Running payroll is a complex process, even for companies operating 100% locally. If you’re thinking of hiring international talent, it’s easy to feel overwhelmed at first. There are a variety of factors to consider, including global payroll compliance, currency exchange rates, how to factor in cost of living, and offering local benefits packages, all of which can make global payroll management a tall task. 

That’s the bad news. The good news is that global payroll doesn’t have to be a chore — if you know how to manage it.

Whether you’re planning a big global expansion or simply looking for a better way to manage payroll for your existing international staff, this guide is for you.  

What is the definition of global payroll?

Global payroll is an umbrella term for practices related to onboarding and managing payroll for international employees and contractors. Depending on the employees’ or contractors’ host country, global payroll can include a number of actions, including:

Let’s take a closer look at how the different components of global payroll work together to support international teams.

The ultimate guide to managing global payroll

This resource offers an introductory level overview of global payroll. For a deeper dive, we also recommend downloading our Global Payroll Management Guide. Remote’s Global Payroll Management Guide provides actionable advice on how to manage payroll for your global team while keeping your business compliant with international labor laws.

For anyone new to global payroll, it’s important to understand the options on the table. There are three main methods of establishing a payroll process. 

An employer of record is a service through which a designated company manages your entire payroll process in a foreign country. EORs make it possible to employ international staff without the need to set up a legal entity in each country. From a legal perspective, they are the employer for your international staff. Apart from ongoing payroll management, an employer of record can also help manage the hiring process and formalities.

PEO, just like the above-mentioned EOR, acts as your HR. However, if you opt to use a PEO, you have to own your legal entity in the country or region. Working with a PEO means entering into a co-employment relationship with your employee and another provider. Both of you employ the person simultaneously, while your PEO manages HR functions on your behalf.

In-house payroll operations and workforce management

Global payroll can also be managed internally, provided that you have the time and resources to handle compliance in house. Before deciding on this approach, you need to make sure that you can:

Launch legal entities in all of the countries where you employ workers

Centralize and monitor the payroll process

Have sufficient local legal representation

Have relationships with local benefits administrators

Understand the cultural nuances of payroll, benefits, and taxes in each country

To run in-house payroll successfully, it’s essential to use software that will automate at least part of the process and analyze employee payroll data. 

What are the challenges for global payroll?

Let’s now take a look at the main challenges associated with global payroll.

Setting compensation for your remote workers. Should you pay everyone the same amount or account for cost of living? What should you do if employees in one country receive a government benefit that employees in another country do not? To answer these questions, check out Remote’s guide to global compensation.

Employee classification. Do you know when to classify your workers as employees or contractors? If you get it wrong, you can be subject to fines, penalties, and even business bans. Be diligent and review employment relationships regularly to maintain compliance.

IP and invention rights. As remote workers can do their job in various locations, you have to abide by different intellectual property laws wherever you do business. Failing to understand local laws can not only result in the loss of IP rights but can also lead to legal battles and reputation damage. 

Tax management. Hiring remote workers also means you need to know where to pay income taxes and who’s responsible for settling each payment. Employers are usually required to withhold taxes for employees, while contractors tend to be fully responsible for their own taxes. See where remote workers pay taxes to learn more.

Permanent establishment risk. Permanent establishment is a tax status that refers to companies with an ongoing presence in a country. Whether permanent establishment applies to your company depends on the local governments understanding of your operations within that country. Working with an EOR or PEO does not have an affect on your permanent establishment risk either way, but a good partner can help you understand and manage your risk exposure. See our guide to permanent establishment risk for more information.

The challenges of global payroll can be steep, but the right partner can help you build an international team with minimal risk quickly and easily.

Here are a few reasons you may want to consider working with a global payroll provider:

Compliance with laws in multiple countries. Hiring talent from a number of countries doesn’t automatically mean you’ll have more paperwork to take care of. Remote makes it easy to abide by each country’s legal requirements, such as tax, benefits, and social contributions.

Access to in-house payroll knowledge. Worried about fines for noncompliance? Not clear how to handle withholding for foreign social programs? Your global payroll provider should understand the payroll customs in every country where you hire.

Save time and money. Global payroll is a faster and less expensive alternative to setting up your own entities in multiple countries. Opening an entity can cost tens of thousands of dollars and take months to complete. By working with a global payroll provider, you can hire international candidates immediately instead of months down the line.

On-time payment. Reliable payroll is absolutely critical to keeping your team happy. If you keep payroll operations in house when you expand into new countries, you could inadvertently cause delays in payment, leading to frustration and mistrust within your team. A global payroll partner helps you guarantee on-time payments to your whole team every time.

Increased productivity. How much time does your human resources team spend going through spreadsheets, double-checking figures, and making calls with benefits providers? When your global payroll solution handles the details, your team is free to focus on the most important thing: your people.

What are the responsibilities of global payroll?

To decide whether you’re better off using in-house resources or partnering with a company like Remote for global payroll, it’s important to understand the various responsibilities of a global payroll provider. Here’s a breakdown of the main areas.

Legal registration of your entity in the local market, if applicable

Timely payment of taxes and other local obligations (both yours and the employee’s)

Statutory benefits (for instance, 13th salary or holiday bonus), as well as optional benefits that are sought after by top talent

Ever-changing regulations and rule amendments.

Before you hire staff in a new market, you must be sure to stay compliant throughout the entire payroll process. Understanding these responsibilities is the first step toward successful international hiring.

There are several cultural factors to consider when hiring internationally. Your global payroll provider should be able to help you with:

Public holidays. When you hire in multiple places, you are expected to provide a variety of public holidays to team members. Your global payroll provider can help you track these days for your distributed team.

Paid time off. Different countries have different laws regarding when employees receive PTO and for how many days. It’s not always a flat number, either — many countries have different rules about paid leave for illness, family care, bereavement, maternity, paternity, and other situations.

Time zone differences. Ready to run payroll but the banks in your employee’s country closed six hours ago? Your global payroll provider can keep you ahead of any potential mishaps.

Salary and currency considerations. First, you must set salaries that are competitive in the market and legal under the local government’s rules. Salaries employees in the US, for example, are subject to minimum wage laws much higher than the federal minimum in certain states. In addition, the salaries you set for your employees must remain consistent in the currency in which they are set — converting currencies can quickly become difficult without a little help.

When you hire international workers, you become responsible for their data. Your global payroll solution provides a way for you to safeguard that data by placing it in the hands of local experts who understand where data can and cannot be hosted or transferred.

Every company with data of European citizens is subject to GDPR, but your responsibilities become even broader when you hire Europeans to your team. Different countries around the world all have different laws relating to data protection, and they all have processes to enforce steep penalties for companies out of compliance. If you do not have full-time data protection teams with local knowledge within your company, you could benefit from working with a global payroll provider with team members on the ground in every country where you hire.

What are the different types of global payroll providers?

Earlier in this resource, we mentioned the differences between PEO, EOR, and in-house payroll management. To expand on that knowledge, global payroll providers can be widely divided into two types:

Partner-dependent providers – With a partner-dependent provider, your payroll is managed by third-party entities located in the country where you hire. Avoid partner-dependent providers whenever possible. Not only do they have limited control over your employees’ experience and payroll, but they also provide limited IP protection and tend to have lots of hidden costs.

Owned-entity providers – Owned-entity providers only operate in countries where they fully own and operate their own legal entities. That means they have full visibility into the payroll, benefits administration, taxes, and contracts of your employees at all times. If you ever have a question or need assistance, an owned-entity provider can help right away, while a partner-dependent provider has to pass the message along to an unknown third party.

For more information on the differences between owned-entity and partner-dependent global employment partners, read our guide on owned-entity global employment.

So if a PEO involves a co-employment relationship, and an EOR hires employees on your behalf but does not involve a co-employment relationship, is a global PEO any different? And is the term any different from global payroll?

A global PEO is still a PEO — just one that can provide companies with PEO services in multiple countries. While a global PEO may be able to act like an EOR and take on certain legal responsibilities in the countries where your employees live, you can only work with a PEO (global or otherwise) if you have your own local legal entity, as an entity is a prerequisite for entering into the co-employment relationship.

So, in summary: any partnership with a PEO requires you to own a local legal entity and enter into a co-employment relationship. An EOR can hire employees on your behalf in other countries without a co-employment relationship and without requiring you to open a local legal entity.

Global payroll is a general term that refers to paying employees internationally. It can come under different names such as payroll outsourcing, managed payroll, or payroll services, and may include working with a PEO or an EOR. Global payroll may even include making payments to independent contractors in other countries.

However, there is a more specific definition of global payroll as well: working with a company to run your payroll in a country where you own your own local legal entity. Some companies offer global payroll services in addition to PEO or EOR services. If you are not sure about which type of global payroll service you need, Remote can help you understand your situation and recommend the best approach.

What is a professional employer organization, or PEO? – Learn more about how PEOs work and what they do for businesses with local legal entities.

When should you use an employer of record, and which one should you choose? – So you want to hire in a country where you don’t own a legal entity? This guide will help you get started.

Does your business need an EOR or a PEO? – Not sure whether you need an EOR or a PEO? This guide can help.

What is an employer of record? Learn more about what an EOR is and how these global employment partners operate.

How do you ensure payroll compliance with local labor laws?	

One of the key considerations when hiring global staff is deciding on the right type of contract. How are your remote workers classified? Depending on the country where your prospective hire lives, a worker may be seen either as someone who is a self-employed contractor or a full-time employee hired directly by the company. In some places, like the U.K., there are additional worker classes between the two traditional definitions. As a general rule, employees have more legal coverage and benefits than contractors.

That being said, when you decide to bring a new member on board, you always need to understand which legal requirements are your responsibility. Look into the following local labor elements:

Benefits (e.g., vacation bonuses, 13th or 14th month salaries, etc.)

Employee termination conditions (i.e., any protection periods or compensation)

Sick leave (for employees and for families)

Insurance coverage (health insurance, pension, social security, and others)

Once you’ve established which party covers these and any other obligations, you’ll know how reporting and payroll can be handled. Tax and contributions will usually be dealt with individually by each contractor. For full-time employees, the hiring party typically covers at least a portion of insurance premiums and other payroll-related benefits.

To avoid any compliance or misclassification issues, be sure to give our dedicated employee versus independent contractor misclassification resource a read.

When should you outsource global payroll?

There are situations where outsourcing global payroll is the right choice. Let’s discuss them now: 

When you want to expand internationally. Is your current payroll model fit for international expansion? Do you have the right processes in place? Do you have sufficient staff to manage the workload and expertise necessary to operate in another region? If not, outsourcing global payroll may be the wisest choice.

When you want to reduce complexity. Local payroll is complex, but global payroll can be substantially more difficult without help. You need to consider different labor laws, tax codes, benefits, and currency exchanges. Handling it alone is hard; working with a trusted partner is easy.

When you want to ensure compliance. Depending on the location of your employees, you will be subject to various employment laws. Changes in legislation can happen without warning, and consequences can be swift and unpleasant. By outsourcing global payroll, you can guarantee compliance no matter where you go.

When you want to save time. If you decide to manage global payroll in house, your employees will have to go through training and spend a lot of time setting up new processes. That likely means new software, new hires, and long training periods. Outsourcing lets you skip the wait and provide your employees with a superior experience from the outset.

How should you track your global payroll costs?

To make sure that you have a scalable approach regarding global payroll, it’s important to track and report your costs. Once again, you have two options — an internal tool or file where you track and apply changes manually, or reporting software from a global payroll solution.

Using software to track your costs for global payroll is a much more scalable and cost-efficient way to manage your spending. Spreadsheets may be free, but the sheer volume of data involved — not to mention the hidden costs associated with inevitable human error — make manual tools a poor option. A good global payroll spending management system should provide:

Overall payroll costs in a monthly or yearly view

Hiring global employees is easy and scalable with the help of the right global payroll partner. Whether you’re planning a global expansion, or looking for payroll efficiency, this guide will help you understand global payroll and its benefits.

What Is Global Payroll?

What is global payroll?

To hire in multiple countries, you must first understand how to create a fair compensation strategy that can scale across international borders. Mastering global compensation and total rewards for a distributed team is part art and part science, but the key to the entire exercise is putting the needs of your team at the center.

According to a survey by Deloitte, 64% of businesses say they will revise their compensation strategy by the end of 2023 at the latest. If we acknowledge that compensation goes beyond salaries and also includes benefits, stock options, and company contributions to perks like pensions, the need for constant reevaluation makes sense. The more distributed your team becomes, the more questions you must address in the evolution of your global compensation plan.

In this piece, we’ll cover what constitutes global compensation and how you can manage it effectively for your remote employees. 

Global compensation refers to how companies manage direct and indirect compensation for a globally distributed workforce. While direct compensation accounts for salaries and bonuses, indirect compensation includes all the extra benefits offered by the employer with the aim to attract the best talent and boost employee retention. Indirect compensation might include everything from health insurance to 401(k) contributions to stock options.

Global compensation also includes a legal component — chiefly, how do companies pay international employees compliantly? An employer of record like Remote can help with the compliance part, but for this article, we will focus on the question of how to develop the total rewards program that precedes any international hire.

What do you need to know about global compensation?

Managing compensation is challenging enough in one country. To handle total rewards well across multiple countries, you need to get the basics right first.

Base salary. Before extending an offer to any candidate, you need to establish the base rate for the role. On top of benchmarking for role and seniority level, an employer must ensure the basic remuneration reflects the candidate’s local purchasing power and a number of other factors (such as the inflation rate or special tax policies).

Allowances and premiums. To assess the correct monetary value of bonuses or additional allowances per team member, consider the standard costs of living in each country where you hire. This will help you create an attractive and competitive rewards program while facilitating employee acquisition and retention.

Benefits. Each country has its own list of mandatory benefits, which can be supplemented by additional perks, such as private healthcare. However, not every employee will prioritize the same benefits. Given the various medical systems across the globe, some employees will expect private insurance, while others might not see the need to provide anything on top of what’s offered to them by the NHS.

Additional incentives. After establishing base pay, you can add in any incentives that relate to your company’s rewards programs. For instance, if all employees are given stock options, then you must ensure that you avoid any legal roadblocks related to offering stock in every country where you hire.

To make sure that you’re offering just, equitable compensation to each staff member, it’s essential to create a total rewards policy that accounts for all aspects of global compensation. Your strategy must address the financial, career, and benefits rewards that motivate staff and promote long-term engagements with your company. Let’s take a closer look at the process behind creating a global compensation strategy.

Why is a fair and equitable global compensation policy so important?

Offering a fair and equitable global compensation policy is a necessary part of building a happy, diverse, and productive workforce.

Diversity and equity in practice and in law

Why should the issue of pay equity be of concern to employers? Not only is ensuring equity in compensation the right thing to do, but putting diversity and equity at the heart of your global compensation strategy will ensure all your employees feel valued.

The concept of diversity and equity goes beyond business effectiveness and ethical practices, though. As more legislatures around the world adopt equal pay laws for people of all genders, companies without internal controls for pay equity could find themselves in trouble with regulators — and making the news for all the wrong reasons.

Remote work has become the standard for many companies and will continue to empower more businesses to hire internationally. Businesses with remote workforces must be especially vigilant in the creation of their global compensation plans. Because every total rewards policy extends beyond salaries to cover statutory and non-statutory benefits, as well as various deductions, things can get complicated. 

Let’s take Canada and Australia as an example. 

In Canada, employee insurance is paid by employers on a monthly basis, which means there is more money left in the employee's pocket. In Australia, after an employee reaches a certain salary band, employers must make deductions from salaries to cover for the employee's higher education fees (if they attended university). This results in less cash in an employee’s bank account.

Therefore, even if two employees doing the same job in two different countries have equal salaries, their net pay will differ as they’re subject to various employment laws. An introduction of a total rewards policy helps companies realize these differences to ensure all their employees are paid fairly. That is not to say that every difference should lead to a salary adjustment, of course — only that companies need to be aware of different local factors to create more competitive compensation offers.

A comprehensive total rewards policy is an excellent way to keep your employees happy and motivated to do great work at your company. The opposite is also true: a poorly planned or nonexistent global compensation plan will make employees feel confused, undervalued, and unappreciated, which can lead to poor performance and low retention rates.

Part of every effective total rewards plan is transparency. If you create a global compensation strategy that is fair and equitable, you should want to share the process behind that plan with your employees — and with everyone else! Remote has a large part of our public handbook dedicated to our total rewards policy, where anyone can see how Remote sets salaries and accounts for things like cost of living and performance.

One of the best ways to begin creating a total rewards strategy is with a pay equity audit (PEA, in short).

To fix any discrepancies in rewards, you should first look at how much employees from the same seniority tier make for a living. Next, investigate every discrepancy and scan for any justifiable differences. On top of global fluctuations in tax and contributions, look for things like work experience, tenure, and job performance metrics, i.e. factors that back up any recent raises or bonuses. With those factors out of the way, you are left only with pay discrepancies not justified by other factors — that is where you should focus on closing the gaps.

Now, how do you tell whether your base salary is competitive in the first place? The good news is that many remote companies (particularly, those in tech) are open about the rates they offer to employees. 

Buffer is a perfect example. Not only does the company offer a Transparent Salary Calculator, which lets you see how much you would earn at Buffer for your location and prospective role, but they also disclose how they reward their own staff. These pages correlate perfectly, so anyone considering a job at Buffer can see that staff members are paid as much as the calculator says they would be.

Regular market pay gap and gender pay gap analysis

Conducting a pay equity audit is a great first step toward building a complete global compensation policy. Doing so comes in two parts: a regular market pay gap analysis and a gender pay gap analysis.

A regular market pay gap analysis focuses on the roles your employees hold at your company, their locations, and the salaries they earn based on those factors. In this part of your analysis, you can cover things like seniority (how much experience one person has compared to another in the field) and performance (what kind of performance evaluations have employees received). By quantifying these factors and comparing across the organization, you can identify areas where employees with similar backgrounds should be earning similar amounts for their contributions.

The gender pay gap analysis is a necessary part of the equation as well — so necessary, it requires its own step in the process. Women still earn less than men when performing the exact same work, per Payscale, even though that gap has been shrinking in recent years. As organizations become more proactive about measuring pay disparities across all genders, viewing total rewards through this lens is a vital component of an equitable global compensation plan.

Salary adjustments are purely reactive, so businesses must seek proactive ways to close the compensation gap and keep it closed. Your pay audit should uncover any operational mistakes and provide structure for how to correct those mistakes. 

Remote’s VP of people, Nadia Vatalidis, led Remote’s team through a total overhaul of our total rewards policy, including a global pay equity audit. Her advice for other companies looking to follow the same path is to lean into transparency:

“The question of equitable global compensation is a huge one, and it's a place where we are hoping to set a good example for other companies. Internally, we recently rolled out our new total rewards philosophy, which is available in our public handbook. Our policy focuses on belonging, inclusion, equity, and diversity. We are building Remote to democratize access to opportunity for employees and access to talent for companies, and we believe doing so means paying people fair wages for their work. Remote aspires to set the standard for equitable pay for everyone who works here, and our global employment service makes it easier for other companies to do the same within their organizations.”

What is happening in the global world of compensation right now? 

Remote work and distributed workforces create some confusing questions about how much to pay employees living in different places. Some organizations (particularly those that are primarily office-based) actually penalize remote workers with reduced salaries for working away from the company headquarters. While cost of living can be a factor in employee compensation, punishing employees for working remotely is the wrong approach.

Research from Remote found that 81% of workers would move to a new place if they could do so without affecting their prospects at work. As remote work makes workers more mobile, people are less willing to stay in one place when they know they could do the same work for the same or similar pay in a more desirable location.

That does not always mean moving to a tropical paradise, however. Many employees move to be closer to their families, to access better schools for their children, or simply to experience a new culture. The reasons for moving can vary, but the option for mobility is the common factor. Companies that are more accommodating of employee relocation are much more likely to attract and retain great people in the long term.

To compete for the best talent in different locations, companies cannot simply offer the bare minimum of statutory benefits required by law. Employees are attracted to opportunities with more competitive benefits packages. Fortunately, developing a more appealing benefits package does not necessarily mean spending a lot of money.

The modern benefits stack today’s employees desire most puts flexibility at the front. Not every employee wants to work remotely, but many of them do, and those workers do not want to limit their options to companies requiring a return to office. Perks like flexible working hours, location independence, and home office stipends can go a long way toward making employees feel supported regardless of where they want to work. Add in the more traditional benefits, like pensions and health insurance, and the benefits part of a total rewards package can play a major role in attracting and retaining employees.

The beauty of a total rewards policy is that it’s scalable by nature. Once you understand how and why you set salaries at certain levels and how to offer the best benefits, you can make competitive offers to great candidates much more quickly.

Think of two situations. In the first situation, you have no clear total rewards policy. When you find a great candidate for an open role, you must quickly figure out what the salary for the role should be, which benefits you can offer in the candidate’s country, and how much cost of living should affect your offer. This process takes time to complete, leaving your candidate with a lot of frustrating “it depends” answers and potentially leading the candidate to take another offer.

With a clear total rewards policy, you can skip all the parts of compensation that drag out the hiring process. Find a candidate, look at your policy, and tender a great offer immediately. The candidate doesn’t keep looking for other jobs because you demonstrated how much you value this person and how excited you are to have them join your team.

The same is true of internal scalability for total rewards. Your policy not only covers new hires, but also events like promotions and performance reviews. This accelerates internal mobility, ensuring people who are already within your organization feel valued and seen.

What are the different types of global compensation strategies?

There are, broadly, four different approaches to global compensation: paying everyone the same salary, adding a cost of living adjustment, using a salary calculator, or following a total rewards approach. Before we dive in and take a look at the differences between these four strategies, we first need to understand the difference between global pay, GEO pay, and local cost of living.

Global pay vs. GEO pay vs. cost of living

Global pay means setting salaries based solely on role and experience, then paying workers the same no matter where they live. GEO pay refers to using geo pay ranges to set salaries. Cost of living, of course, refers to using the cost of living of the city where the employee lives to adjust the employee’s salary.

Global pay and cost of living are self-explanatory, but geo pay ranges are a little different. Geo pay ranges are large areas with similar costs of living. For example, a standard cost of living model for compensation might consider every individual city within a country, while a geo pay range may include a few countries with similar costs of living as one entity in terms of salary calculations. We use geo pay ranges at Remote, because doing so allows us to compensate our team members with higher salaries.

The following are the most commonly used strategies for determining global compensation.

Global pay: Roles, not regions, determine salaries.

This is the easiest strategy to manage, but it is also the most expensive. Paying everyone the same usually means setting salaries at a rate tied to an expensive city — otherwise, the company would be unable to hire anyone living in a major metropolitan area. That means an employee working in San Francisco as a senior operations specialist, for example, would earn exactly the same salary as a senior operations specialist in Chiang Mai, Thailand. For smaller companies with lots of money, this may be a good option, but scaling global pay gets expensive quickly.

Cost of living: Set salaries by role and adjust by city or region.

As mentioned previously, companies can consider cost of living using either city-level data or geo pay ranges. Geo pay ranges strike a good balance between global pay and city-level costs of living by compensating employees with higher salaries without creating huge gaps in pay equity. With geo pay, anyone living in a high cost of living area still receives a good salary, while someone in a lower cost of living area receives a higher salary than they would in a city-level model.

Cost-of-living calculator: Use a formula to set salaries.

A compensation calculator tied to cost of living can be a smart way to manage global compensation, at least for the salary portion. Buffer and GitLab both have salary calculators that are publicly available, so prospective hires can get a good idea of what they would make at the company. The trouble with owning a salary calculator comes with the upkeep — managing all those variables can be tricky, especially as factors like exchange rates change over time. Changing the calculator can have widespread implications throughout the workforce, so it’s important to get it right from the outset.

Total rewards program: Create a customized, scalable solution.

Large organizations and high-growth startups face immense challenges regarding global compensation. At Remote, we have some of the most hands-on experience with global compensation and total rewards in the world, so we used that expertise to develop a total rewards policy that is generous, equitable, and flexible.

For example, geo pay ranges allow us to pay our team members well no matter where they live. To ensure we can attract the best leadership candidates, we use global pay ranges for roles at the director level and up, benchmarked at 80% of the US rate. Our compra-ratio approach sets the baseline for salaries at 65% of the median rate (instead of the usual 50%), then adjusts up or down based on performance and experience. Tactics like this allow us to pay our employees well while leaving room for growth.

For more information on how different companies handle compensation, see our piece on how to manage remote worker compensation. If you want to know more about Remote’s total rewards policy, you can always check out our public company handbook.

Why fair global compensation is more than just salary

Fairness and equity are not as simple as setting equal salaries for all. Equality in compensation is important, but to achieve true equity, companies must account for everything from worker location to benefits packages.

The importance of a global compensation total rewards policy

Remote work gives employees more freedom to select the employment opportunities they like best. With more power shifting to the workforce, businesses need to be proactive in developing total rewards policies that are not only equitable and competitive, but also appealing.

To retain current talent and attract new employees, companies have to approach their total rewards policy holistically, including both financial and non-financial incentives. This is especially important given the cultural context and the discussion around equality. It’s the organization’s responsibility to structure rewards in a way that guarantees transparency and fairness. In addition, employees respond strongly to whole-person total rewards programs that include perks like mental health care, student loan repayment assistance, learning and development budgets, and similar nontraditional offerings.

Having an attractive, forward-thinking total rewards policy will not only act as a great motivator for employees to perform at their best but will also make them feel appreciated. Additionally, benefits like these will help employers to stand out from the competition, which is key in an increasingly competitive talent marketplace.

There is no one-size-fits-all approach to benefits

Building a total rewards plan with associated benefits is a bit of an oxymoron. Every employee should feel their benefits package is personally relevant, but every employee should have access to the same company-sponsored benefits whenever possible.

Different countries have different rules for social contributions and associated government assistance. This should be reflected in your compensation benchmarking. For instance, at Remote, we take into account that the Netherlands requires an employer to pay a holiday allowance that translates to 8% of the employee’s annual earnings. We factor extras like this into our benchmarks for each role. In the Philippines and Mexico, both of which require employers to offer a 13 month’s salary, we follow the same practice.

State-mandated benefits alone do not make a competitive benefits package. Employers must also take into account rewards that aren’t required by the government but are seen by the employee as a market standard (for instance, private insurance packages in Brazil or the US). To stand out from other employers on the market, consider which nontraditional benefits your current and prospective employees may desire.

To give you a real-life example of how global compensation can be managed, let’s take a look at how we handle total rewards at Remote, where we have hundreds of employees in dozens of countries all over the world.

Total rewards philosophy and mission statement

At Remote, our mission is to ensure bias-free compensation and equity for all employees. Our total rewards policy is the result of deep research regarding compensation with employee wellbeing, fairness, and equity at the core. It is our hope that, through our approach to global compensation, we can inspire other companies to reward their distributed teams well, improve standards of living around the world, and empower more people as they contribute to their local economies.

Compensation data, benchmarking, and fair pay analysis

In 2021, Remote ran an extensive pay and equality analysis to understand how to benchmark compensation for each role. We included a gender gap analysis during this research to ensure everyone at Remote is paid fairly regardless of gender.

While we cannot publicly display our compensation data for specific employees, we do publicize the factors we use to determine compensation. Remote applies global pay to director-level employees and sales roles, which are benchmarked at 80% of the US rate. Compensation for all other roles is based on:

Level of experience and alignment to the position

65th percentile positioning within the overall market

Benchmarking across teams and departments to ensure internal equity and fairness

At Remote, we use the above-mentioned geo pay ranges as part of our rewards policy formula. When determining the cost of living index, we look at the exact costs of living per country instead of per city or region. This is important, as two neighboring countries might fall under two different geo ranges (for instance, Lebanon and Israel).

To ensure compliance everywhere Remote operates, all employees are paid in their local currency. We use a constantly updated calculator to convert from USD to all local currencies. To guarantee fairness and find balance between currency fluctuations, we use a 12 month trailing average rate. 

Our compensation review policy includes a number of factors, including:

Two annual performance reviews (compensation review in October/November and market check in May/June)

Determining role readiness and individual predispositions when determining promotions

Our compa-ratio metric, which takes the midpoint salary range on the market and compares it against our employees’ remuneration

For a deeper dive, be sure to give our public rewards policy document a read.

What is the best approach to global compensation when you hire remotely: global or geo pay? Read our comprehensive resource to find out.

How to Manage Global Compensation: Remote's Total Rewards Policy

How to manage global compensation

You asked for a way to offer and track stock options in the Remote platform for your employees in other countries — and we have delivered. Not only can you offer options through the Remote platform, but you can also include details like number and type of options, vesting periods, and vesting cliffs as you onboard new employees. This makes it easy to track which employees have been offered what stock options through our platform. 

How Remote supports your international equity offerings

We go beyond simply enabling you to track your stock option offers. Remote can help you no matter what stage you're in, whether you already have an equity incentive scheme or you’re just getting started. We take the guesswork out of offering equity to your international team members in the following ways:

Equity plans. Our dedicated tax law experts can review your legal documentation to help you determine whether your scheme is compliant. Don’t have one yet? That’s OK. We can share best practices for setting up schemes that are fair and inclusive.  

Local tax laws. We love talking about taxes so you don’t have to. Our team of tax law experts can help you understand the tax consequences of offering equity incentives in every country where we operate, and then some. We’ve done the heavy lifting so you can focus on attracting and retaining great talent for your business.

Withholding and reporting. Let’s say one of your team members vests in Norway and another team member exercises in Canada. All you have to do is let us know, and we’ll take care of the tax withholding and reporting (in some countries, like Switzerland, you may still have obligations on your side, but we’ll make sure you know that too). Most  EOR services don’t offer this, but we do. And of course, to help you plan ahead, we’ll keep you apprised of any taxable events in your employee's jurisdiction.

Remote makes it easy to offer equity around the world — but you still have a few responsibilities as the creator of your equity plan. Let’s take a look at what that means:

Administering your equity plan. You and your legal team must set up your equity plan and understand the compliance requirements of doing so. Likewise, your legal team is responsible for implementing any changes to the equity agreements based on our guidance.

Issuing the equity agreement to the employee. The agreement is between your company and the employee. Remote is not able to issue equity to employees directly, nor can any EOR. 

Withholding and reporting. In some countries, you may have additional withholding and reporting requirements. But don’t worry, we’ll let you know when that’s the case. 

Setting up a global equity plan can be incredibly complex, but we’re here to make it as straightforward as possible with Remote. With our guidance, you can use equity incentives to build an amazing team all across the globe.

Ready to talk about offering equity to your global team?

If you’d like to learn more about the tax implications of granting equity to your team members abroad and how Remote can help, please contact us at equityqueries@remote.com. If you’d like to speak to one of our experts, we welcome you to sign up for a free 30-minute Equity Incentive Planning Consultation. 

You asked for a way to offer and track stock options in the Remote platform for your employees in other countries — and we have delivered. Not only can you offer options through the Remote platform, but you can also include details like number and type of options, vesting periods, and vesting cliffs as you onboard new employees.

Offer stock options to international employees with Remote

No matter how big your business, no one likes to get sued. The financial costs of handling the lawsuit can be significant, and if things don’t go your way, the settlements can be substantial.

When you’re building a cross-border team, your exposure to risk can increase, especially if you misclassify contractors. Global employment lawsuits can be varied in cause, ranging from breach of contract to intellectual property disputes. It’s enough to keep legal, finance, and HR all awake at night.

Fortunately, the risks can be mitigated and managed. Many troubles are triggered because of failure to comply with employment legislation. Failure to comply with payroll and related employment legislative requirements carries significant risks and penalties, but avoiding danger is typically straightforward. Understanding relevant laws and statutes goes a long way toward protecting your company. But, if you’re employing a global workforce, there is great variability from country to country and even state to state. Working with a partner with global expertise is essential to reduce risk.

This guide covers common reasons international employers face lawsuits and the best strategies to avoid legal trouble abroad.

Intellectual property (IP) refers to the intangible assets (“creative outputs of the mind”) generated by your company. IP is distinct from physical property such as buildings, goods, and infrastructure, although both enjoy protections under the law.

Copyrights include written works, music, graphics, and software or code. 

Patents cover inventions, methods, designs, and processes, or significant improvements on existing inventions, methods, designs, or processes. 

Trademarks include words, phrases, logos, or images that designate products or services as unique and distinct from others of similar nature.

Trade secrets include the various types of confidential information, formulas, techniques, and recipes held by your company. 

IP violations occur when a third party knowingly or unknowingly uses IP without consent or permission. IP infringement could include something as obvious as putting another company’s logo on your own goods or marketing your services under the same name as another company’s services.

In a traditional business setting where everyone works and produces IP in one place, the owner of the IP is generally clear. However, in remote work settings, when using contractors, and with cross-border teams, ownership can become muddled. This opens the door to inadvertent IP violations and complaints against your business.

What determines the consequences of IP violations?

The consequences of IP violations include financial fines and penalties, injunctions against ongoing and future infringement, and even criminal consequences for deliberate violations.

However, consequences vary greatly based on a variety of factors.

Learn about some common reasons businesses get sued and tactics to avoid legal trouble as you grow.

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