Technological advances, the pandemic, travel restrictions, and personal preferences have allowed many skilled workers to call the shots.
A remote-working ideal typically engenders flexibility in a work setting and the freedom to operate on an individual basis, while meeting the multiple demands of global business objectives.
This reality is reflected in a growing number of Australians (around one million and rising) who are living and working overseas – many of whom first explore the option of working remotely for their current employer.
But allowing workers this kind of flexibility could potentially open the employer to significant payroll-compliance risks.
Why small businesses should be open to global hiring
Smaller Australian businesses often have fewer resources, so when they are recruiting it is usually to fill a specialised or immediate need. Given this added pressure, it’s wise to widen the net and be open to hiring candidates globally.
As 98 per cent of Australian businesses fall into the small-and-medium enterprises (SME) category, it’s not the large businesses they are competing with, it’s often companies of a similar size. SMEs that expand their hiring pool outside of Australia, while offering more flexible working conditions, will have the best chance of finding and retaining top talent.
New figures from the Australian Bureau of Statistics (ABS) have revealed nearly 10 per cent of the Australian workforce quit their jobs last year – a massive 1.3 million people, so it’s important for businesses to think differently about their hiring practices in order to keep up with the changing employee landscape.
How small businesses can manage compliance risks
Global hiring is becoming more commonplace for Australian companies. Given SMEs usually operate with limited resources and smaller financial margins, every step of payroll compliance needs to be informed and failsafe.
Small local businesses that offer remote-working opportunities on a global scale, but don’t have the correct foreign entities set up, need to ensure they understand and comply with the local employment regulations of every country where they have an employee. This includes having a compliant payroll solution, knowledge of and compliance with local statutory benefits, and a localised employment contract.
In-country employment laws override contradicting work contracts, so if companies ignore local regulations, say in favour of the laws and rules where the company headquarters are, the consequences can be damaging.
While this situation can be challenging, it’s important that businesses don’t overlook payroll compliance while they adapt to employee needs to remain competitive.
Here are some tips to help SMEs manage payroll compliance risks while easing the time and cost burden of having employees in different countries:
- Overhaul your payroll systems with a centralised solution. This is complex, as it brings together and standardises payroll processes and technologies across multiple countries, languages, and currencies, but is an important step for visibility and risk management.
- Leverage a global payroll provider with a history of success in foreign markets, and people on the ground with in-depth knowledge of local regulations. In-market HR experts are the best resource for understanding your obligations. Expanding globally means internal policies will need to be adapted for each region and continually met.
- Ensure you can operate payroll in a timely and accurate manner, ensuring international employees are paid in their local currency. The fluctuation with currency exchange rates can be challenging if not accounted for in the system.
- Be aware of different tax reporting deadlines to meet and complications to avoid in each market, so that you don’t have issues with local tax authorities.
- Roll out training and support programs alongside your payroll program to ensure that all features are understood from inception.
- Last, but not least, standardise data. With data being shared across borders and teams, it’s important to have a collaborative and transparent plan in place for global standardisation.
