Resource management

GBCI 2022: focus on payroll and human resources – Human resources management

This article focuses on the first of these three key business areas, payroll and human resources, taking a closer look at some of the findings from this year’s Global Business Complexity Index (GBCI), as well as feedback from our subject matter experts.

Advantages

Paid leave and minimum wage remain the top two legally mandated benefits worldwide, followed by paid maternity leave and paid sick days. Over the past three years there has been a steady increase in statutory requirements for compassionate leave, childcare support and housing/social care contributions, mainly due to developments requirements in South American and EMEA jurisdictions. It is therefore not surprising that among the ten most complex jurisdictions for payroll and human resources, six are in the EMEA region and two are South American. Overall, companies tend to be more employee-centric, which is perhaps related to a greater emphasis on social responsibility.

The requirement for companies to submit employee reports remains mandatory for most jurisdictions. As we’ve seen, reports on equalities (for example, the gender pay gap or employees with disabilities) and employee demographics have increased compared to previous years. Details of foreign national employees are increasingly required to be submitted by all organizations, rising from 54% of jurisdictions in 2020 to 68% in 2021 and 73% in 2022.

Equality reports saw the biggest year-over-year jump, with respondents in 26% of jurisdictions confirming that reports are required by their government authorities, up from 8% of jurisdictions in 2021. This increase is evident in all regions, with jurisdictions of note including Brazil, Argentina, Malaysia, Turkey, Slovakia, Vietnam, Slovenia, Guatemala, South Africa, Thailand, Chile and the Dominican Republic.

Additionally, this year’s research found that employee rights channeled through works councils and unions are common across jurisdictions, with 66% of all companies globally legally allowing employees to be members of unions or works councils. This is led by South America, where this is true for all businesses in all jurisdictions. In 69% of jurisdictions worldwide, works councils are allowed to demand regular wage increases for employees, led by EMEA (76%) and South America (70%).

1211620b.jpg

Impacts of global mobility

“Global labor mobility will generate a need for more sophisticated payroll and HR services.”

Payroll and human resources expert, TMF Romania

Covid-19 has had a significant impact on payroll and human resources, with many of those mandated to work from home continuing to work remotely at least some of the time. With remote work, employees have had the ability to move away from the city, or even the country, of their place of work, accelerating the trend of global mobility.

Before the pandemic, global mobility was primarily a company initiative, where employees were moved to a certain location in order to perform a specific job; the balance has now shifted towards employee-centric mobility. While this flexibility is widely seen as beneficial for employees, for employers it can be a source of complexity as there may be additional HR and payroll obligations or considerations.

“From a payroll perspective, you need to consider residences and taxes. Global mobility is increasingly something companies need to address, and it’s not easy. They will need to ensure that whether they have in-house global mobility advisors, or whether they work with multiple vendors, they will also need to track visas as part of this service.”

Payroll and human resources expert, TMF Group

Our expert in Hong Kong highlighted the rise of global mobility, not only within the workforce, but also within supply chains:

“We are likely to see increased global mobility as companies seek to diversify both their markets and their supply chains. future disruption to their operations, which will likely lead to hiring additional suppliers and vendors, as well as establishing manufacturing bases in more countries. International companies will have to deal with the nuances of hiring, retention and, in some cases, personal dismissal in more jurisdictions.

What does the future of payroll and human resources look like?

On the payroll side, digitization plays an important role, which has only been accelerated by the pandemic. For example, electronic payslips are becoming the norm in most regions, although some jurisdictions in South America are lagging behind this trend. Another, perhaps newer, example is the introduction of chatbots to allow employees to get HR questions answered, reducing the need to speak directly to HR professionals.

“There are generally a lot more e-filings in APAC. Europe and North America are probably second. South America is a region characterized by complexity and a lot of manual processes. And that’s the region where you still also produce physical paper payslips for employees.”

Payroll and human resources expert, TMF Group

While digitization can simplify processes, such as accessing information, organizations are now increasingly leveraging data with payroll providers and demanding more information than ever before. Examples of such data include reports on equality (eg gender pay gap, disability). Although the reporting of this information is often non-statutory, some jurisdictions encourage the disclosure of compensation differences for board-level employees and lower-paid employees, placing an additional reporting burden on those responsible for reporting. pay.

“There are going to be more statutory reports, people want more information and more data. I think any organization these days – whether you’re in business, in healthcare, a teacher – people value data more, so the demand for data and analytics is going to be greater every year.”

Payroll and human resources expert, TMF Group

With increased digitization of payroll and the requirement for additional employee data and analytics, this leads to the question of what data and insights can we provide? The traditional payslip, while necessary for employees to see their level of pay and taxes, is a legal requirement for business reporting. However, experts from TMF Group anticipate that payslips could be used to provide more information to employees, such as expected tax changes, commission rates if they work in sales roles or information relating to the equality of chances.

In the future, not only could there be an evaluation of the data we provide to employees, but also a potential move towards on-demand payroll. It is common for employees to be paid monthly, but employees could have the option of having more flexibility in how they are paid by taking part of their salary. Flexible pay is already widespread in the United States, but it is unlikely to happen in the short term globally.

Adele Ewing, Global Head of Payroll and Human Resources at TMF Group, adds:

“Payroll technology has a key role to play in consolidating multi-country payroll operations, but it would be a mistake to downplay the importance of the human touch.

Providing businesses with access to payroll experts who speak the local language and understand the local business and regulatory environment makes a big difference when it comes to mitigating the risk of non-compliance in every country they operate in. .

The risks associated with choosing the wrong payroll provider are numerous and potentially very costly, so in that sense, it makes a difference for companies to consolidate their overall payroll service offering.”

The Global Business Complexity Index

The 2022 GBCI provides authoritative insight into the complexities of building and operating businesses around the world. It explores the factors of success or failure in international business, with a focus on operations in foreign markets, and describes key themes emerging globally as well as local complexities in 77 jurisdictions.

Explore GBCI rankings, analytics and global trends to help you find your way to growth amid the complexity of business compliance.

To download and read the full report, visit the Global Business Complexity Hub today.

To learn more about the drivers of case complexity in the jurisdictions you are interested in, why not explore our Complexity Insights dashboard?

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.