6 Tips to Handle Payroll for Multinationals in Africa

Payroll for multinationals

Payroll is a basic function that all organizations – both for-profit and nonprofit ones – have to fulfill.

 

Yet it is complex by nature, and becomes exceedingly more difficult to handle when companies cross borders and seek to conquer other markets. Faced with truly staggering volumes of data, internal payroll teams are left to juggle with impending deadlines, multiple data variables (leaves, sick days, overtime…) and even more crucially, multiple labor and taxation laws… Even the most well-meaning internal payroll staff are unable to face this gargantuan task on their own without running into error after error.

 

Fortunately, there are multiple steps multinationals can take to address these issues:

For multinationals, expanding to new markets means more employees, which in turn means more data for payroll teams to sort through and process. The sheer volume of data means that staff are more likely to make mistakes when moving from one stage of processing to the next. If mistakes happen at the beginning stages of payroll, during data input for instance, the whole process will be affected, resulting in payroll miscalculations and eventually leading to over and underpayment of employees.

These are serious consequences to deal with, and they are problematic on multiple levels. At the resources level, this means time and therefore money lost making up for payroll mistakes. At the employer level, this means reduced trust from the employees. At the legal level, this may constitute a violation of employees’ rights, should it happen often or should an employee decide to lodge a formal complaint.

Automation helps prevent such occurrences by relieving payroll staff – already in a race against the clock – of repetitive tasks such as data input. State-of-the-art payroll systems can help payroll staff by keeping timesheets for instance. By combining information from a login platform, an automated payroll system can record when employees clock in and out of work for a given work cycle. Additionally, the software can then look for inconsistencies on time cards and notify the manager before requesting payment.

Other tasks such as calculating commissions, sending approvals for overtime compensation and even creating payroll reports can be automated. This leaves payroll staff with more time to focus on matters that truly require their input.

Complementary to automated payroll systems, employee self-service portals are becoming increasingly popular additions to payroll systems. These portals are available in the form of applications, programs or websites that employees have access to. Not only do they allow workers to log in their hours, they also enable them to send leave requests without the usual need for paperwork. Naturally, this expedites the process, making for truly seamless communication between HR/payroll departments and employees.

Compliance is to payroll what payroll is to business: one of its most important aspects. Compliance happens at multiple levels, from labor law to taxation and data security. Not being fully compliant will subject multinationals to fines, sanctions and a damaged employer reputation. Typically, the fines paid to the local authorities far exceed the costs of remaining compliant in the first place.

So whether it concerns administering payroll in a timely way or deducting the correct taxes and paying them on time to the relevant authorities, multinationals must keep compliance in mind no matter what they do.

Multinational companies often find themselves in the unenviable position of having different payroll systems across the many African countries they are present in. This means that the company has little control over payroll costs – which can rack up to quite a sum.

Besides, from a managerial perspective, multiple payroll systems are a headache to deal with as it can be difficult to track whether the company’s standards are being met across the board. This is because each payroll system will calculate and report data in its own distinct ways, making it hard to compare data effectively.

The solution in this case is to integrate all these different payroll systems into one big, centralized system. Doing so gives multinationals more control over their now-unified, global payroll system, helping to bring down payroll costs in the long term.

Besides, unified payroll systems make it easier for multinationals to gather data and make decisions based on them.

Full names, addresses, phone numbers, bank details, marital statuses, social security numbers… Companies deal with sensitive personal data all the time. But with multinationals, the stakes are even higher because of the volumes of personal data involved. It is crucial for multinationals to properly secure their employees’ personal data according to the laws of the African country they are in. Otherwise, they risk being victims of hackers and data breaches, leaving them vulnerable to sanctions by local authorities and legal action by affected employees.

In Nigeria for instance, failure to protect employees’ data can lead to the following penalties:

If a data controller (i.e. someone like an employee who stores personal data) has more than 10,000 data subjects, they must pay a fine of 2% of their annual total income from the previous year, or NGN 10 million, whichever is greater. If they have fewer than 10,000 data subjects, they must pay a fine of 1% of their annual total income from the previous year, or NGN 2 million (about €4,600), whichever is higher.

Payroll is a process, not a one-time task that multinationals can consider once and not look at again. Every payroll system needs to be constantly reassessed and updated to remain efficient and to keep with the times. For instance, a multinational’s need for automated processes will evolve over time. With more employees, multinationals may need more extensively automated payroll processing. New technologies may also crop up, making the need for such payroll “health checks” necessary.

1. Reduce repetitive tasks with automation

For multinationals, expanding to new markets means more employees, which in turn means more data for payroll teams to sort through and process. The sheer volume of data means that staff are more likely to make mistakes when moving from one stage of processing to the next. If mistakes happen at the beginning stages of payroll, during data input for instance, the whole process will be affected, resulting in payroll miscalculations and eventually leading to over and underpayment of employees.

 

These are serious consequences to deal with, and they are problematic on multiple levels. At the resources level, this means time and therefore money lost making up for payroll mistakes. At the employer level, this means reduced trust from the employees. At the legal level, this may constitute a violation of employees’ rights, should it happen often or should an employee decide to lodge a formal complaint.

 

Automation helps prevent such occurrences by relieving payroll staff – already in a race against the clock – of repetitive tasks such as data input. State-of-the-art payroll systems can help payroll staff by keeping timesheets for instance. By combining information from a login platform, an automated payroll system can record when employees clock in and out of work for a given work cycle. Additionally, the software can then look for inconsistencies on time cards and notify the manager before requesting payment.

 

Other tasks such as calculating commissions, sending approvals for overtime compensation and even creating payroll reports can be automated. This leaves payroll staff with more time to focus on matters that truly require their input.

2. Introduce Employee Self-Service

Complementary to automated payroll systems, employee self-service portals are becoming increasingly popular additions to payroll systems. These portals are available in the form of applications, programs or websites that employees have access to. Not only do they allow workers to log in their hours, they also enable them to send leave requests without the usual need for paperwork. Naturally, this expedites the process, making for truly seamless communication between HR/payroll departments and employees.

3. Put compliance at the core of all activities

Compliance is to payroll what payroll is to business: one of its most important aspects. Compliance happens at multiple levels, from labor law to taxation and data security. Not being fully compliant will subject multinationals to fines, sanctions and a damaged employer reputation. Typically, the fines paid to the local authorities far exceed the costs of remaining compliant in the first place.

So whether it concerns administering payroll in a timely way or deducting the correct taxes and paying them on time to the relevant authorities, multinationals must keep compliance in mind no matter what they do.

4. Integrate local payroll systems into one centralized system

Multinational companies often find themselves in the unenviable position of having different payroll systems across the many African countries they are present in. This means that the company has little control over payroll costs – which can rack up to quite a sum.

 

Besides, from a managerial perspective, multiple payroll systems are a headache to deal with as it can be difficult to track whether the company’s standards are being met across the board. This is because each payroll system will calculate and report data in its own distinct ways, making it hard to compare data effectively.

 

The solution in this case is to integrate all these different payroll systems into one big, centralized system. Doing so gives multinationals more control over their now-unified, global payroll system, helping to bring down payroll costs in the long term.

 

Besides, unified payroll systems make it easier for multinationals to gather data and make decisions based on them.

5. Be mindful of data protection

Full names, addresses, phone numbers, bank details, marital statuses, social security numbers… Companies deal with sensitive personal data all the time. But with multinationals, the stakes are even higher because of the volumes of personal data involved. It is crucial for multinationals to properly secure their employees’ personal data according to the laws of the African country they are in. Otherwise, they risk being victims of hackers and data breaches, leaving them vulnerable to sanctions by local authorities and legal action by affected employees.

In Nigeria for instance, failure to protect employees’ data can lead to the following penalties:

If a data controller (i.e. someone like an employee who stores personal data) has more than 10,000 data subjects, they must pay a fine of 2% of their annual total income from the previous year, or NGN 10 million, whichever is greater. If they have fewer than 10,000 data subjects, they must pay a fine of 1% of their annual total income from the previous year, or NGN 2 million (about €4,600), whichever is higher.

6. Carry out payroll "health" checks

Payroll is a process, not a one-time task that multinationals can consider once and not look at again. Every payroll system needs to be constantly reassessed and updated to remain efficient and to keep with the times. For instance, a multinational’s need for automated processes will evolve over time. With more employees, multinationals may need more extensively automated payroll processing. New technologies may also crop up, making the need for such payroll “health checks” necessary.

How Africa HR Solutions can help

Expanding to new markets is never an easy feat – and handling your own payroll may actually work against your multinational company both in the critical first months and even in the long term. Having worked with over 700 international clients in over 46 African countries, Africa HR Solutions can reliably manage your payroll, handling all aspects: from providing a modern, centralized payroll solution to ensuring data protection.

Africa HR Solutions offers you the benefit of having a single point of contact for all your payroll needs across 46+ African countries – requiring minimal input from your side to keep your payroll and other activities running smoothly.

Ready to focus solely on your core business? Get in touch with our team now to find out more about our payroll services.

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Multinational Payroll is made stress-free with Africa HR

Africa HR Solutions believes paying employees throughout an entire continent should not be as stressful and hard as it is. With our extensive payroll solutions, your team is always sure to receive their salary on time.
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GRANT GERAGHTY - Africa HR Team

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Grant Geraghty is the longest-serving member of the Africa HR team. This resident subject matter expert and client champion is responsible for gaining a deep understanding of our clients’ unique HR needs in Africa and providing tailored solutions that align with their business objectives. Grant collaborates closely with our clients to ensure that their requirements are properly implemented, providing ongoing support and guidance throughout the process.

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Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.

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VILOSHNA PACKIRY POULLE

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MARK DU PREEZ​

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Alex Daruty - Africa HR Team

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Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.

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