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Major global payroll compliance risks lay ahead 

Mike Eralie

The 2019 Global Payroll Complexity Index is published today by NGA Human Resources. The report compiles the feedback of nearly 2,500 payroll professionals from around the world. Contributor Mike Eralie, Chief Operating Office – NGA Human Resources.

Published biennially, in association with the Global Payroll Managers Institute (GMPI), American Payroll Association, Canadian Payroll Association and the Chartered Institute of Payroll Professionals (CIPP), the Index ranks the top 40 countries in order of payroll complexity.

The key findings in 2019 reveal heightened anxiety around data ownership. Respondents from all countries highlighted ‘the protection of personal identifiable data in the payroll process’ as a major challenge. The GDPR has hit hard and stimulated a review of data protection legislation beyond the EU.

Unstructured payroll legislation and tax changes, and the influence of collective agreements, sees Europe continue to lead the table for complexity for the third consecutive Index. France, Italy, Belgium and Germany remain at the top. The fastest rise in complexity is reported by payroll teams in countries in the growing international business economies of Eastern Europe, South America and Africa.

In the rise of these countries, they have pushed the United States, Canada and Australia down the ranking. This downshift doesn’t reflect a lower risk. Rather, it was widely reported that increased partnership between governments and the payroll industry has simplified reporting in most states and /or territories in these countries.

“The results of the Global Payroll Complexity Index confirm that in 2019, multinational organizations continue to be challenged by managing growing volumes of employee data, adhering to data privacy regulations, and staying compliant in a world of unique employment and taxation compliance regulations across the globe,” explained Mary Holland Global Director of Strategy, Development and Training at the Global Payroll Management Institute (GPMI) and the American Payroll Association (APA).

“Positively, the responses show that complexity can be managed by the standardization of processes, having the best global talent, selecting the right service delivery model and using technology to enable and manage payroll operations. As globalization continues, we will see the increased use of robotics, expanded reporting, artificial intelligence, managing risk exposure, increased government audits, and standardized processes,” continued Mary Holland, a contributor to the 2019 Global Payroll Complexity Index.

Key research findings
One-third of governments have no schedule for tax and legislation changes Rise in ‘micro-legislation’ – city, as well and regional and national rules India, Australia and UK leading adoption of robotics and analytics in payroll Cloud payroll is on the rise at 34 percent against 33 percent on-premise and 11 percent still manual. M&As and organisational change accelerating payroll upgrade projects, with US most concerned by payroll compliance risks. 

“This is not the time to sit back. To be prepared for the future, you need to understand the challenges you face and find the solutions to these. The Global Payroll Complexity Index draws on the research we started in 2014. This gives us good insights into how the payroll process has evolved over five years. It also gives authority to say that as we move into the next decade, the need for clarity, compliance and intelligence in your payroll processes has never been greater,” said Mike Eralie, Chief Operating Office at NGA Human Resources.

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