Hiring internationally? Here’s how to decide on global payroll

Expanding into a new country for the first time? Or is your current international payroll setup falling short? Either way, it may be time for a new global HR and payroll solution. That’s a big decision, and tackling it without prior experience can feel overwhelming. 

We’ll discuss the signs that a change might be in order, the main options on the table, and how to choose the right approach for your organization. That way, you can spend more time growing the company and developing your business strategy. 

Key takeaways 

• Your company may need global HR and payroll if you have one or more international employees, contractors who could be classified as employees, or a setup that makes reporting and decision-making difficult. 

• Three major benefits of global payroll are improved reporting, compliance support, and scalability. 

• International employment options may include establishing a local entity or using an employer of record (EOR), while payroll may be managed in-house, through external providers or managed services, or through a hybrid model. An HCM platform can provide the technology and data foundation across these arrangements. 

• The right global payroll approach will depend on several factors, such as the number of employees in a given country and your company’s long-term plans. 

• Global payroll software like Dayforce can help bring together employee data, payroll workflows, reporting, and the employee experience across different countries and delivery models. 

Signs your business needs global HR and payroll

There’s no one universally agreed-upon moment to implement a global HR and payroll solution, but here are some signs it might be time: 

• You hire (or plan to hire) your first full-time employee in another country and want to proactively support your company’s growth. 

• Your headcount or long-term plans in a country have grown enough that you need to reassess whether an EOR, local entity, or another employment arrangement offers the right balance of cost, control, and administrative support. 

• Your organization needs to review whether international contractors are classified appropriately under applicable local requirements or has identified other cross-border payroll and employment risks. 

• An audit reveals a patchwork of local vendors behind your current system, and reporting has become slow, complicated, and error-prone. 

• Your chief financial officer (CFO) asks for total global payroll costs, and it takes you days to compile an answer you’re not fully confident in.   

How global payroll benefits organizations

Managed in-house with software or outsourced to a third party, a global payroll solution can help your company in many ways. Here are the three significant benefits: 

• Global payroll reporting: When payroll data from across countries is consolidated into a consistent reporting experience, organizations can run more timely reports and identify trends. Leaders can also make better-informed decisions using a more complete view of global payroll. 

• Compliance support: Local payroll experts can provide in-region information and support as labor, tax, and payroll requirements change. And that can help your company overcome the risks of multi-regional payroll complexity. 

• Seamless scalability: A strong global HR and payroll platform can support expansion by reducing the need to source, connect, and reconcile separate payroll systems and providers as your organization enters new markets. 

Steps to manage global payroll

Employing a paying workers in other countries involves a few connected decisions, such as your legal structure for hiring and your payroll delivery model. Here’s how the pieces fit: 

Choose an employment setup

Before running payroll in a new country, your organization needs a legal structure for employing workers there. You have two options: 
 

• Establish a local entity: Your company registers as a business in the country, obtains local tax identification, and takes on direct employment responsibilities. 

• Use an employer of record (EOR): A third party legally employs workers on your behalf, handling local HR, payroll, and compliance obligations so your company doesn't need its own entity in that market. 

Choose a payroll delivery model

How payroll actually gets processed is a separate decision from how workers are employed. Most organizations land on one of these models or a combination: 
 

• Manage payroll in-house: Your team handles calculations, filings, and payments directly. This gives you full control but requires deep local expertise in every country where you operate. 

• Outsource payroll or use managed payroll services: A provider runs payroll on your behalf, applying local tax rules and filing requirements. You retain oversight without needing specialized staff in each jurisdiction. 

• Use a hybrid of in-house and outsourced payroll: Some organizations run payroll internally in their largest or most established markets and outsource in countries where they have smaller teams or less local knowledge. 

Choose a technology foundation

An HCM or global payroll platform can support in-house, outsourced, or hybrid payroll operations by connecting employee data, payroll workflows, reporting, and the employee experience across countries. Available functionality and delivery models may vary by jurisdiction. 

Many multinational organizations combine these arrangements. For example, an organization might operate through local entities in its largest markets, use an EOR in selected countries, manage some payrolls internally, and use managed payroll services or in-country providers elsewhere. A common technology platform can help create greater consistency across that environment. 

Important note: As you explore payroll solutions, you may see the term PEO, or professional employer organization. PEOs use a co-employment arrangement and are most commonly associated with the U.S. market, although availability and legal structures vary by country. Unlike an EOR, a PEO generally requires the client organization to have an established local entity. 

How to choose a global HR and payroll solution

Here are some questions to help guide your thinking during the global HR and payroll solution selection process: 

• Does your company plan to establish a local entity in the country? If so, it may not need an EOR for employees hired through that entity. 

• How large and long-term will your presence in the country be? Compare the total cost, administrative requirements, level of control, and long-term fit of an EOR and local entity rather than relying on a fixed employee threshold. 

• Does your company plan to maintain a workforce in this country long term, or is it currently testing the market? Establishing a local entity can make sense if your organization’s presence in the nation will be permanent. 

• How complex are your payroll, reporting, and workforce-management needs? Consider country count alongside employee volume, pay-rule complexity, integrations, reporting requirements, internal resources, and plans for future expansion. 

• Does your company have extensive reporting needs or require audit-ready data at a moment’s notice? If so, it may want to consider implementing an HCM system. 

• Does your organization struggle to manage international payroll compliance? If so, look for a provider that offers localized payroll expertise, compliance support, clear responsibilities, and processes for monitoring relevant regulatory changes. 

If your company wants to maintain control of its workforce but would rather not handle the day-to-day HR and payroll tasks, HCM outsourcing services could be a good fit. 

Getting started with global payroll

Navigating your organization’s unique path to global HR and payroll starts with preparation and an action plan. Here are the initial steps:
 

1. Assemble a team of company stakeholders who will help with this decision, including leaders from HR, payroll, finance, IT, and legal. 
2. Gather relevant global HR and payroll data, such as employee names, locations, positions, pay rates, employment setup, and the payroll delivery model and provider used in each country. 
3. Make a list of must-have features (including support for countries your company may enter in the future). 
4. Research global payroll providers and HCM platforms and create a short list of potential solutions. 
5. Attend product demonstrations of your organization’s top picks, and make sure each provider shows how the tool will work for your company’s specific use cases. 
6. Ask finalists detailed questions about compliance support, payroll automation, in-country HR expertise, and scalability. 
7. Review the contract and fee schedule carefully before signing to avoid hidden expenses that could derail your company’s budget. 
8. Work closely with the provider to roll out and test the new tool before it replaces your existing setup.  

Which HR software is best for global payroll? That depends on your workforce makeup, your organization's goals, and a handful of other factors.  

Connect with Dayforce and find the right global payroll fit for your organization. Get started today. 

Frequently asked questions

How do I know if my company needs global payroll?

You likely need global payroll if you’re hiring your first international employee, or your next one. It’s also worth a closer look if your organization’s international contractors could be classified as employees or if an audit reveals a patchwork of systems instead of one clear source of truth. 

What are the main setup options for global payroll?

Organizations need to make three related decisions: how to employ workers, how to deliver payroll, and which technology to use. Employment options may include establishing a local entity or using an employer of record. Payroll may be managed in-house, through a managed or outsourced provider, or through a hybrid model. An HCM or global payroll platform can provide the technology and data foundation across these arrangements. 

What steps should a business take to get started with global payroll?

Your business should follow these steps to get started with global payroll: 

• Assemble a team of stakeholders to help with the decision and implementation. 

• Take inventory of your workforce, including employee locations, employment arrangements, payroll delivery models, providers, systems, and reporting requirements. 

• List must-have and nice-to-have features. 

• Compare feasible options and attend demonstrations of your top picks. 

• Work closely with the provider to phase in the selected solution. 

What is the easiest way to manage global payroll?

There is no universally easiest way to manage global payroll. An EOR may simplify initial hiring in a country where your organization does not have a legal entity. For organizations operating across several countries, a global payroll platform or managed payroll service may offer a more scalable way to standardize payroll data, reporting, and operations. The right approach depends on your country coverage, workforce size, internal resources, reporting needs, and long-term plans. 

How does Dayforce support businesses that are setting up globally? 

Dayforce helps organizations manage global payroll through a single user experience, localized payroll expertise, managed payroll services, and connections to in-country payroll providers. It can centralize core workforce data and provide consolidated payroll visibility and reporting across countries. Available functionality and delivery models vary by jurisdiction.