Balancing the Requirements of HR, Finance and Compliance in Global Payroll

Who do you think owns payroll in an organization? Is it HR given that the payroll department is responsible for employees’ compensation – the most sensitive aspect of an employee’s engagement with the company? Is it finance given that it controls a company’s most important resource, well –  finance? Or should it be the legal & compliance division given that this department also plays a vital role in protecting the company’s reputation by ensuring compliance with various local payroll activities, adhere to the country’s tax obligations and comply with employment legislations?

There is significant overlap amongst functions in administering global payroll. Taxation is handled both by finance professionals and compliance lawyers. Similarly, labour relations is handled both by HR professionals and compliance lawyers. Global Payroll as a process is executed by stakeholders from HR, Finance, and Compliance functions and it is pivotal that they are trained in understanding taxable benefits and employment standards legislation.

Human Resources (HR), Finance, and Compliance each play key roles in the employer-employee statutory/legal relationship. The responsibility of the HR function is restricted to supporting the employees in their core constituencies – mostly around employee relations. The finance function is interested in payroll more like a line item in general ledger (GL) entries and hold control of the company’s financial resources. Compliance team would mostly operate on the “no news is good news” mode apart from running internal audits.

Global Payroll as an HR Function

It is only natural for employees to get upset if they aren’t paid accurately or on time. Employee compensation and employee relations pretty much go hand-in-hand. Given the sensitivity associated with payroll, it can easily be considered as the most important process within the employee lifecycle. HR is really at the start of the global payroll value chain. The input data for the global payroll flows in from the HR function. Garbage in is garbage out. Many payroll activities are tied to core HR functions, and these include new employee setup, changes in compensation, payment of bonuses, leaves of absence, deduction of benefits, time and attendance related data points, pay equity and employee termination. The human resource is truly the champion of employee relations and is therefore, one of the keys if not the key stakeholder of payroll data. At the end of the day it is HR that faces an employee’s wrath should there be any issues in his/her payslip. Payroll and HR functions need to work closely together to ensure that the data integrity and accuracy is sacrosanct. In general, payroll is also considered a sub-function of HR because it pays and deals with employees at large. The HR side is that the company must preserve the employee’s rights and abide by federal and state anti-discrimination and maternity laws.

Global Payroll as a Finance Function

Employee compensation is the single largest expense in many organizations. The core aspect of global payroll lies in managing payroll data and depositing and managing taxes in its local jurisdictions. Payroll is number-driven and calls for knowledge of tax laws & accounting, and therefore it is often parked under the finance function.

Global Payroll as a Compliance Function

According to E&Y, the focus on compliance among organizations has intensified. Payroll reporting and tax withholding ranked as the number one global compensation challenge. One of the biggest problems in managing global payroll compliance is that the goalposts keep moving and this often is a stressful situation for payroll managers. It’s hard to stay on top of things when legislation is constantly changing, and new cases are found to impact the existing status quo. Given the implication of managing compliance in global payroll, employers are held accountable for the legal and regulatory compliance side of global payroll.

While the function that has the highest leverage on global payroll is a matter of contention, the relationship with HR, Finance, and Compliance remains strong due to the under-lying need for collaboration between the three functions to ensure payroll’s success. . Eliminating the gaps between HR, Finance, and Compliance in global payroll takes more than just technology – it calls for re-imagining payroll – it calls for exponential innovation and smart simplification.

A smart global payroll technology and solution mostly pays for itself. If you are looking at a solution that goes beyond,

– Addressing core HR requirements of the HR function – input preparation, helpdesk and employee experience,

– Core finance requirements – of comprehensive integration and reporting with preconfigured global/ local reports,

– Compliance requirements – of compliance monitoring and tracking across 150+ countries

then reach out to Neeyamo for more information on its PayNComp based global-payroll solution – an extended, integrated and universal payroll system. Click here.

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