International payroll: how to pay employees across multiple countries

International payroll is the process of paying workers outside the country you normally operate from. Businesses can pay employees or contractors through international payroll. To run international payroll successfully and compliantly, organisations must follow local labour laws, make the appropriate tax arrangements, and pay workers in their local currency. 

Some businesses process payroll through their own local entities, but many growing businesses instead use an employer of record (EOR) service to avoid having to establish a presence in every country.

Domestic payroll is complex enough, but paying international employees introduces fresh challenges for HR and finance teams. Navigating legislation, handling currency conversions, and following the right processes takes up extra time and resources.

The main concerns for UK teams include: 

• Changeable exchange rates: Market volatility means the cost of paying employees varies every month, making it hard to accurately budget for monthly and annual costs of hiring internationally.

• Data security and compliance: UK teams are used to complying with the UK GDPR and other local legislation, but every country comes with its own legal requirements that the business needs to meet — either directly or via a payroll service.

• Pension and benefit provisions: Contracts, benefits, and pensions all differ depending on an employee’s location, which adds admin requirements and compliance risks if handled in-house.

International payroll can be challenging, but there are options for organisations that want to avoid some of the admin and risk of paying employees overseas.

There are three main routes for businesses who need to pay international employees and contractors: managed payroll, employer of record (EOR) services, and professional employer organisation (PEO) services.

Here’s how those options compare on services, responsibilities, and entity requirements:

International payroll providers rely on your business having a local entity that employs individuals in that country. Employer of record services don’t require a local entity — instead they function as the employer of the individual, while your business directs the work the employee does.

If you need to outsource international payroll, choosing the right provider or vendor is critical. The ideal international payroll service needs to be compliant, offer fast onboarding and payments, and introduce time savings — rather than add to your admin to-do list.

Compare potential payroll providers on:

• Country coverage: Can you run payroll in the countries you currently or plan to operate in? Do they have local expertise, especially when it comes to compliance?

• Currency: Can you pay employees in their local currency? What are the currency conversion fees?

• Compliance: Does the service handle compliance risks and concerns? Which risks remain with the business?

• Data security: Is data securely stored and processed? Is any personal data shared with artificial intelligence (AI) tools? Does this conflict with your internal policies?

• Onboarding: What’s the onboarding process like for new hires? How does the provider handle employees changing regions?

• Payment speed: How quickly can the provider pay your employees? Is there an unnecessary delay? Is the service reliable?

• Integrations: Can the payroll provider integrate with your HR software? Is there a simple and reliable way to sync data between the two systems?

• Pricing: Is pricing transparent? What will it cost per employee per month? Are there extra fees and charges?

• Reputation: Does the provider have a positive reputation? Are their online reviews positive? 

• Support: What customer service and technical support is available? Can the payroll provider support employees directly?

For most businesses, the deciding factor will be the countries covered and whether or not the provider can integrate smoothly with your existing human resources information system (HRIS) or not. 

The success and speed of your international payroll operations depends on secure access to accurate, real-time HR data. Personio’s preliminary payroll and EOR service (powered by Remote) means you can enjoy all the efficiencies of Personio, with the added benefit of payroll-ready data and easy access to Remote’s EOR capabilities.

HR teams can use Personio’s payroll solutions to: 

• Prepare payroll-ready files for local payroll providers

• Send preliminary payroll data to tools like Xero and Sage 50

• Hire, manage, and pay employees in 100+ countries with Personio’s EOR services

• Integrations with payroll tools popular outside the UK, including Germany, the Netherlands, and Spain

• Act as a single source of truth for HR and payroll 

HR and preliminary payroll in one place

Book your demo to see how Personio supports HR teams with preliminary payroll and EOR services.

You only need an international payroll provider if you already hire employees in another country or you plan to expand operations into new locations. If you have a local entity, you can manage payroll in-house. If not, an EOR gives you a way to pay employees efficiently and compliantly. Some combined HR and payroll software providers allow you to manage both operations from one place.

The cost of international payroll depends on the method you choose and your provider’s specific fees. For managed payroll, it’s typically £10-£30 per employee per month. For a PEO, it’s around £40-£200 per employee per month (or a set percentage of gross payroll costs). For an EOR, expect to pay between £140-£599+ per employee per month. 

To run payroll in multiple countries, you either need a local entity in each country or to use an employer of record (EOR) service. Setting up a local presence can be expensive, but so can using an EOR service over the long-term. Weigh up which option is best for your growth plans and budget, then either handle payroll and compliance in-house or outsource it to your chosen EOR.

Personio supports preliminary payroll, which allows HR teams to prepare HR data ready for your local payroll provider(s) or payroll software. If you’re looking for an EOR, Personio’s employer of record service (powered by Remote) allows you to streamline operations and improve data flow between your HR and international payroll systems.