For instance, Mexico employees are required to sign each pay slip, while other countries will not allow for online delivery and may require paper pay slips with data online for reference purposes only. Many HCM systems will now interface directly with payroll providers and can provide the detail to the employee within their company’s HCM system, integrating the process and closing the loop on delivering payroll detail. Many payroll providers have begun to offer online pay slip portals with unique login IDs via self-service systems where the employee can access their pay slips in a very secure way.

As a long-term expatriate, the employee will be paying taxes in a foreign location, and those tax credits will be utilized to offset the employee’s U. S. tax liability. In the above example, the employee is bearing the Medicare and Social Security on his or her base salary, just as the employee would have if he or she stayed home – without any allowances, norms, or COLA as a local. In this scenario, the employee will pay actual Social Security and Medicare taxes on his or her total base compensation package (salary plus allowances and COLA, minus hypo taxes and norms). Payments for benefits in kind must be included in the expatriate tax calculation at the host country and at the home country if the home country taxes worldwide income for social insurance purposes, e.g., United States, South Africa, and Switzerland.

There are numerous solutions available for each of these options which are dependent upon factors like the number of employees working in each country, the available systems and structure in place, available internal resources and expertise, employee turnover, and local employment complexities. The payroll systems available range from complex systems like SAP and Oracle for larger markets including the United States, Canada, UK and France and more specialized systems like DATEV for countries like Germany, and then for smaller locations like Nigeria, a more manual approach, Excel spreadsheets. Smaller organizations typically will outsource to a local, regional or global provider and will manage regionally or globally and capitalize on the expertise of the provider to manage global payroll. If not, you’ll need to determine if a legal entity is required in the locations you need to manage payroll and ensure that you have all the proper registrations and benefits set up to ensure compliance.