managing global compensation: the quest for compliance · global mobility and serve as ey s payroll...

Managing Global Compensation: The Questfor Compliance*

Matthew Blaker, Sean Watts, and Caroline Lu, Ernst & Young**

INTRODUCTION

Employees on internationalassignment present a challengeto HR and payroll functions inorganizations. There is increas-ing scrutiny and enforcementfrom tax authorities, the lengthand structure of assignmentsare changing, and businessescontinue to demand a return ontheir investment in talent.

This report brings togetherthe views of internal mobilityfunctions working across 17industry sectors. Combined,they manage over 20,000 inter-national assignees worldwide,and in common, they face vari-ous challenges to achieve ro-bust, compliant and cost-e�ect ive assigneecompensation processes. Itprovides a timely refresh of ourreport , “Managing global

compensation: time to take con-trol?” published in 2013.

The survey focuses on threekey themes: What are the priori-ties in reviewing the global com-pensation model for interna-tional assignees? How havethese priorities changed overthe last 12 months? What ac-tion has been taken to addressthese priorities?

THE GLOBALCOMPENSATIONCHALLENGE-ONE YEARLATER

In 2013, EY undertook acomprehensive benchmarkingsurvey to explore what actionsthe global business communityis taking to tighten the controlover their management and re-porting of global assigneecompensation. One year later,

we asked: has anythingchanged?

Twelve months ago, whenpresented with a number ofbusiness challenges pertainingto global compensation, partici-pants who took part in our sur-vey indicated that establishinge�ective global processes andcontrols ranked as the numberone challenge for mobilityteams.

In 2014, while the picture issimilar overall, employers haveshifted their focus to challengesrelated to compliance withcountry payroll reporting andwithholding obligations.

Q. What are your organiz-ation's top three business chal-lenges in managing assigneecompensation?

*© 2015 Ernst & Young. Reprinted with permission.**MATTHEW BLAKER, Lead Partner, Global Compensation Services, EMEIA. Matt has over 19 years of experience in global

mobility and leads EY’s global compensation service operations across EMEIA. He helps clients to reduce risk by restructuringand managing their global compensation process to report accurate payroll, be compliant with corporate controls and prepareaccurate tax returns.

SEAN WATTS, Lead Partner, Global Compensation Services, Americas. Sean has over 19 years of experience of experi-ence in global mobility and serves as the global leader of Ernst & Young's compensation accumulation and payroll advisorygroup. He specializes in the implementation and operations of global collection and payroll reporting systems.

CAROLINE LU, Lead Partner, Global Compensation Services, Asia-Paci�c. Caroline has over 17 years of experience inglobal mobility and serve as EY’s payroll and global compensation service operations Lead in APAC. She has experience payrolland expatriate tax compliance and advisory services and help clients to achieve their compliance and tax e�ciency goals to meettheir business needs.

Journal of Compensation and Bene�ts E March/April 2015© 2015 Thomson Reuters

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“The results re�ect the in-creasing focus by revenue au-thorities on employer reporting.Global mobility is one area ofparticular scrutiny that requiresa robust response,” said Mat-thew Blaker, EY Global Com-pensation Services Leader,EMEIA.

ENSURING COMPLIANCEWITH COUNTRY PAYROLLREPORTING ANDWITHHOLDINGREGULATIONS

In 2014, the focus on compli-ance has intensi�ed. It ranks asthe number one global compen-sation challenge faced by oursurvey respondents. This islikely due to the increasing in-tervention by tax and revenueauthorities, who consider pay-roll for international assignees

an area of relatively weakcompliance.

It does, however, appear thatemployers' heightened attentionto compl iance is payingdividends.

Just over a third (35.9%) of2014 survey respondents haveexperienced queries and �nd-ings related to payroll omissionsas a result of local tax authorityaudits. These include:

E “Deferred compensationsourcing has not been ac-curately reported.”

E “Net income is notgrossed-up correctly.”

E “Compensation elementshave not been reportedcorrectly.”

This represents a reductioncompared with the results ofour 2013 survey, which showedthat 59% of respondents hadexperienced audit queries re-lated to payroll. This reductionsuggests that successful mea-sures have been taken to re-duce the number of �ndings.

Driving the trend of furtherreducing compliance risk, re-spondents identify a number ofinternal and external initiativesthey have implemented or areconsidering, including:

E Training for payroll teamsto understand the nu-ances of internationalcompensation issues

E Greater collaboration be-tween the home andhost payrolls as to theapplication, trackingand sharing of data

E Operational level training

Managing Global Compensation: The Quest for Compliance


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on own policy and taxissues, as well as un-derstanding the im-pact of non-compliance

E Adopting hypothetical in-come and social se-curity taxes for all as-signments, therebysimplifying the ques-tion of whether taxpaid has been borneby the employee oremployer

In today's regulatory environ-ment, tax authority audits arelikely to continue to increase,so the sustained focus on com-pliance by our survey partici-pants is warranted.

However, the compliance riskdoes not simply encompasstaxation: visa and immigrationprocesses are also likely to bea key factor. Fast-tracking theimmigration process to meet apressing business requirementoften results in the subsequentneed to temporarily excludethat individual from the payroll.This cycle of risk will lead toheightened visibility to the au-thorities and potential enquiries,immigration delays, �nes andpossible entry refusal.

“Governments around theworld are increasingly placingemphasis on the protection oftheir domestic labor market,”said James Egan, EY Global Im-migration Leader. “One tool isto facilitate enhanced informa-tion sharing between tax andimmigration authorities. As a

result, tax non-compliance canleave assignee populations di-rectly vulnerable to greater im-migration scrutiny—resultingboth in penalties and more se-vere future processingobligations.”

Regulatory audits are justone source of risk: the pictureis similar when respondents areasked about internal audit. Aninternal audit �nding or omis-sion is a warning sign that anorganization's payroll controlsand processes may need to bereviewed and revised.

Nearly 40% of respondentshave experienced internal auditexposure and report the follow-ing �ndings:

E Overpayments to employ-ees caused by lack ofpayroll coordinationwhere a split paymentarrangement was inplace

E Insu�cient clarity on pay-roll instructions lead-ing to poor process-ing and revisions

E Internal control gaps andlack of coordination

E Missing and incorrectcompensation acrosshome and host pay-rolls

Sixty percent of respondentsbelieve that local payroll andmobility teams do not have suf-�cient knowledge of assigneepayroll reporting. Concernsraised by the survey partici-pants include:

E “Most local payroll admin-

istrators have limitedglobal responsibilities.Managing a single ex-patriate is di�cult.”

E “Local payroll in certaincountries is chal-lenged with timely re-porting and grossingup for taxes.”

E “Local payrolls do nothave to manage thepayroll for many as-signees, so don't al-ways understand theimplications of the de-cisions they take.”

This response mirrors that inour 2013 survey, when almost60% (59.4%) indicated that theirlocal teams were not su�cientlyknowledgeable of the payrollreporting process. Participants'awareness of this issue meansthat a number of central initia-tives that can increase knowl-edge and understanding havebeen identi�ed. Examplesinclude:

E Applying a more consis-tent approach to com-pensation gathering,sharing and process-ing, and a more con-sistent approach withregards to hypotheti-cal tax

E Demanding more supportfrom in-house techni-cal advisors within thecorporate tax depart-ment

E Assigning a global payrollleader who would en-force the assigneepayroll process glob-ally, and for all localpayrolls to have asubject matter expertfor assignees

Journal of Compensation and Bene�ts


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Some are also in the processof implementing change:

E “We are currently review-ing our payroll pro-cesses, resulting inbetter monitoring andcontrol measurementsin the countries.”

E “We are currently provid-ing training for our HRand payrolls to assistwith the existing ca-pability and knowl-edge gaps.”

Q. In the past 12 months,which countries present thegreatest challenges with as-signee compensation?

In 2014, these are ranked:

1. China and the UnitedKingdom (joint �rst)

3. United States

4. Brazil

5. Germany

6. France, India and Russia(joint sixth)

9. Switzerland

10. Argentina

The response to this ques-tion will have been partly drivenby the number of assignees inthose countries, as well as thelevel of compensation complex-ity per country.

China and the UK are rankedthe most challenging countriesfor our response group, with theUnited States, Brazil and Ger-

many also featuring high on thelist for survey participants.

“Payroll taxes present chal-lenges that are di�erent to othertaxes. Particularly in the UK, ac-countabilities and responsibili-ties are often unclear, and fre-quently span di�erent functions(HR and �nance, most com-monly) and geographical ter-ritories,” said Sue Robinson,Partner, EY Total Reward,London. “It is no accident thatboth external and internal auditsare increasing in this area.”

“German employers oftenstruggle to follow the ‘home netplus approach’ through theirpayroll. In particular, gross-upcalculations and negative com-pensation are di�cult to pro-cess because of the limitationsof some payroll software,” saidJochen Reinig, Executive Direc-tor, EY Global CompensationServices, Mannheim.

“The U.S. rules regardingresidency, the frequency ofreporting and state variationsall increase the complexity ofthe U.S. compensation collec-tion and reporting process, em-phasizing the need for e�-ciency, robust datamanagement and e�ective con-trols,” said Sean Watts, Partner,EY Global Compensation Ser-vices, Dallas.

“Brazil's domestic legislationon labor a�airs is not sympa-thetic to the execution of inter-

national assignment programs,”said Oliver Kamakura, Partner,EY Mobility Services, SãoPaulo. “Not only has the level ofcompliance requirements in-creased over the last few years,but the release of eSocial—across-checking platform ad-opted by local authorities—hasrequired a new approach onhow to manage payroll and HRevents. The traditional HR com-petencies are no longer suf-�cient enough to keep compa-nies out of trouble.”

“Constant changes in China'stax �ling and reporting require-ments makes compliance morechallenging,” said Caroline Lu,Partner, EY Global Compensa-tion Services, Beijing. “Changescan be announced with veryshort notice, leaving little �ex-ibility for transition, and as aresult, it is crucial to have strongcontrol over timely payroll datacollection (especially non-cashbene�ts) to ensure a �uent data�ow for compensation accumu-lation and tax preparation.”

China (ranked joint �rst)

China is considered a com-plex country from an assigneecompensation and complianceperspective, and the monthlytax return process varies ineach city. Strict �ling and pay-ment deadlines apply, usuallywithout extension, requiring ac-curate (not estimated) compen-sation and taxable income



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reporting. Further, the ambiguityof some tax regulations meansthat local authorities interpretthe rules and put them intopractice in di�erent ways. Limitson transferring funds from Chinato foreign bank accounts alsoapply, and the recent strength-ening of the foreign exchangecontrol process makes com-pensation and compliance re-porting more challenging, as itrequires multi-level approvalswith di�erent local authorities,supported by extensive docu-mentation each month.

United Kingdom (rankedjoint �rst)

Over 60% of the UK's taxtake is in relation to payrolltaxes. Unsurprisingly, the taxauthorities therefore focus oncompliance in this area. Theenhanced ability to track em-ployees and their payroll andexpenses spend has raisedexpectations that global em-ployers will monitor and controlthis spend and the tax associ-ated with it.

United States (rankedthird)

United States is a comparablycomplex country from a com-pensation reporting perspectivedue to numerous factors. Thedistinction between residentsand nonresidents introducesthe �rst level of complexity.Residents are taxed on theirworldwide income, while non-

residents are taxed on theirincome connected to the U.S. Asecond contributing factor isthe di�ering state reportingrequirements. Lastly, year-endreporting, tax estimate andgross-up processes must betailored to adapt to various as-signment types and facts. In ad-dition to state di�erences, peri-odic payrol l report ingresponsibilities require organi-zations to collect compensationthroughout the year and imple-ment a robust reporting proto-col to payroll.

Brazil (ranked fourth)

Brazilian law requires certain�xed local payments to bemade in order to comply withimmigration prerequisites and,in such a scenario, dependingon the type of entrance visa, theassignee should also have a lo-cal employment contract. In re-lation to Brazilian nationals sec-onded abroad, legis lat ionenacted in 2009 recommendsthe maintenance of the employ-ment contract in Brazil duringthe assignment period, generat-ing a new approach for the as-signment structure. Moreover, anumber of gray areas overglobal compensation, e.g.,FGTS (employer obligationsregarding severance and redun-dancy pay), limits companies'ability to accurately forecastcosts and mitigate against risk.

Germany (ranked �fth)

Germany is considered acomplex country due to its lo-cal reporting requirements. Cer-tain income that is not taxableis taken into account when de-termining the tax rate on Ger-man taxable income. This inclu-sion rule is called the “taxexemption under progressionclause.”

MANAGING GLOBALCOMPENSATION: THEQUEST FOR COMPLIANCE

On a daily basis, businessesface a number of areas wherecompliance with and adherenceto external regulations and in-ternal guidelines must bemanaged. This includes immi-gration and employment law,data security, policy, incomeand social security tax with-holdings and intercompanycharging/transfer pricing toname a few.

For mobility functions, oper-ating in a cross-border environ-ment simply brings these issuesinto greater focus. A signi�cante�ort is often required to main-tain compliance in all countries,and substantial penalties and�nes may be imposed if a com-pany is not compliant with bothhome and host payrol lregulations.

Each organization taking partin our survey recognizes the is-sues related to non-compliance.



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However, each one will face dif-ferent challenges and pres-sures, internally and externally,to manage these as e�ectivelyas possible in a commercialenvironment. There is no singlesolution to these challenges;employers must choose thebest approach based on com-

pany operating model and busi-ness need.

Home, host or split—setting the scene forpayroll compliance

A fundamental element of as-signee compensation is the

method chosen for paymentdelivery. Choosing how to ap-portion pay across the homeand host location sets the tonefor complexity with regard tocompliance, cost and processe�ciency, and assignment sat-isfaction and success.

Most survey respondents in-dicate that assignees are paidvia the home country payroll.Regional and geographic di�er-ences aside, this remains themost common payment methodand the most transparent toassignees. But it could leaveassignees managing currencytransfers and associated risksthemselves.

The second most commonmethod is to split home andhost payments, with nearly 29%of participating organizationsopting for this either through�xed or �exible approaches.This approach addresses any

exchange rate challenges, butis more complex to manage andcontrol.

Highlights:

E Over a third of survey re-spondents (near ly36%) indicate that as-signees are paid viathe home countrypayroll.

E Almost 90% of respon-dents do not use aglobal HR or othersystem to share pay-roll setup data.

E Thirty-nine percent of sur-vey respondents statethat they do not haveseparate assigneeand domesticpayrolls.

E Forty-seven percent iden-tify the work permitand visa applicationprocess as the mainreason for delays insetting up payroll fora new assignment.

“Organizations that opt forhome or host pay should con-sider factoring in exchange rateprotection for assignees sec-onded to countries prone tovolatile currency activity,” saidSiobhan Cummins, ExecutiveDirector, EY Mobility Perfor-mance Improvement.

Q. How is information sharedwith host payroll to ensure ac-curate set-up?



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The almost 90% (88.9%) ofrespondents who cannot relyon a global HR or other systemto share payroll setup dataindicate an equal split betweendeploying a standardized initia-tion process and a �exible orad hoc approach.

In the absence of a global HRsystem, a standard instructionform, as used by 44.4% of par-ticipants, should be considered

a “best practice” approach.This supports consistent infor-mation sharing across all homeand host countries, and subse-quently assists the ongoingprocessing of complete and ac-curate compensation data inboth locations.

However, the remaining re-spondents indicate that theirmethod of sharing informationwith host payroll at setup stage

varies, with 25.1% stating that itdepends on the location and19.4% using ad hoc means. Themore inconsistent the approachis, the greater the risk of errorsand process ine�ciencies—which can ultimately lead togreater cost for the employer.

Q. In which countries do youhave a separate assignee anddomestic payroll?

Almost 39% of survey re-spondents state that they donot have separate assignee anddomestic payrolls to facilitateassignee pay. A further 17% areunsure which countries ring-

fence the assignee payroll fromthe domestic payroll.

Respondents who indicate“Other” elaborate:

E “It depends on the country.We would like every

country to separatedomestic and as-signee payroll, butthat is not alwayspossible — or withinour scope — to pushupon payrolls.”

E “Assignee and domestic



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payroll is separate inmost countries, forcon�dentiality rea-sons and as pro-cesses di�er.”

Keeping assignee and do-mestic payroll separate is, insome jurisdictions, a regulatoryrequirement. But even when notstrictly necessary, a separation

can be bene�cial. Assigneepayroll is generally more com-plex and requires di�erent pro-cesses and treatments to thatof domestic payroll. A separa-tion of the two can allow forgreater focus, bringing processe�ciencies as payroll teams' fa-miliarity with the complexities ofassignee pay increases. In turn,

such focus and familiarity canhelp �ag inconsistencies andrisk areas, leading to enhancedcompliance.

Q. Where you experiencedelays in setting up payroll fora new assignment, what is themain reason for the delay?

Nearly half of respondents(47.2%) identify issues withwork permits and visa applica-tions as the cause for delays insetting up payroll for newassignments. Enhancing thetracking and reporting through-out the immigration process canhelp reduce approval and turn-around times, as can gaining athorough understanding of localrequirements in advance of theassignment setup.

Employers are encouraged toconsider creative, strategic ap-proaches to achieve an im-proved “speed to deployment.”By considering factors such asskills, experience and corporate

need alongside employee na-tional ity, regional mobil i tyagreements and enhanced en-try treaties in the host location,organizations could signi�cantlyreduce delays with assignmentinitiation.

A signi�cant number of sur-vey respondents (22.2%) statethat delays with payroll setupoccurs not for technical rea-sons, but due to ine�cienciesin the stakeholder noti�cationprocess. In most cases, rectify-ing this issue would require onlya review of current communica-tion procedures and could be aquick, non-disruptive processimprovement.

ESTABLISHING ACOMPLIANT GLOBALPROCESS

Establishing a consistent,compliant approach to assigneecompensation globally can bechallenging. A good startingpoint is to evaluate current pro-cesses and identify which spe-ci�c elements are presentingsigni�cant issues that can havean adverse e�ect on compli-ance and operational e�ciency.

Survey respondents wereasked to consider the diagramopposite, which lists the typicalprocess steps required in acompliant, monthly assigneecompensation cycle.



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Highlights:

E Nearly 30% rank the com-pensation data gath-ering process as themost di�cult step toachieve as part of themonthly assignee paycycle.

E Providing meaningful re-porting and analyticsis also a top challengefor respondents asbusinesses demandgreater insight fromtheir mobility data.

E The majority of respon-

dents lack a consis-tent operational pro-cess for ongoingcommunication withlocal payrolls of taxand social securityrequirements.

Q. Which steps do you con-sider the most difficult to

achieve?



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The data gathering processis considered the most di�cultstep to achieve, with the major-ity of respondents ranking it�rst. This is not a surprisingresult—it is one of the funda-mental complexities with as-signee compensation due to thewide variety of sources fromwhich data is collected andvalidated. It is nevertheless avital �rst step—without a com-prehensive clean data set, allother requirements are likely toeither fail or be sub-optimal.

This is recognized by a num-ber of respondents, who giveexamples of initiatives thatwould improve their internaldata gathering process,including:

E “Establishing a process togather data where weknow we have gaps.”

E “Implementing a consistentformat to how andwhen compensationdata is gathered.”

E “Centralization of pro-cessed payroll data,so that, e.g., host taxgenerated in the hostpayroll can be ex-tracted centrally andprovided to the homecountry—not manu-ally requested fromeach shadow payroll.”

Once established, gatheringinformation from local sourceswill allow for a global compen-sation overview. This data canthen be aggregated before be-ing used by local payroll forprocessing, or for other analy-sis and validation.

The second most challengingstep, with the largest number of�rst and second ranks com-bined, is the �nal stage in thecompensation cycle—reportingand analytics.

Businesses are increasinglydemanding greater value andinsight from their data. As aresult, mobility functions are

expected to provide meaningfulanalysis and reporting that candrive future decisions regardingmobile populations—whether itis total costs reporting, work-force planning initiatives or sup-porting the wider talent agenda.

“In an increasingly globalcompetitive market for skills,new forms of mobility analyticscan provide a vital link betweencompensation, talent and mar-ket benchmark data,” said Na-than Sasto, Executive Director,EY Mobility Services DataAnalytics.

For example, costs and ben-e�ts of moving critical talentpools around the globe can berapidly assessed relative toalternative HR execution strate-gies such as local hiring oroutsourcing.

Q. How do you inform payrollof tax and social securityrequirements?

Most respondents apply astandardized method to informhost payrolls at the setup stage

of international assignments.However, the ongoing opera-

tional process appears to beless formalized.



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The majority lack a consis-tent operational process forcommunicating tax and socialsecurity requirements to localpayrolls. A third of respondentsindicate that this is done via adhoc means, and a further 27.8%state that the method of shar-ing this information depends oncountry combinations andlocations.

The payroll process relies onlocal knowledge to assess localobligations and, given the pres-sures on mobility functions, it isunderstandable that there ismore devolution of responsibil-ity to local teams. However,without a common approach,local payroll teams can becomedetached from the assignmentprogram's fundamental aims.

This means not only potentiallysharing information ine�cientlybetween teams, but also creat-ing compliance gaps and a lackof overall control of costs.

A standardized process, asindicated by 28% of respon-dents, can provide greater cer-tainty that all income is reportedand shadowed for tax pur-poses, that tax and social se-curity contributions are paid ac-cording to the countr ies'regulations, and that withhold-ings are applied correctly.

“Incorrect withholdings canbe costly for the business interms of duplicate paymentsand interest or penalties—butthe knock on detrimental e�ecton the assignee experience

should not be overlooked, withpotential impact on social bene-�t entitlements for not only theindividual, but also their depen-dents,” said Mike Kenyon, EYInternational Social SecurityLeader.

CONTROLS, CHECKS ANDBALANCES

The monthly compensationprocess needs a proactive,built-in controls framework tomaximize compliance acrossmultiple jurisdictions. Thesecontrols should be automatedas far as possible to allow forany errors and inconsistenciesto be corrected.

Q. How do you check that thecorrect payment instruction hasbeen followed?

Highlights:

E Sixty percent of surveyparticipants have nocontrol mechanisms inplace to check thatpay instructions havebeen followed.

E Over a quarter review thepayment instruction

only if they receive anemployee complaint.

E Forty percent of respon-dents report that theyhave no formal pro-cess in place for vali-dating that all com-pensation is beingreported throughpayroll.

While 40% of respondentshave systems in place to checkthat the correct payment in-struction has been followed, ei-ther through pay slip review orfrom information available in acentral database, 60% of surveyparticipants have e�ectively no



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establ ished contro lmechanisms.

Twenty-six percent only re-view the payment instruction ifthey receive an employeecomplaint. In general, employ-ees are more likely to raiseunderpayments and errors withtheir compensation rather thanoverpayments or incorrect taxreporting. As a result, organiza-tions that rely on employee

complaints as opposed to auto-mated control methods may runthe risk of:

E Negatively impacting onassignee satisfaction,as the employee isunable to reconciletheir pay

E Unknowingly and repeat-edly overpaying theirassignees

E Mis-reporting income fortax and social secu-rity compliance

Fourteen percent of respon-dents only check that correctpayment instructions have beenfollowed if an error results innon-compliance or double tax-ation, and a further 20% areunsure as to how, if at all, pay-ment instructions are checked.

Q. How do you validate thatall compensation is being re-ported through payroll?

Forty percent of respondentsreport that they have no formalprocess in place for validatingthat all compensation is beingreported through payroll. Glob-ally, tax authorities want em-ployers to be able to articulatethe controls they have in placeto ensure robust reporting of allcompensation items, and a lackof process to do so may leaveorganizations at greater risk ofnon-compliance. In response,some survey participants callfor:

E Consolidation of globalpayroll for the mobilitypopulation

E De�nition of internal guide-lines in order to coor-dinate all parties in-volved, and de�nitionof roles and responsi-bilities

E A genuine link between thetax services providerand the compensationservices provider

The remaining 60% of re-spondents indicate that they dohave a process in place tocheck that payments and with-holdings are actually carried outby payrolls as instructed. Withinmany organizations, a formal-ized validation procedure is also

a requirement for internal auditpurposes.

CONCLUSION

With payroll compliance now�rmly on the radar for tax au-thorities worldwide, mobilityteams are focusing their atten-tion on the accuracy of localpayroll reporting and withhold-ing obligations.

While the majority of our sur-vey respondents report thatthey have not experienced in-ternal and external �ndings andomissions, there remain consid-erable concerns that local pay-



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rolls lack su�cient knowledgeof assignee payroll reporting.

Validating payroll data at theoutset, improving communica-tion with local payrolls and com-paring pay instructed with paydelivered could, for many orga-nizations, bring signi�cant clar-ity for local payroll teams andimprove compliance as a result.

The quest forcompliance—practicalsteps to achieve robustglobal compensationreporting

1. Establish appropriatedata validation andcontrols

Starting out with a completeand accurate data set is criticalto the success of each of thesubsequent stages in the com-pensation cycle. It also providescon�dence that compliance andcost is managed across the as-signee population, as a robustvalidation process will identifyany incorrect or missing pay-ments before they are deliveredto employees.

Moreover, tax authorities andinternal auditors are increas-ingly seeking reassurance thatcontrols are in place to activelymanage payroll compliance, andthe e�ectiveness of these mustbe demonstrated.

Take action

To establish a robust data

collection and validation pro-cess, take the following steps:

E Set up regular training toimprove local payrolland HR team knowl-edge of global as-signee payrollreporting.

E Agree and communicateultimate accountabilityand responsibility forassignee paymentand tax compliance inthe home and hostcountries.

E Put more checks and con-trols in place, reviewall data sources andestablish companyguidelines. Controlsshould include com-paring collected dataagainst assignmentpolicy, and reviewingagainst prior monthsand across the as-signee population.

2. Communicate assigneetax and social securitypositions

Signi�cant time and re-sources are spent within organi-zations to con�rm the correcttax and social security positionof their assignees, such as ap-plying certi�cates of coverageand scheduling arrival and de-parture meetings to establishtax residence. However, this ef-fort could be wasted if theseinstructions are not e�ectivelycommunicated to the localpayroll.

Clear payroll instructions areeven more important for teamswho lack su�cient knowledge

of assignee payroll reporting.Without accurate and clear in-structions, local payrolls run therisk of making incorrect pay-ments to assignees or to localrevenue authorities.

Take action

Reduce the risk of error byproviding local payrolls withcomplete process informationon all tax positions each month.Consider local payroll guides foreach location that include re-porting and withholding obliga-tions, taxability and processes,as well as clear instructions forassignees who continue to paysocial security in their homecountry.

3. Carry out post-payrollanalysis

By making post-payroll anal-ysis part of the monthly com-pensation process, any issuesor omissions can be addressedquickly in the next payroll cycle.This can include identifying anyout-of-policy or duplicate pay-ments delivered locally in addi-t ion to those instructedcentrally. It also provides acontrol mechanism to con�rmthat tax and social securitypositions have been followed.

Take action

Compare payroll output �lesto payroll instructions eachmonth to identify any variancesand take corrective action. Such



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checks can be largely auto-mated, provided they are set upcorrectly and wage types areclearly understood.

4. Seek continuousimprovement throughreporting and analytics

Harnessing global compensa-tion information for analysis andreporting purposes can contrib-ute greatly to an organization'sunderstanding of the fundamen-tals of their mobility program.

Oversight of total programand individual country cost, orthe ability to drill down to spe-ci�c grade and policy compo-nents, can help identify areasfor cost savings. It can also givean indication of the overall valuefor money generated byassignments. This, in turn, caninform strategic decisions, forexample to explore alternativeoptions to secondments suchas localization, local hires oroutsourcing to �ll skills gaps.

Take action

Add greater detail to the datagathering process by includingbreakdowns of, for example,shipping invoices and non-taxable items such as vendorfees. Such minor changes willenhance the value of the datato allow analysis of costs. Makeuse of data analysis techniquesand technology to spot trendsand identify areas of high-costor potential savings.



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