HRO Today Global Autumn 2017 - 42

The Benefi ts
Package
Payroll From Afar
An infl ux of remote workers means new compensation considerations.
By Jean-Luc Barbier
In recent years, HR departments have witnessed the
rise of a whole new type of workforce, one that
now includes remote workers. As globalisation,
skill availability, and outsourcing practices change,
businesses have been taking advantage of freelancers,
and the traditional work environment is being reshaped.
According to a recent Gallup survey of more than 15,000
employed workers, 43 per cent said they work remotely
at least some of the time. This is a four point uptick
from 2012. Many large organisations know that the best
talent might not already be at their doorstep, and there
is nothing stopping them for looking globally for a new
employee.
Although the skill gains can be huge, there are also
important considerations that can impact productivity,
especially if remote workers are in another country.
These issues include time zones, currency fl uctuations,
and language barriers, amongst others. Further, the
question of how to pay remote workers pops up for
many businesses time and time again. Wages can vary
widely from one location to another.
Managing a remote workforce can be a full-time job,
but ensuring that remuneration is accurate and on-time,
and that all taxes are paid can be a whole other matter.
Before engaging a worker remotely, fi rst consider if
they will be employed by the organisation or as an
independent contractor.
Engaging them as a self-employed worker makes
payment much simpler, as there are no complicated tax
obligations. If, however, the worker is not self-employed
and is an employee, then, depending on the residency
of the person and the payroll location, a certain amount
will need to be withheld from payroll. In some countries,
workers who claim to be independent, self-employed
consultants may still be classifi ed as employees if they
spend most of their time working for the company.
Currency Considerations
Currency fl uctuations are also hard to manage,
[42]
HRO TODAY GLOBAL
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AUTUMN 2017
especially if the worker wants to be paid in their local
currency. Whenever possible, pay the worker in the
currency of the company's home country. This will
generate an equal pay rate across the team and reduce
any negative factors that could affect the team.
If the employee is based in another country, it may
be worth engaging a local payroll company and
outsourcing the remote workers payroll. This will ensure
that all local laws are met. When a remote worker is
paid from the company's home-country payroll, it may
be necessary to withhold taxes, even though the worker
lives abroad. The employee is then responsible for fi ling
a claim to recoup the overpaid tax and pay their own tax
liabilities in their country of residence. Some countries-
such as Ireland and the U.K.-have double taxation
agreements. Country of residence also increases in
complexity when taking into account benefi ts such as
healthcare, minimum wage laws, overtime, and annual
leave, as many different tax rules apply.
Business Cohesion
To tackle payroll effectively, keep remote workers up
to date with any pay changes. Organisations need to
consider whether a remote worker should receive the
same pay increases as an equivalent in-offi ce worker. An
accessible platform for all workers that provides details
of pay structure, dates, benefi ts, holiday time, and sick
leave can eliminate confusion for remote employees.
Ensure that remote workers keep the organisation up to
date on any personal changes, like moving.
Any organisation thinking of engaging remote workers
in their own country or abroad should consider
outsourcing payroll. Doing this ensures that all tax
obligations are met and there are no surprises. Do
not let the complications of remote workers deter
engagement. As long as an organisation has the correct
payroll set up, the benefi ts could far out way any issues.
Jean-Luc Barbier is international managing director and CEO,
Germany of SD Worx.

HRO Today Global Autumn 2017

Table of Contents for the Digital Edition of HRO Today Global Autumn 2017

HRO Today Global Autumn 2017 - 1
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