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How To Pay a Global Team: A Comprehensive Guide

By June 19, 2023September 20th, 2023No Comments6 min read

Guest post by Deel


Since the pandemic, the rise of remote work has allowed businesses to hire the best talent across international borders without too much hassle.

Globalization and the development of technology have revolutionized the business landscape, creating opportunities for organizations to branch out and develop a global and remote team while remaining connected with employees.  

The increased popularity of global employment expands opportunities, fosters cultural exchange, and contributes to the growth of organizations. Managing employees in different parts of the world has many benefits, but it also demands careful attention to remain compliant, efficient, and productive — especially regarding global payroll.

When paying global team members, there are various factors to consider. We’ve compiled a comprehensive guide to help you navigate the process of paying a global team.

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Understand the Local Labor Laws 

First and foremost, it’s essential that human resources and the payroll team understand the local labor laws of each country involved, ensuring compliance and fair treatment of all employees. 

Different countries have their own set of regulations that cover minimum wage, working hours, overtime, taxation, benefits, and employment contracts. There may even be differences from one American state to another. 

Familiarizing yourself with these laws helps to prevent legal issues, penalties, and other negative consequences for the business and international employees. Demonstrating a commitment to local labor laws also helps to build trust among employees and maintain a positive work culture. 

Choose the Right Payment Method

The chosen payment method will impact the efficiency, security, and ease of transactions. Various payroll providers offer different payment options, but it’s important to consider the countries involved, the frequency of payments, and the preferences of the team members when choosing the best for you. 

Standard options include wire transfers, online payment platforms, and international payroll services. Each has its own pros and cons, and it’s necessary to do your research before making a decision. 

For example, wire transfers are reliable, but they typically involve high fees and longer processing times. Online payment platforms, like PayPal or Payoneer, offer convenient and quick transactions but have certain limitations and fees. In contrast, international payroll services provide comprehensive solutions while considering compliance, taxation, and local regulations. 

Keep in mind that you may be paying independent contractors as well as full-time (or part-time) employees, and these payment methods may vary. It’s important to keep strict employee records to prevent misclassification (and its consequences).

Consider Exchange Rates and Fees

Exchange rates and fees are typically involved in global payments for distributed teams. These rates and fees can impact accurate and fair compensation. They should be minimized and allocated accordingly. 

Keep in mind that fluctuating exchange rates may impact the employee’s salary. It’s important to stay updated on any changes so the company can offer competitive rates or allow for currency conversions at favorable rates. 

Take the time to compare and evaluate the fees for foreign transfers or currency conversions for local currency, ensuring that you minimize costs while maximizing the amount earned by remote employees. 

Set Up a Payroll System

Managing payments can get complicated when working with global team members, but a streamlined payroll system makes the process easier and more efficient. All of the above steps will play a role in choosing the best payroll system for your international team, including understanding local labor laws, tax regulations, and social security contributions, such as health insurance. 

deel dashboardEstablish a centralized payroll system to handle multiple currencies and facilitate cross-border transactions. Partnering with international payroll service providers or investing in payroll software helps to automate calculations, generate pay stubs, and manage tax withholdings. It’s worth considering whether your chosen system integrates with existing accounting software for efficient financial reporting. 

Take the time to review and update your payroll system to adapt to changes in regulations or the team composition. A robust payroll system will save time, ensure prompt payment, and maintain compliance, making the payroll process cost-effective and efficient.

Communicate Clearly with Your Team

Clear communication is key to fostering transparency and trust while ensuring smooth financial transactions — especially with remote teams which don’t benefit from regular face-to-face contact. Establish clear communication channels through email, instant messaging, video conferencing, and project management tools to facilitate dialogue about the payroll process. 

Make sure that all employees are informed about the payment schedule, including dates and frequency, as well as any relevant details, such as taxes or deductions. These details should be shared from the beginning of the onboarding process. If necessary, provide clear instructions on payment methods and necessary documentation for timely processing. 

Transparency is especially important when addressing currency conversions or exchange rates, ensuring you provide accurate information to prevent confusion or misinterpretation. 

It helps to have a dedicated point of contact to address any payment-related inquiries or concerns timeously. By establishing a strong rapport with your team and welcoming feedback, you can minimize misunderstandings and create a positive working relationship with your remote team. 

Other Options to Consider

There are a few easy tips to consider that reduce the hassle of global payrolls, such as the following.

  • Establish a local business entity and run local payroll
  • Consider hiring remote workers as contractors and pay in their local currency
  • Use an employer of record service (EOR)
  • Get advice from a payroll expert

A Streamlined Approach to Global Payments

Keeping each of these steps front of mind ensures that you successfully pay your global team while complying with local labor laws. Not only do these practices ensure compliance and prevent costly mistakes, but it also maintains a positive and transparent workplace culture where employees feel valued. 

Make sure that you consider the functionality of your chosen software, ensuring that it ticks all of your boxes and helps you to pay your global workforce on time and fairly. A service that considers employment laws across time zones is an added benefit when hiring remote workers. 

Take the opportunity to leverage available technology to streamline and automate payroll management, making the process simpler and more efficient.  With Deel, businesses can expand globally with speed and flexibility, streamlining the global hiring, HR, and payroll process in a centralized place.