How To Pay International Employees
An all-encompassing guide to paying international employees, including suitable payment methods & factors to consider.
You’d be hardpressed to find a web-based company today that doesn’t have international employees. Any modern business, pandemic or no pandemic, that’s looking for opportunities for growth, will be looking at emerging markets not just for a new client base but for staffing.
Looking overseas for expertise only makes sense. Talented experts can be found anywhere. If you’re not looking internationally, odds are you aren’t getting the very best. Now more than ever, finding the best (and most affordable) staff depends on your global reach.
While it’s inarguable that border hopping for staff is great for saving money and finding elite talent, it does come with many challenges. Dealing with multiple currencies, diverse taxation laws, and different legal requirements for compensation, benefits, and labour protocols adds significant complexity to managing any company.
That’s why it is essential to do some homework in advance. The more informed you going into hiring international employees, the fewer mistakes you’ll make, and as we’ll see sometimes those mistakes can cost you not only money and time, but an array of legal problems.
Things To Consider When Hiring International Employees
Hiring international employees comes with various unique considerations—some predictable, some less so.
Having a plan for compliance with local legal and tax requirements from the outset, as well as setting up a good contract with each of your remote employees are essential to avoiding uncomfortable surprises and complications downt the road.
With a plan and a good payroll solution, all of the challenges to international payroll are absolutely manageable.
Here are the top five things to consider when hiring international employees:
1. Contract Type
The first thing to familiarize yourself with is the unique rules and regulations for international employment contracts in your new market.
Because the labor laws differ nation to nation, you won’t be able to use the same contract template for everyone. In some countries, such as Canada, you’ll also need to be aware of the different rules by province.
Much of this should be handled by or in cooperation with your payroll solution but you’ll need to understand right away what kind of contract is required for your new international employee in each new region.
This goes without saying, but it can’t be overlooked. Tax compliance for foreign employers can be tricky.
Of course your employee will have to pay taxes in their home country, but you will also have to withhold taxes in yours. To ensure you aren’t being double taxed, it will serve you well to investigate the tax rules in your new region from the jump.
Getting taxes right saves time and money and also avoids the very deep, dark waters of legal problems down the road.
For most businesses that hire overseas, the number one way they throw away money is in currency exchange.
Having a good multi-currency account and being able to ensure smooth, affordable, timely foreign exchange is essential to paying your employees in their preferred currencies.
Make sure the solution you choose allows you to quickly and cheaply exchange your primary income currency into each currency you’ll be making payouts in.
4. Local Timezone, Holidays etc.
A common oversight for employers of international employees is to assume everyone’s on your schedule.
Managing staff in farflung places requires knowledge of the calendars your staff are on. To avoid administrative headaches, keep track of the various local timezones and holidays.
Better yet, find a banking solution that will do that for you and notify you anytime an adjustment is necessary.
5. Legal Compliance
Labour rules differ country to country. As do the legal requirements around certain products or services. Beyond establishing unique contracts for payroll region to region and ensuring you get the taxes right, you’ll also need to be aware of local rules that might affect your product or what you ask of your employees.
For instance, once you collect data on your employees for payment purposes, you may become responsible for compliance with the data collection rules in their home country. Doing your research into legal compliance in all forms is essential.
Choosing An International Payment Solution
All of the above problems can be easily solved by choosing the right international payment solution.
A good one includes everything a traditional payroll solution does (accounting, automatic scheduled payouts, tax and benefit deductions, detailed record keeping, etc.), and includes all the essentials for cross-border payments (everything from multi-currency accounts and quick, cheap foreign exchange to local calendars and clocks and case-by-case tax rates and payment parameters).
In short, a high-quality international payment solution automates the management of multiple currencies, taxation and legal regulations, and cultures so that your overseas staff payments go out as smoothly as your local ones.
Here’s what to look for in an international payment solution:
Step 1: A Multi-Currency Account
A multi-currency account is the foundation of international payments. Being able to send, recieve, and hold multiple currencies in the same account is essential.
Otherwise, you’re outsourcing payments, constantly transferring money, and inviting headaches as you try to manage several accounts in different institutions.
You’re also likely losing money on numerous transfers from account to account. A multi-currency account is what separates a modern, international payroll from the stone ages. It puts it all in one place so that you can treat international payouts like you would local ones.
Step 2: Easy, Low-Cost Currency Exchange
If you are paying staff or contractors in different currencies, nothing will save you more money than finding a low-cost solution for currency exchange. Any ol’ international payments solution will offer foreign exchange.
The key is finding the one with the best rates and the greatest diversity of trading pairs. Find that and you’ll be solving the most common problems right from the jump.
Step 3: Compliance
Compliance is one of the key considerations from the outset. A good global payroll solution will help you ensure you’re meeting tax and regulatory compliance at all times regardless of region.
Anyone managing payroll in several countries at once will tell you that the best way to achieve this is for the international payments solutions to automate a lot of the compliance work for you.
Find a solution that keeps compliance up to date and notifies you of any changes along the way.
Step 4: Advanced Reporting
Managing several currencies and several different tax and legal frameworks means you’ll need to be tracking each and every transaction and be able to quickly generate reports based on many diverse parameters.
Don’t skimp on reporting. It will be the difference when it comes to tax time and accounting.
Step 5: Elite Security and Data Protection
For the simple fact that your remote employees will be accessing their dashboards in farflung places and your transactions will be moving through numerous payment networks across international borders, top-level security and data protection are crucial for international payroll.
It is also key to recognize that as soon as your employees enter their personal data into your system, you, the administrator becomes custodian of the data and each country has it’s own rules for data protection to comply with.
A Step-By-Step Guide To Paying International Employees
Having to pay international employees can cause a whole slew of problems and headaches if you’re not prepared from the get go. Each new hire you make in a new country brings a new set of local labor laws, tax frameworks, currency, payment networks, and more.
If you want to save your business money and time, comply with local laws, and keep your employees happy with when and how they get paid, here are a few things to consider.
Step 1: Learn the Basic Laws of the Land
Local labor laws differ in surprising ways country to country. The key is to establish a basic understanding from the start.
In some cases, certain forms (like the W-8BEN form in the US) will need to be filled out and submitted before the international employee begins work. It’s essential to have all your legal ducks in a row from the start.
Step 2: Set Up the Automated Parameters in Your Payment Solution Dashboard
Once you have a basic understanding of the rules in the regions you’re working in, it’s time to input the different tax rates, currency preferences, payout dates etc. into your payment solution dashboard so that you can automate as many processes as possible.
For instance, if you have a web developer working in Ukraine, you can set your USD balance to go out in Ukrainian Hryvnia at a particular tax rate, avoiding local holidays etc. This saves time and eliminates error.
Step 3: Ensure Your Employee Has Access to Relevant Slips and Records
By ensuring that the payment solution you’re using generates clear, detailed payslips and records for employees, you avoid having to personally follow up with each and every payout. Much of the work of compliance can happen at the employee end if you give them the documentation they need. Giving them reliable record keeping is also key to resolving disputes and keeping staff and contractors happy.
Step 4: Automate As Many Processes as Possible
This is a big way to minimize payroll costs as well as to reduce human error and save massive amounts of time. You don’t want to be re-entering currency, tax rate, payment date, account numbers etc. each payday and you don’t want to have to trigger data collection or transfer.
You let the system to do the work of conversion and compliance for you. The key is to take the time in the beginning to automate as many of the payment and reporting processes as possible.
Step 5: Ensure Compliance
If you don’t comply with local labor, tax, data, and banking laws, you expose yourself and your business to harsh fines or worse. Ensuring compliance on all fronts is essential.
Here’s the thing: your international payment solution should take care of this for you. A good solution will allow you to onboard new employees in numerous regions without additional confusion or legwork on your part.
Whenever there is a change in the local laws, they should keep you apprised or automatically update the parameters.
Payset’s International Payment Solution
Payset is an elite online payments platform based in London, England that is an exceptional solution for global payroll. They provide a diverse suite of payment solutions for companies (and individuals) who need fast, efficient, affordable cross-border banking solutions.
Payset’s multi-currency bank accounts make it possible for your company to send and receive payments in up to thirty four currencies. They also offer fast, cheap currency exchange, and excellent reporting and compliance for outgoing payments to regions around the world.
Here are a few of the key reasons Payset is ahead of the curve:
- It’s incredibly simple and quick to open an account with Payset
- There are no setup fees and you can cancel anytime
- There are low transaction fees, maintenance fees, and exchange fees
- Payset is PCI level 1 and GDPR compliant
- You can make instant payment to/from Payset clients (get your employees to sign-up to save you both money and time)
In short, if you need to pay international employees, Payset is the ideal solution for you. Here are the top three benefits to choosing Payset:
Benefit 1: Exceptional Multi-Currency Accounts
Payset’s multi-currency accounts can hold, send, and receive up to thirty four unique currencies all in one dashboard. It modernizes your banking, pure and simple, allowing you to move money across borders without hassle or excess costs.
With a Payset dedicated IBAN account you can:
- Transfer funds both locally and internationally, making use of numerous payment networks including SWIFT, SEPA, TARGET 2, FASTER PAYMENTS, CHAPS, and more.
- You can make easy, low-fee currency exchanges and cross-border payments
- You can pay staff instantly in their chosen currency without large fees for either party
- You can make instant payments to and from other Payset clients
Benefit 2: Instant, Low-Fee Currency Exchange
Payset allows you to exchange 38 currency pairs instantly for exceptionally low fees. You can view exchange rates live in real time in order to make timely trades, or time outgoing payments to minimize exchange costs and earn extra money.
You also have the option of setting pre-agreed margins on currencies you exchange frequently in order to enjoy a guaranteed competitive rate.
With Payset you have access to detailed reporting so that you can monitor forex fees and transactions at all times and work to minimize costs by establishing patterns and identifying higher-loss transactions.
With access to thirty eight different currencies at your fingertips you can make payments to staff, suppliers, contractors, etc. in over 180 countries.
Benefit 3: Pre-Paid Cards
One of the features that makes Payset unique is the pre-paid cards. Clients can choose between virtual cards, which are used and managed online, or plastic MasterCards, which can be used either online or in person.
Payset’s pre-paid, personalized credit-cards allow you to give staff or others controlled access to company funds as well as track and manage all payouts from your dashboard. The cards are able to hold up to 34 different currencies making cross-border payments effortless and cost-effective.
Imagine a team member is heading to a conference in Dubai. You can give them a pre-paid expense card to use while travelling. This is just one use-case for Payset’s prepaid cards.
Come find out why Payset is the fastest growing international payment solution in the world!
If you have international employees, Payset can without question save you money, time, and legal hassle as well as improve your staff relationships. Visit us online, chat with our client reps, and sign-up for a free account now! Let us show you how we can improve your business.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
- Account holders can send and receive money with other Payset users for free.
- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset allows you to receive payments in 34 currencies. You can send payments from your account in 38 currencies. For more details, check our payment guide.
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Types of Multi-Currency Accounts
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