MEMBER TAKEOVER
H istory shows that the first salary BC. At that time, it wasn’t monetary pay, but a system which allowed the exchange of goods, such as salt, grain and other food products or services between tradesmen. The importance of the payroll function was strengthened with the introduction of income tax. It was introduced to Great Britain by prime minister, William Pitt the Younger. In his budget of December 1798, Pitt payment was recorded somewhere between 10,000 BC and 6,000 introduced progressive income tax. Under this new tax, all yearly incomes over £200 were taxed at 10%, while those between £60 and £200 were taxed at a graduated rate from just under 1% to 10%. Looking globally, over 60 years later, in 1861, the USA introduced a personal income tax: 3% for income over $800. Many of the developed countries introduced income tax between 1900 and 1920. There are other events, aside from the introduction of income tax, which have shaped global payroll, such as the introduction of: l National Insurance and social securities l employment contracts l minimum wage l real time information l and much more. Some more recent global payroll challenges However, I would like to have a closer look at more recent global payroll changes and challenges. Following Brexit, many international companies looked at opening new offices in Europe. Ireland, the Netherlands, Germany and Italy became incredibly popular locations. Of course, the payroll function played an important role in these new office openings. We were the partners who researched and established best practice, and ensured the organisation stayed compliant with local requirements for: l minimum wage l overtime l paid time off l tax l social security l benefits. We were one of the first teams to meet new employees or to advise on relocation requirements for current employees. The payroll team would be heavily involved in smooth onboarding processes in these new locations.
Global organisations recognised that we’re not just a back-office team, but the team which plays a strategic role in controlling one of the most expensive costs in the company – the ‘people’ cost. We’re often asked by businesses to look at benchmarking and get involved in salary review processes. This is incredibly important now, more than ever, when inflation is rising globally. Our advice to the business could be crucial in ensuring employees are paid fairly. Global organisations recognised that we’re not just a back- office team, but the team which plays a strategic role in controlling one of the most expensive costs in the company – the ‘people’ cost A colleague of mine once said to me ‘payroll is payroll’. What he meant by this is that if you can do payroll in one location, you should be able to do it in others too. I would agree and disagree with this statement. Yes, if you work in payroll, you’ll possess some key attributes and traits enabling you to deal with the associated processes. However, we must consider that global payroll involves working with different laws, regulations, habits, cultures and languages. Also throw into the mix different time zones. In a lot of situations this is very challenging, a prime example could be the time difference between New York and Hong Kong (13 hours). Some locations even have different working weeks. In Israel, the working week starts with Sunday and finishes on Thursday. This means global payroll teams must pay extra care when running payrolls and releasing payments. A global payroll team is required to have in-depth knowledge of every location they work with and must stay up to date with any local payroll-related regulatory changes. Another event which highlighted the importance of the global payroll role was
The importance of the global payroll function
Irina Bozhkova MCIPP, EMEA payroll and benefits lead, HarbourVest Partners, talks about her passion for global payroll, and dealing with different payrolls all over the world
| Professional in Payroll, Pensions and Reward | December 2022 – January 2023 | Issue 86 38
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