Articles

How to pay your remote employees?

Paying remote employees is a stumbling block for many businesses. The issues include maintaining an efficient payroll system, calculating payroll based on individual circumstances, considering job specific agreements, and complying with state and national requirements. This complexity is challenging for remote employers hiring in one country. Paying employees across countries requires an even more complex payroll system.

5 min
Suzie Haines
December 14, 2020

Paying remote employees is a stumbling block for many businesses. The issues include maintaining an efficient payroll system, calculating payroll based on individual circumstances, considering job specific agreements, and complying with state and national requirements. This complexity is challenging for remote employers hiring in one country. Paying employees across countries requires an even more complex payroll system.

Some companies assume that contracting will solve their remote payroll issues. But misclassifying an employee as a contractor is regarded as non-compliance and severely penalised by local authorities.

When employing remotely, you will want a payroll scheme that is compliant, cost-effective, and that significantly reduces your admin burden. The first step is to know what exactly is included in the payroll process for remote employees. We detail everything you have to consider when paying your distributed team and how to find the best payroll solution for your company.


When to pay employees


Each country has different rules or customs regarding when employees need to be paid. Employers must first be aware of pay cycles or periods. These are the periods during which an employee’s time worked is recorded and paid. Employers also need to be aware of specified rules regarding payday, including when this should occur and how.

While some countries’ pay day is the 25th or last day of the month, others vary. In Mexico, for example, salaries can be paid out on a weekly, bi-weekly or monthly basis. This will depend on the agreement in the employment contract.

The table below compares the monthly payroll cycle of a few countries:


Many countries also have a mandatory or customary 13th or 14th month pay. When this has to be paid will also be stipulated either in state law or in the employment contract.


Employer and employee contributions


Employer and employee contributions have to be paid in accordance with the law of the country where the employee is resident. These commonly include:

  • payroll tax
  • healthcare
  • unemployment insurance 
  • pension or superannuation funds

Each jurisdiction will calculate these according to local regulations.

For example, South Korea has relatively high contribution requirements. Currently, contributions are generally calculated as follows:

In comparison, South Africa’s contribution requirements are currently low. These will vary according to the employer and employee. As of now (December 2020), companies with a payroll over ZAR500,000 (approximately £21,000) per annum will pay approximately:

In addition, some countries, like Australia, will set specific standards, but regions or provinces can stipulate the percentages of employer and employee contributions.

There are also intra-national regulations to ensure that contributions are being paid properly. Within the EU, for instance, there are also clear guidelines on how and where contributions are to be paid for cross-border workers.


Employee income tax


Some countries, like Bangladesh, allow employees to file their income tax themselves, before an annual deadline. But this is less common around the world. Income tax will generally be deducted from your employees’ monthly pay. Your payroll process will need to ensure that this is being paid correctly.

Employee income tax is paid in the country where employees are tax residents. Their tax residency is determined according to citizenship, right to work, and how long they are living and working in a country. You will need to know the applicable tax codes, brackets or rates for each employee to ensure their income is properly taxed. 

For example, Brazil’s income tax brackets calculate tax percentage by monthly salary. These, however, can change frequently due to currency fluctuation. As of now (December 2020), income tax is calculated as follows:


A less conventional example is Romania, where income tax is calculated as a flat rate of 10%. There are exceptions to this for some forms of income, but generally a salary will be taxed at this rate.



Local currency rules


Most countries’ labour laws will require you to pay your remote employees in their local currency. 

But where there is exchange rate fluctuation or high inflation, the value of a currency can crash suddenly. In this scenario, either the employer or the employee will have to bear the consequences. 

To mitigate currency risk, some countries allow employers to specify other base currencies in their contracts or allow a fixed exchange rate to ensure stability in payments for remote employers and employees. Where this is not allowed as part of the employment contract, Omnipresent can help you and your employees to draft a separate civil law agreement to hedge for exchange rate fluctuations.


Payroll systems


A smooth-running payroll system significantly reduces admin, enhancing employer and employee experiences. When choosing the right payroll provider, you should look out for a service that can handle: 

  • compliant salary and benefits payments
  • international payments across currencies and jurisdictions

To handle international payroll successfully, the service used needs to be able to handle the complexity of a global workforce. This includes tailoring to the needs of employers while also meeting local expectations and laws. This involves paying before public holidays and making sure funds don’t get delayed internationally.

Not all payroll providers are able to offer the breadth of these services and to tackle all the obstacles to international payroll.


Fortunately, Omnipresent Covers All Your Payroll Needs.

Omnipresent offers a holistic payroll package for remote employees in 150 countries. Our tech-driven service includes:

  • ensuring compliance in 150 countries - and more to come
  • tailored benefits packages
  • expertise to mitigate currency risk
  • a secure and user-friendly digital platform
  • paying all your staff in one invoice

As a remote-first company, we are facing the same payroll questions that all companies employing remotely are facing too. With Omnipresent mitigating all risks and taking over employment admin, your company can: 

  • hire the best talent from around the world
  • optimise your hiring structure and minimise cost
  • focus your time on the highest ROI activities

Omnipresent can help your company create the best payroll solution geared towards your and your employees’ needs. If we’ve piqued your interest, get in touch for a free consultation.


*Local tax and contribution percentages are subject to regular change. All data presented here is accurate at the time of publication. 


Suzie Haines
Suzie Haines manages payroll at Omnipresent. She has 20 years of experience in domestic & international payrolls and prior to Omnipresent lived and ran her own business in Italy for 12 years. She is now settled in Bath, UK.