According to the latest industry trends report by the TMF Group (a leading provider of tax, accounting and HR services on an international scale), together with the Global Payroll Association, a lack of knowledge of local regulations is the biggest challenge faced by global and in-country payroll professionals.
Of the in-country payroll professionals surveyed, 41% reported a lack of knowledge of local payroll legislation and requirements, which was an increase of 6% on 2016.
Cited by 30.2% of those surveyed was a failure of in-house professionals to understand local rules and regulations and 29.6% said they were responsible for sourcing local payroll compliance information, but were often unaware of where to find it. These were the most common reasons given for payroll errors.
Of the payroll professionals surveyed a high amount - 69.4% - reported having no or fewer than 50% of global policies that apply to all payrolls.
The top four challenges faced by global and in-country payroll professionals were found to be lack of knowledge of local payroll legislation and requirements; vendor management; ability to find information on legislation and compliance and lack of consistency in policies and processes.
Deborah Williams - Global Head of Service Lines at TMF Group - said:
"The payroll industry is doing remarkable work despite facing increasingly complex rules and regulations. Nonetheless, the lack of local knowledge is of concern, as it has potential repercussions on compliance. Ultimately, it can affect the payment of staff and the performance of the business.
It is encouraging to see that four out of five payroll professionals value having an in-country contact - such as ourselves - who speaks the local language to help them communicate more effectively."
She added:
"The lack of consistency and control that results from not having robust payroll policies and processes in place should be of concern to organisations operating in multiple jurisdictions as this leads to errors in payroll processing and increases risk of non-compliance.
Our report with GPA also shows that many organisations are yet to adopt appropriate technology to support their payroll operations at an international scale. This contributes to the failure of policies and processes.
There is a growing trend among organisations towards the adoption of middleware to solve the problem of trying to deal with a multitude of systems and suppliers across different territories. We now see many organisations turning to payroll outsourcing to fulfil these needs."
Melanie Pizzey - CEO of the Global Payroll Association - stated:
"Our second annual survey with TMF Group indicates that professionals responsible for multi-country payroll delivery are facing increased complexities on many fronts. As a result, global payroll transformation is - or will become - a priority for employers so they can achieve consistency in their global operations, and maximise the return on their investments."
