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Multinational Payroll ProcessingRecent studies have indicated that the expatriate workforce is continuing to experience dramatic growth, with the number of employees on international assignments showing an increase of almost 90 per cent over the last three years. (Mercer’s Benefits Survey for Expatriates and Globally Mobile Employees 2008/2009).

Recruiting and retaining expatriate talent may evolve even more in the future. According to a recent study by professional services firm, KPMG International, it’s not just the global economy that’s contracting, but also the global labour pool. The study indicates that there will be a contraction of the labour pool during the next decade - affecting countries such as Japan, Australia, Canada, China, New Zealand, the United Kingdom, the United States and much of Western Europe.

Payroll success at any rate!

As the expatriate workforce continues to grow, and worldwide currencies fluctuate in response to a deepening global recession, more companies are turning to outsourced payroll solutions, particularly when it comes to managing the intricacies of international payroll processing.

Managing payroll globally is a complex endeavour. Typically, customers who use multinational payroll outsourcing prefer local currency invoicing. For example, services supplied in Italy are invoiced in Euros and paid in Euros, whereas services in Australia would be invoiced in Australian dollars. This approach, which requires the payroll provider to maintain bank accounts in a number of currencies, helps negate any currency exchange rate fluctuations for the customer.

Sometimes customers require invoicing in a single currency to a single location or multiple locations. Complex invoicing can be accommodated by using the foreign exchange rate at the time of invoice generation. This can help companies avoid major foreign exchange rate effects.Len Elkington, Vice President of Ceridian’s Multinational HR Services.

Not only do multinational companies need to account for exchange rates, many must accommodate a split-pay option, which allocates pay between an expatriate’s home country and the currency of the host country. With the ongoing flux of the dollar and the unstable economy, many expatriates carefully monitor how their allowances are distributed and change the distribution of their allowances.

Skills and expertise on a global basis are an important aspect in getting payroll compliance in order. This had been appearing on people’s radars naturally, even before the current economic crisis. Len Elkington

A recent article from the Society of Human Resource Management (SHRM), Automating Global Pay, Benefits Can’t Wait for Better Days, cites the following functionalities as essential to a global compensation management solution:

  • Easy review of compensation and taxation information in various currencies
  • Easy identification of exceptions or regions with unique practices through the use of standard compensation templates that highlight modifications
  • Simple management and updating capabilities for employee split-payroll requests
  • Ability to extract data in a format best suited to each end user’s needs

A solution you can bank on!

Multinational companies must make strong investments in human capital that include using innovative solutions for compensating their global workforce to ensure retention once the economy begins an uphill climb. A wise approach involves using outsourced payroll providers, which are playing a greater role in helping their customers develop a more efficient business, find appropriate talent, comply with new and changing regulations, and gain savings outside of payroll.

” With the current economic crisis, currency fluctuations are in an unpredictable state. There is a huge risk for multinational companies who, by nature, require predictability in foreign exchange rates to ensure buying and selling at a profit,” said Elkington. Therefore, operating payrolls across different countries is not something organisations should entertain without expert advice, especially in the current economic crisis.

Ceridian's Multinational Payroll Solution offers one global service contract, one service level agreement and one single point of contact in a language of their choice. Operating out of our multilingual Shared Service Centers, we keep our clients’ payroll secure and compliant in more than 45 countries, increase their control over costs and allow global reporting. In addition, Ceridian's International Funds Transfer service allows organisations to pay their employees wherever they work in the world -- without the need to open and maintain different currency accounts or spend time managing payments through their banking institutions. Our combined services provide an end-to-end process from payroll to payment, making sure overseas employees are paid correctly and on time.

  • 1st June 2009
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