Paying wages to overseas employees: How to manage an international payroll
Wednesday, 1 February 2023, 3 minute read
The rise of remote and hybrid working has created exciting opportunities for businesses across the UK. Companies can now tap into a wider talent pool and hire top talent from around the world, adding new skills and diverse perspectives to their organisation. But along with this comes the responsibility of managing an international payroll and paying wages to overseas employees.
This might seem like a daunting task, but it doesn't have to be! With the right tools and knowledge, making sure your international employees are paid on time and in full can be a breeze. In this article, we’ll take a look at some of the things you need to consider before paying your employees overseas - and explore the easiest and most cost-effective ways to handle your remote payroll.
Things to consider before paying wages to overseas employees
When paying wages to overseas employees, it's important to be aware of the tax implications in both your home country and the country in which the employee is working, as you’ll need to comply with both. We recommend consulting a tax advisor to ensure compliance with all applicable tax laws. Importantly, you must continue to calculate and deduct PAYE tax from all payments made to employees who work abroad. You can find out more about how to calculate taxes for paying overseas employees on the government’s website.
Laws and regulations
Each country has its own laws and regulations regarding paying wages. Most countries, for example, require employers to provide a detailed payslip to the employee and keep records of payments for a certain period of time. It's essential to familiarise yourself with these requirements to avoid any legal issues.
Paying international employees in their local currency can be a challenge, as you’ll want to find a cost-effective way to pay while avoiding the risk of exchange rate fluctuations. Businesses can lose a lot of money in fees and costs by not paying attention to exchange rates. To save money, it’s important to keep an eye on current rates - especially if you’re going to be paying international employees via bank transfer.
How to pay international employees
When it comes to paying international employees working across international borders, there are several options available to you. Depending on the size of your business, your expansion plans, and your current needs, you may find that one method works better for you than another.
Here are some of the most common ways companies pay overseas employees, along with their benefits and drawbacks:
Work with a Professional Employer Organization (PEO)
A PEO is an organisation that serves as the local “employer” for companies that need to hire international employees. For a fee, your PEO will take care of all your payroll administration, taxes, and benefits in your overseas employee’s country, making this an attractive option for companies that want to avoid the hassle of managing these tasks themselves. However, this option is more expensive than managing your international payroll in-house, and for some smaller businesses, the high cost of PEO services might outweigh the value.
Opt for a wire transfer
Wire transfers, such as SWIFT payments, are another option for paying overseas employees. However, this method can be slower than other options and may come with higher exchange fees and additional bank fees.
Partner with a local business
Companies that want to expand into new markets quickly may choose to partner with a local business in the industry, who can then take care of paying local employees. This enables businesses to scale faster and build their footprint in new markets without having to open their own branches, but it won’t be the best option for every business.
Set up a new branch in your international employee’s country
Rapidly growing companies may want to consider setting up a local branch in their international employee’s country. This makes administering payroll easier and gives the company more control when paying foreign employees, but may not be the right option for many smaller businesses.
Use an online payments solution
There are several options available for online payment services, including Crezco, PayPal, and Payoneer. PayPal allows businesses to send money directly to employees with existing accounts, but fees will be incurred for the transaction. Payoneer is a good option for paying foreign contractors, but exchange rates and additional fees may make it less feasible than other options. Crezco makes international payments cost-effective, fast and easy, so is a great choice for most businesses looking to manage their international payroll. We’ll cover this more in the next section.
The easiest way to pay overseas employees
Crezco is an online payment platform that allows businesses to easily manage their international payroll and make secure account-to-account payments overseas - with no high rates or hidden fees.
Crezco can help
Crezco makes international account-to-account payments easy and secure, letting you make international payments directly to your overseas employees’ existing local bank account without creating any virtual IBANs or local wallets.
One of Crezco’s key features is its ability to handle over 70 currencies. This means you can pay employees in over 100 countries in their local currency - making handling your remote payroll easier than ever. All you need to do is import data from your accounting or payroll software, then quickly add your contacts and bills, and you can pay your entire team across the globe in one single click.
The platform allows you to automate your international payroll process and pay overseas employees in bulk, in addition to paying international invoices from overseas suppliers and freelancers. Plus, with Crezco, you’re guaranteed to enjoy favourable exchange rates, lower fees, top security and fast payments.
It’s time to start paying foreign employees overseas
In conclusion, navigating foreign tax laws and regulations might seem like a complex process, but with the right tools and knowledge, handling international and remote payrolls can be safe, fast and easy. When you use a payments solution like Crezco, paying wages to overseas employees is as simple as handling your UK payroll.
Take the time to research your options and choose the best international payment method for your business to ensure the process of going global is as smooth and enjoyable as possible - for both you and your employees.