Streamlining payroll andbenefits management for a

remote workforce

I started my career over thirty years ago, but it may as well have been

longer.

In the late 1990s, there was a very different idea of what work was like and

what it entailed. You entered the office building, sat down in your cubicle,

and kept yourself busy so your manager didn't have an excuse to single you

out. If you needed a break, you simply got up and headed to the

watercooler to talk about the upcoming game.

Technology has changed the way we work.

Today, your team does not have to be in one place at the same time. You

can now hire employees across the world, tapping into a global pool of

talent in ways that weren't quite possible before. You could be in Prague

and your employees scattered to the four winds, and still run a successful

business,

Managers no longer monitor their employees through their office window

like they used to during my early days but rely on productivity software to

understand if their employees were getting the job done or not.

Your employees no longer have to commute to an office building to start

their shift. Tools like Slack, Hangouts, and Skype have replaced the

meeting room with something less time-consuming and virtual. Our ideas

of work culture, our professional aspirations, and ideas of productivity

have all changed from when I first started; what hasn’t changed is HR

Sophisticated technology has not made ourcommunication any better

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Whether HR offices had tall shelves that reached up to your shoulders or

software loaded with data, payroll and benefits management remains one

of the most time-consuming operations for businesses.

In fact, in 2020, payroll amounted to over 70% of total business costs.

That’s a huge chunk out of any company’s budget, and I‘m sure that most

businesses would rather reallocate these resources somewhere else.

While technology has allowed us to run a business remotely, it has not

removed the complexities of administrative processes that come with

paying your workforce. If anything, they have become more complex

because now we have new challenges to consider, like currency exchanges

and government regulations.

In this eBook, my plan is to explore some of the challenges that come with

rolling out salaries and benefits for a remote workforce, and most

importantly, how you can work around these problems by retooling your

processes and using the right technology.

Whether you already have a remote workforce or are planning to set one

up, this guide provides some useful information on how to streamline a

process that normally takes a significant amount of time and resources.

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In recent years, we’ve seen remote working grow to become more

common. In countries like the US, the number of remote employees has

grown to over 72%. While the pandemic has made it necessary to enforce

social distancing, there are other factors that make remote working a

staple of the workplace in the future.

Yes, health and safety are important, but there is plenty of evidence to

indicate that remote working is going to be a permanent fixture for most

companies even in a post-pandemic world.

According to a survey in August 2020, 49% of HR leaders plan to hire more

remote workers, once the dangers of the pandemic pass, and another 46%

indicated that they would let employees work remotely more often.

Why, you might ask?

As it happens, WFH is proving to be a popular perk among employees, with

over 56% of individuals stating that they would prefer to work from home,

while another 17% prefer work from home as a permanent option.

Preparing for the future of work

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Lucrative perks, in turn, make it much easier to attract some of the top

talent in the world.

It helps employees manage their work-life balance better, which means

higher productivity in the long run. According to a recent survey,

employees who claim to have excellent work-life balance are 21% more

focused and engaged, compared to people who say their work-life balance

is poor.

In the future, we might not see employees converge in a physical space,

but in virtual common rooms, instead. That is good news if you are an

employee, but as an employer, you have certain obstacles to get through

first.

Besides the usual challenges like communication, engagement, and

“maintaining a company culture”, businesses encounter a lot of

administrative problems too, particularly where payroll and benefits are

concerned.

To prepare for the workplace of the future, it is important to resolve these

problems, so work from home becomes less of a hassle and more of a

benefit for both businesses and their teams.

By the time you are through with this eBook, you will have a much better

understanding of the complexity behind accounting for payroll and

benefits in a global workforce.

You also walk away equipped to streamline your payroll and benefits, so

that they fit into your administrative operations seamlessly, so you spend

less time on HR and more time growing your business.

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Culpable in compliance

The legal challenges of remote payroll management

In theory, payroll should be simple; all you need to do is pay your

employees on time. Unfortunately, that is far more difficult to accomplish

in practice. Legal factors bind payroll, making it hard for even the most

seasoned HR professionals to navigate it efficiently.

Accounting for pay on a global scale

Payroll is a complex web of interrelated factors that muddy the process.

Here are some of these factors.

Each nation has its own legal requirements for paying salaries and

dispensing benefits.

Understanding the legalities of this takes time. This is particularly

problematic if you are new to operating in a country because you must

learn the language and the legal jargon behind it, which often leads to a

central issue: inadvertent non-compliance.

Accidental non-compliance occurs in different ways. Even if a company is

following procedures, they could still find themselves violating the law

because they have not accounted for changes to it. This unintentional

violation occurs in different ways and includes missing deadlines, not filling

out forms perfectly, or even paychecks not going out on time.

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Staying up to date on regulatory developments

Being proactive about employee regulation is another challenge. You have

to account for a dozen different laws when paying your remote workforce,

and these tax laws are changing all the time.

As a business, you can find yourself still clashing with regulatory bodies

even if you have done your best to abide by them because you didn't

account for updates.

Moreover, current compliance processes are simply not efficient. Most

companies rely on a third party to help them handle their payroll and

benefits. This brings with it its own set of issues. Communicating back and

forth between two companies can be time-consuming, especially when

there is a dispute that needs to be resolved. In the long run, this can get in

the way of just how quickly or effectively you respond to regulatory

changes.

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Streamlining compliance and staying one step ahead

Incorporate a timeframe for checking regulatory updates

To work around the issue of accidental non-compliance, while streamlining

this process, you need to tweak your processes so that you are more

proactive about how you manage your global payroll and benefits system.

One step is planning out the process by considering the timeframe.

For example, during week one, you can send out notifications to respective

departments. On week two, remind employees to submit their

information. On week three, validate information obtained and compare it

against regulatory laws.

You should also establish a process, which is often known as horizon

scanning, to stay ahead of the latest regulatory developments. By working

on these processes, it’s easier to anticipate the changes taking place across

compliance regulations.

To further streamline this process, consider delegating authority to more

than one person. One of the reasons why payroll and benefits are complex

is because only a few people can authorise payroll. Delegating authority

can streamline the process, removing the rigidity behind it and preventing

accidental non-compliance.

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Consider democratising the process

Another option is to democratise payroll and benefits rollouts.

Encourage your remote employees to stay on top of regulatory compliance

to ensure payroll is processed accurately. It can also help you maintain a

clear line of communication with your employees, preventing any

misunderstandings that lead to alterations. This might be a more feasible

option if you have an entire team working in one country, instead of a

single employee.

Accidental non-compliance is a huge issue for most businesses. By fixing

your processes, you can make payroll compliance more efficient and have a

much easier time complying with the statutory requirements that govern

payroll and benefits.

However, while compliance remains a huge issue, there are other

problems to address.

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Violating employee rights and misclassifyingcontractors

How poor data management leads to poor employeemanagement

We run into several problems when payroll and benefits are not properly

integrated into company operations. One of these issues is unintentionally

violating employee rights or mistaking them for independent contractors.

Unintentionally violating employee rights

Poor employee management occurs in two ways: violating employee rights

and misclassifying independent contractors.

Most employees are protected by employee rights as per their local

government. In Germany, both parents are entitled to paternity and

maternity leave while France has a strict overtime pay policy where there

are limits on the number of hours employees can work.

When you are operating in several countries at the same time, it can be

very easy to breach employee rights. This does not happen intentionally, of

course.

There could be deadlines to meet, misunderstandings can happen, or a

vital piece of legislation gets lost in translation. When this happens,

employee rights get violated, leading to all sorts of issues. There could

even be issues between you and the local government over how

employees are treated.

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Misclassifying independent contractors as employees

The line between independent contractors and full-time employees is

distinguished by a certain set of factors, and it can be easy to mistake one

for another. Different countries have specific classification systems that

differentiate a contract worker from an employee.

For example, in the US, the IRS has behavioural, financial, and relationship-

related protocols that dictate who is a contract worker and who is a full-

time employee. Misclassifying these types of employees will lead to

problems in payroll compliance.

Automate the payroll process

One option is to automate the process.

Automating payroll procedures, like handing out payslips with the correct

information improves accuracy and helps you avoid mistakes. Moreover,

automating the process makes it easier to account for different

regulations across each country.

It will also help you streamline the process and make it more efficient. This,

in turn, will help you maintain compliant payroll processes while reducing

the effort needed from you and your administrative teams.

How can you avoid these issues?

Establish clear lines of communication with your workforce

Give your independent contractors the option to contact you over growing

concerns about their working relationship with you. That way, if their

working hours go beyond designated limits, they can contact you to

address their concerns.

It also ensures that you are not unintentionally violating employee rights.

Good communication between you and your remote teams also goes a

long way towards resolving misunderstandings, rather than waiting for the

problem to build up.

To ensure you are not making these mistakes, it’s also important to

implement a process that will allow you to classify workers accurately. One

reason why the misclassification of employee status occurs (along with the

unintentional breach of employee rights) is the mismanagement of

employee data.

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Accounting for technical difficulties

Payroll is a daunting task for any organisation

While compliance remains a major issue for most organisations, there is a

technical aspect that prevents global businesses from staying on top of

their payroll as well.

To dispense benefits and salaries, you need to account for multiple data

points. After all, there are many aspects to payroll and benefits: we are

talking working hours, commissions or benefits, tax rates, and related

expenses.

This means pulling data from different systems. For example, if you are

paying by the hour, you need to pull the data from your time tracking

system. Depending on certain processes, you may even need to pull data

from different departments to process payroll and employee benefits.

What’s more, is that the process is not complete even when all these rates

have been accounted for! You have to transfer the funds to three different

parties:

The employee: All employees receive a paycheck that records salary,

bonuses, working hours, and commission.

The local tax authorities: Most countries have different tax institutions

with their own unique rates.

The cost of inefficient planning

Benefit providers: Benefits are not provided to employees directly; there is

usually a separate local organisation that processes these benefits.

These procedures are incredibly complex for most small to medium-sized

businesses to handle, but when you account for different countries with

differing tax rates, currency rates, on top of other variables like employee

bonuses, payroll becomes an inefficient process that could lead to several

problems, including budget planning.

Employee benefits can vary based on each country. For example, the

Netherlands stipulates that teams pay an 8% holiday bonus, while in

Germany, employers are expected to pay up to six weeks of employee sick

leave.

Staying updated on benefits in different countries, on top of individual

benefits, is a real challenge and many businesses end up underestimating

the cost of these benefits. This stems from an inefficient process that fails

to take into account local customs

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Invest in technology that streamlines your payrollprocesses

To streamline payroll and avoid underestimating the cost of benefits,

consider investing in an online payroll management system. A cloud-based

system makes it easier to stay up to date not only on employees’ individual

benefits, but also what is legally mandated per country.

Moreover, a cloud-based system makes it so much easier to understand

what your obligations are and stay ahead of regulatory developments. A

cloud-based system also paves the way for many opportunities to

streamline the process. This includes having professionals from your HR

and finance department collaborating more effectively when it comes to

the distribution of payslips and tax worksheets.

The right technology can help you simplify what can be a complex process

and reduce the likelihood of making mistakes.

By investing in the right technology, you will have a much easier time

streamlining how you roll out your payroll and benefits plan.

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Mismanagement of employee data

What is the connection between data management andpayroll?

Paying a global workforce on time is one of the biggest challenges any

organisation faces, regardless of its size.

It means accounting for and integrating different sources of data for

processing. While the previous chapter addressed what these technical

difficulties are, there is also a managerial component to consider.

When managerial processes are not up-to-date, it can be easy to process

incomplete data.

Unfortunately, it’s also easy to get this process wrong. Take, for instance,

an employee who may not have logged in their hours on time or a manager

who has forgotten to report their sales commission. These little mistakes

are further compounded by the complexities of global payroll. On top of

that, there are external factors like changing regulations that make payroll

and benefits management more complex.

Taking steps to improve data management processes can make this

process more efficient.

Better management leads to more accurate data, which means payroll is

more efficient. It also leads to fewer delays and complications.

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Taking a two-pronged approach to improving datamanagement

Having regular audits can help, but what if you are already auditing your

processes? In that case, it’s best to tackle the problem using a two-pronged

approach: By altering your management process and consolidating payroll

data into one system.

Consider decentralising the process

One option to streamline management and reduce errors is to implement

self-service where possible. Employees can do part of the reporting by

tracking their attendance and time-off reports while you handle the more

complicated datasets like taxes and benefits.

Since you are working with remote workers, there is already a chance they

are reporting their own hours and expenses, so it's only a question of

taking existing data and incorporating it into your payroll system.

This streamlines the process because you don't have to dedicate time to

data entry; you only need to review what your employees have already

added, making payroll easier to manage and more accurate.

If you are using more than one system to manage your payroll, it is best to

consolidate your payroll data on a single system.

Consolidate your data on a single system

Businesses that work with a local partner often work with different

systems, but this only complicates the process even more. Making a shift

from multiple systems to a single system can help you streamline payroll

and benefits management. You can also consolidate your data, easing

management of what can be a very complicated dataset!

A system capable of storing and processing information like salaried

employees, contractors, and records can help you improve your efficiency

and reduce the likelihood of errors. It will also be easier to coordinate

payroll and benefits on a global scale, making the process less resource-

intensive in the long run.

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Today, company structures are changing. Our employees don’t have to

share a common space to work; they can be in a different timezone and

still deliver value to your organisation. While this is good news for

employers and employees, there are some concerns to be addressed.

If you are spending a lot of time processing payroll and benefits, chances

are, your processes are not as efficient as they should be. This is

particularly disconcerting because it could lead to several problems when

your company grows: compliance violations and sour relationships with

employees, for instance.

The good news is that you can streamline your processes, so payroll and

benefits take less time to dispense even as your workforce grows.

Implementing these strategies can help you create a more efficient

process where your employees get their pay on time so that all parties

remain happy.

If you are looking for a way to streamline your payroll and benefits to

spend less time on tedious data management, contact Rivermate for what

you need.

Recalibrating payroll and benefits managementfor greater efficiency and compliance

hello@rivermate.com

Burgemeester Loeffplein 70E, 's-Hertogenbosch

www.rivermate.com