10 Payroll Challenges for Global Organizations in 2020

Staying on top of global payroll laws and trends is imperative to do international business in 2020. Make sure you’re prepared for what could be in store as an HR or payroll professional, by reading about the prospective issues for the coming year. Concerning everything from social security reform in Brazil, to the impacts of Brexit, read on to find out everything you need to be aware of regarding payroll in 2020.

U.S. talks of statutory parental leave

Most countries offer some form of statutory maternity leave, and the U.S. is one of just three countries that doesn’t. But, with eight states having passed family leave bills in recent years, it’s looking like U.S. citizens are calling for things to change.

Whether or not U.S. national law changes in 2020, parental leave is likely to be discussed in the run-up to the 2020 election, bringing this issue to the fore.

California’s Consumer Privacy Act (CCPA)

This state law details procedures that have been put into place to protect consumer data. It applies to all businesses that obtain personal information of Californian consumers and employees, including social security and bank details.

Businesses outside of the state are also liable to adhere to the CCPA if they have any employees on their payroll who are based in California.

European minimum wage

An E.U.-wide minimum wage law is likely to be discussed among the Member States of the European Union. Ursula von der Leyen – the President of the European Commission – has highlighted her concerns surrounding the lack of such legislation in Europe. In a letter to Nicholas Schmit, the Commissioner-Designate for Jobs, Ursula wrote of their being a need for a “legal instrument to ensure that every worker in the Union has a fair minimum wage.”

Six E.U. Member States have no national legislation dictating a minimum wage law, and so this could well become a prime concern for the Union.

Brexit

2020 is the year in which the results of the 2016 U.K. referendum finally come into play. The U.K. left the European Union at 11 pm on 31st January 2020, but there are unlikely to be any significant changes during the year. This is because, following the official exit date, the U.K. will enter into an 11 month long ‘transition period.’ Following conversations and agreements between the U.K. government and the E.U., we can expect to hear news regarding implications to business and trade over the coming months.

The Netherlands’ employee bike scheme

As one of the most bike-friendly places in the world, it will probably come as no surprise to learn that the Dutch government is introducing another initiative in 2020 to encourage people to commute via bicycle. The scheme involves a mileage allowance of €0.19 per kilometer for cyclists, to be paid by employers.

New tax rules will also benefit those who cycle to work; 7% of the recommended retail price of their bike will be added to their taxable annual salary.

Italy’s tax regime for relocating employees

Italy has long had a tax relief scheme for employees who relocate to Italy. In the past, this has been at a rate of 50% tax exemption for the first five years after moving to Italy. In 2020, however, the exemption rate will rise to 70% across most of the country, and up to as much as 90% in the poorer areas in the south.

The new regime will apply to both employed and self-employed people, irrespective of their qualifications. This is likely to lead to an increase in the number of immigrating employees, and therefore the recruitment of international staff. In order to cope with this, HR and payroll teams are recommended to seek advice regarding the implications of international HR.

Article Continues Below

Australia’s single touch payroll (STP) law

In 2020, all small businesses in Australia – those with 19 employees or less – must use the STP reporting system. This system is designed to communicate all aspects of employee pay to the Australian government. It includes tax, salary, wages, and withholding information. Designed to aid the government in recognizing any payroll non-compliance, it is now mandatory for all small businesses.

It’s believed that a vast number of small businesses have not yet moved over to this system, so in 2020 it’s likely that the Australian Tax Office will begin penalizing those that haven’t.

Brazil’s social security

2020 will see significant changes in the social security scheme in Brazil:

  • Minimum retirement ages are being introduced. Until now, there has been no minimum wage, and residents have been known to claim retirement benefits from the age of 50. The new minimum retirement age is 62 for women and 65 for men.
  • New social security brackets. 2020 will see the introduction of four social security brackets for those working in the private sector and eight for those in the public sector. It’s because the government has acknowledged that those working in the public sector averagely earn twice as much as those in the private sector, which is why the latter has more brackets.

Morocco’s wage & social security increase

In 2019 the Moroccan government passed a three-year agreement that detailed plans to increase national wages and social security benefits. The first increase happened that year, and the second will occur in July 2020. It is believed that approximately 800,000 employees will benefit from the legislation in the public and state sectors, and an additional 24,000 working in the private and education sectors.

Jersey’s family-friendly Amendment 11

New legislation in Jersey is being introduced in support of families. There will be 52 weeks of parental leave for parents, 6 of which will be paid at 100% salary. This applies to all parents; mothers fathers, adoptive, and surrogate. In addition, all parents will also be entitled to an unlimited amount of antenatal appointments – 10 hours of which will be paid.

Protection will also be put in place for breastfeeding mothers to be able to do so at work. Workplaces must now provide a suitable space in which to breastfeed.

Employers must also offer paid absence if a risk assessment determines that a pregnant or breastfeeding employee cannot continue in their role or be allocated alternative duties.

Any payroll professionals who deal with international business need to keep abreast of upcoming changes in the sector. An understanding of new laws and trends that will be put into place in 2020 is imperative in order to stay prepared and competent when employing, or dealing with international staff.

Matt Bragg is a Director of FMP Global one of the world’s leading suppliers of UK and international managed payroll for SMEs. Matt is a commentator on the current issues surrounding the worlds of HR and Payroll and is an up and coming thought leader on the topics of digital working and employee engagement.

Topics