The post-pandemic era has altered the way organizations operate today. Hybrid work arrangements are becoming a norm, employees’ health as well as diversity, equity and inclusion is rapidly gaining traction, and supporting the overall needs of employees are key focus areas for organizations today. As organizations strive to maintain operations while optimizing their workforce, one of the biggest stressors placed on HR is maintaining compliance with local regulations, particularly in terms of employment conditions, salaries and tax payments.
According to Ernst & Young 2021 Global Payroll Survey, keeping up with regulatory payroll compliance changes rank the 2nd highest compliance challenges after inaccurate employee source data within the payroll system. Over half (58%) of organizations have indicated that evaluating remote working policies and its impact on multi-jurisdictional payroll withholding and other elements of payroll compliance has now become a key priority for organizations in the post-pandemic era.
Given that managing payroll single-handedly while ensuring compliance with the regular changes in employment regulations can be a tedious task, it is not surprising that the majority of organizations decide to outsource their payroll function to third-party vendors. Payroll outsourcing can help organizations to remain compliant with employment laws and avoid hefty penalties and fines.
Staying Compliant with Labor Laws
Organizations may find it challenging to comply with employment laws and payroll calculations if labor regulations are constantly changing. These complexities may lead to inaccuracies and unnecessary mistakes during hiring, calculating salaries, tax payments and reimbursing employees. A professional outsourced payroll provider is likely to have full expertise and knowledge of the latest employment legislations. This may benefit the organization in ensuring that they remain compliant with the latest employment and payroll requirements such as minimum wages, working hours, statutory leave and benefit requirements as well as salary calculations.
Avoid Penalties
Tax legislations, payroll regulations and labor laws are prone to frequent changes. Non-compliance often results in hefty fines and penalties on the organization. Outsourced payroll providers are usually up-to-date with the changing requirements, and support the organization in ensuring accurate and updated employment and payroll reports in line with the latest employment regulations. This reduces the likelihood of costly employment and payroll mistakes, minimizing the risk of being penalized.
Minimize Legal Risks
Employment-related legal disputes can be costly and time-consuming for organizations. This could include disagreements pertaining to employment contracts, HR policies and procedures, and non-compliance with statutory employment terms. The best outsourced payroll providers are familiar with the latest employment laws and regulations, and can provide guidance on ensuring organizations’ HR policies and procedures remain legally-compliant. Further, they may be experienced in handling employment-related claims and disputes, delivering valuable support in helping organizations navigate and avoid potential legal pitfalls.
Access To Specialized Expertise
Understanding employment regulations can be complex, with industry-specific and country-specific nuances. Outsourcing payroll allows HR and organizations to tap into the specialized knowledge and expertise of payroll professionals who are well-versed with the latest employment regulations. These payroll professionals understand the intricacies and nuances surrounding local and global employment regulations, delivering expert guidance and advisory to organizations in ensuring that they operate within legal employment and payroll boundaries while optimizing their HR practices. Organizations can also leverage on their innate understanding of the varying employment legislations to make informed HR decisions and navigate complex employment regulations more effectively.
Compliance with employment regulations is essential for organizations to minimize legal risks and hefty penalties while creating a fair and equitable work environment for employees. The solution to regulatory compliance and staying ahead of the constantly-changing employment regulations is partnering with an experienced payroll provider. They offer in-depth and specialized expertise on the latest employment requirements while helping organizations ensure that their HR policies and procedures remain legally compliant. At the same time, they provide access to standardized payroll processes and take away the administrative burden of payroll processing and employment management away from HR, allowing them to focus on more critical and strategic HR tasks.