Not two decades ago, global payroll was all about manual paperwork, finding appropriate banks to pay foreign employees, losing money over changes in currency differences, and other tedious efforts. Employers used to record hours and calculate wages manually in spreadsheets, which often led to errors, inconsistencies, and sometimes, even fraud.

However, advances in cloud-based systems, artificial intelligence, and machine learning has disrupted global payroll, enabled real-time data access, reduced human error, and increased the accuracy of processing information.

Global payroll trends evolve quickly. To remain compliant and efficient, it's crucial to grasp the trends and factors influencing global payroll's evolution.

Emerging Technologies in Global Payroll

Various technologies have cropped up in the last few years that have changed how payrolling happens. These advancements enable founders to focus on core business activities and international expansion and reduce the administrative burden of processing payroll. 

More importantly, these technologies are also helping finance leaders and payroll experts by reducing the time spent on manual data entry and cross-checking. Thanks to improved data visualization technologies, modern payroll solutions often come with employee self-service portals, which improve transparency and access to payroll information. 

The key technologies impacting payroll processes are: 

1. Artificial Intelligence and Automation

Payroll solutions use AI to automate tasks such as payroll calculations, data entry, and answering simple employee queries. This eliminates manual oversight and saves time, improving task accuracy.

Compliance management is another area that AI can help with. Payroll regulations differ from country to country, sometimes even inter-state (or province), so staying up-to-date with any changes can be challenging. AI systems in payroll software can collect data from various sources, such as government websites, legal databases, news feeds, and official bulletins and ensure payroll processes comply with local laws and regulations. Users of these platforms can also receive alerts from the AI systems whenever major legislation changes happen.

2. Blockchain boom in Payroll

Decentralized in nature, secure to the core, and offering increased transparency, blockchain technology has revolutionized the payroll sector. Multinational companies can use blockchain to safely store payroll-related information and ensure data integrity.

Other phenomenal applications of blockchain in global payroll are payroll administration and cross-border payments, benefits administration, time and attendance, fraud protection, workforce scheduling, certifications, tracking employee training, and more.

3. Cloud-based Payroll systems

One of the most significant international payroll trends is the shift toward cloud-based payroll systems. Modern businesses, especially ones that have the potential to scale globally, require a high degree of flexibility and efficiency in payroll. This is where cloud-based systems come to the rescue.

Cloud-based payroll systems are bang on the opposite end of traditional payroll systems. They offer real-time, universal access to payroll data, a crucial feature for multinational companies that manage diverse and geographically dispersed workforces to exploit. The accessibility feature allows payroll admins to effectively sync operations across different time zones and regulatory landscapes while maintaining consistency and compliance.

One of the blockbuster features of cloud solutions is the integration with other business systems. From operations and project management to human resource and financial management, cloud-based systems can offer a comprehensive and unified approach to organizational data management.

Read more: Best Crypto Payroll Software

Navigating Labor Laws and Regulations Across Borders

Numerous companies are expanding their operations across borders but run into a complex maze of payroll and tax regulations. Understanding and adhering to these ever-changing regulations is quintessential for ensuring compliance and sidestepping costly penalties.

Through two examples, let’s delve into the complexities of navigating international labour laws and regulations:

1. United States of America

The country has a multifaceted labor system that is evolving and making changes to its laws constantly. For example, within the last year, a few states, such as New York, California, and Washington, have passed a “Pay Equity Legislation” that requires employers to list salary ranges for both external candidates and internal opportunities. The FTC (Federal Trade Commission) also proposed a rule that would ban the use of non-compete clauses in 2023. Navigating changes like this and the USA’s tax structure (which varies with each state) requires keen attention to detail.

2. Germany

On the other side of the Atlantic, Germany has its own set of changing laws. Recently, a law was passed that states, “A woman’s entitlement to equal pay for equal work cannot be circumvented by better salary negotiations by a male colleague”. Another example of changing rules is the increase in pension insurance and unemployment insurance ceilings in 2023. In West Germany, it was a rise to EUR 7.30 per month from EUR 7.05 in 2022 and in East Germany, it rose from EUR 7.10 from EUR 6.75 for the same time period.

To parse these diverse frameworks and changes, businesses need a robust payroll system. The key to managing payroll and tax obligations across borders requires a nuanced understanding of each country’s ever-evolving regulations.

The Rise of Remote Work

We all know that the COVID-19 pandemic strongly injected the remote work concept into employment relationships. Five years later,  despite COVID living only in our memories, remote and hybrid work are still very much in fashion.

A Forbes 2023 statistical study showed that 12.7% of full-time employees still work from home, while 28.2% of the same group adapted to the hybrid work model. As companies become more multinational, remote and hybrid work must follow this shift. 

Below are some challenges companies could encounter in the face of global payroll trends.

• When managing remote work teams is figuring out the various tax regulations across jurisdictions. Varying income tax laws, social security contributions, and local levies are just the surface of the payroll compliance iceberg.
• The uptick of remote work has underscored the criticality of accurate time and attendance tracking. When teams are spread across different time zones, payroll management must monitor work hours and overtime. This is where implementing top-class time-tracking systems helps ensure fair compensation and labor law compliance.
• Managing benefits, rewards, and allowances is usually an uphill battle for many payroll administrators. With remote work, it becomes more challenging. Remote employees may have different healthcare plans (based on the local laws of that country), retirement schemes, or other perks based on their geography. Thus, it’s again crucial to have payroll systems that can adapt to the varying demands of remote work.

The Value of Good Employee Experience

An employee-centric workplace is an office environment where not only creativity, free communication, ideas, and innovation are encouraged but also ensures employee satisfaction in areas of expense management and payroll.

1. Employee-centric Payroll Practices

How often do payroll administrators respond to one-off requests from employees about their pay stubs or vacation entitlements? A few times a month? A strategic payroll leader understands that employees are at the heart of all payroll operations. It’s mandatory to focus on good employee experience and engagement. Implementing employee self-service tools, managers checking in on remote workers every once in a while about their planned time offs, and answering payroll-related queries promptly are some practices that can empower employees to perform better and build better trust.

2. Personalization of Payroll Services

A majority of employees are not used to seeing notes on their pay stubs that clarify payment information, such as “Worked on Christmas Day; 1.5x rate paid”. But this information could be a real morale booster for that employee, right? The ability to include messages on payslips presents a chance for employers to speak to their workforce – to promote corporate wellness programs, recognize a cultural event, or even celebrate a company’s milestone.

3. The rise of employee Self-Service Portals and their benefits

Although they have been around for a while, employee self-service portals are on the rise and are very much part of today’s global payroll trends. These portals are designed to provide employees access to and manage their information. Some of their features and benefits include:

a. Onboarding & Offboarding

Employees can easily submit new hire forms (or exit clearance forms) from anywhere using these portals. It’s also simple to update address changes in case of moving from one location to another.

b. HR & Payroll

Allows employees to view and update their personal information (name, address, dependents, etc.) and submit and track approvals of leave/time-off requests.

c. Time & Attendance

Clocking in and out has always been challenging. This feature helps keep track of hours worked, which is an essential consideration if a company works with contractors or freelancers who bill by the hour.

Read more: Guide to Global Payroll Compliance

Other Trends on Global Payroll

1. Green Payroll practices

This will be one of the vital payroll trends in 2024. Imagine reducing paper waste by eliminating cheque printing, pay stub printing, and other tedious manual forms. Even newly hired employees only need to digitally sign their offer letters nowadays through tools such as DocuSign and Zoho Sign. When governments worldwide, like Dubai’s, have gone entirely paperless, why shouldn’t the trend continue in global payroll?

2. Socially Responsible Payroll Practices

Nowadays, organizations engage their employees more in CSR (Corporate Social Responsibility) activities through employee benefits packages. The activities include volunteering, payroll donations, on-demand pay arrangements, financial wellness programs, and reimbursement for social causes.

Benefits of Outsourcing Global Payroll

Outsourcing global payroll to EOR services like Gloroots can be beneficial. Here’s why :

1. Cost Savings

Typically, outsourcing payroll services costs less than having an in-house payroll department. Outsourcing payroll can save both monetary and opportunity costs for fast-growing companies that want to reduce costs and focus on core business functions.

2. Better Data Security

By outsourcing payroll, you can rest assured that all employee data is secured according to industry-best compliance standards, GDPR regulations, and labor laws,  potentially preventing issues like identity theft, embezzlement, and unlawful employee practices.

3. Better Employee Experience

For scaling teams, processing payroll and maintaining compliance standards can be challenging, resulting in payroll delays and costly mistakes. By outsourcing payroll, you can focus more on workplace engagement to improve employee experience and leave the onus of paying salaries on time and expense reimbursements to specialists.  

4. Compliance

Outsourced payroll companies constantly update their know-how of the ever-changing tax laws and regulations, which can help their clients avoid non-compliance penalties.

Gloroots has broken ground in global payroll practices and with all the bells and whistles that come with payroll outsourcing. For better insights into how we can help you keep up with the worldwide payroll trends, book a demo with us!