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Up until the last decade or so, global expansion was only reserved for the largest companies. However, with advancements in technology and an increase in employers adopting remote work, more companies are now expanding internationally than ever before.

To successfully tap into this diverse talent pool across the globe, it’s first important to understand how to pay them, and correctly. In this article, we’ll delve into the fundamentals of payroll for an international workforce.

Adhering to tax laws and other obligations

Hiring internationally opens you up to a whole host of new labour laws that you must comply with to avoid mistakes and fines. Each jurisdiction brings new challenges when it comes to paying employees, from working hours limitations to employment contract requirements. There may also be different norms in relation to pension plans, contribution schemes, and other payroll deductions.

Depending on local tax rules, some employees may end up being taxed twice, once in the country of your business and once in their native country. Therefore, you need to carefully evaluate the costs of hiring certain individuals before putting together any contracts.

To overcome these, consider leveraging local legal counsel, centralised compliance management services, and payroll outsourcing. Opting for advanced payroll software with automated tax compliance not only ensures you keep up with the complexities of international tax laws but also promotes fairness, preventing employees from facing financial disadvantages.

Paying the correct salary

It’s highly important to create a global compensation policy that ensures each of your workers is paid appropriately. To make sure this is fair, you should conduct a full review, accounting for their roles, responsibilities, and location.

Currency fluctuations are also common in global businesses. It’s highly likely you’ll be paying employees using different currencies, meaning you must be aware of the costs of currency exchange fees and ever-changing rates.

These tasks can be made all the simpler by utilising the help of a global payroll provider and using an employment cost calculator with real-time salary data. That way, you stay ahead of your competition and can adapt your recruitment strategy appropriately.

Choosing your payment method

There’s no shortage of options for paying your international employees but deciding on the right one isn’t always the easiest. From directly depositing the compensation to wiring it over or utilising a digital wallet, whatever you choose should be based on factors such as processing time, fees, and flexibility.

Direct payroll through existing systems is likely the easiest for smaller businesses or operations in similar jurisdictions. If your company is on the larger side or you span across numerous locations, partnering with an employer of record may be a more suitable alternative, freeing you from heavy administrative burdens.