The Middle East has its own idiosyncrasies to consider when running a business in the region, which can get complex and complicated when your business has branches in different countries within the region.
So, making sense of multi-country payroll in the Middle East warrants some careful considerations.
Many businesses manage multi-country payrolls in the Middle East. To do this, companies must have a better understanding of the legislative differences between countries in the region, and how to represent these differences in Head Quarters accurately in a single set of accounts.
The reason why software exists is because it’s designed to simplify. Using payroll software in your businesses across the Middle East means you can manage and administrate payroll according to each country’s specific requirements, while reporting into a central payroll administration function at your Middle Eastern headquarters (HQ).
The software enables each branch to manage payroll in-country, while reporting back into a centralised system managed in HQ. This ensures compliance in each country and makes reporting easier and more efficient.
Centralising payroll across the region means you can easily measure and compare payroll datasets across multiple countries, leading a comprehensive analysis and understanding of regional payroll for your company on a country-by-country basis.
Another model of centralising payroll and reaping the maximum benefits of software implementation is having a third-party service provider who is expert in payroll in the Middle East to manage all the payroll inputs from all the countries where the business operates.
Legislative understanding and advice
One of the biggest challenges when running multi-country payroll in the Middle East is to ensure compliance with each country’s regulatory frameworks. It is important to understand each country’s laws and stay abreast of any and all changes that happen. This can be a tall order, since employee laws are numerous and have a tendency to frequently change, no matter where your business is.
In theory, when you have a dedicated payroll team in each country, the risk of non-compliance shrinks because you have in-country expertise to tune into each country’s legal requirements.
If you outsource multi-country payroll to a third-party provider, you ensure in-country legal expertise, compliance and advice without having to train staff in each country to stay up to date. Additionally, you do not have to pay large lawyers’ fees to get legal advice in a country in the Middle East on legislative requirements, changes and how they can impact your business. The third-party provider already has this incorporated in the service they deliver.
Wage Protection System and Social Security
Payroll in different countries in the Middle East is subject to different social security, employee protection and tax rules. For example, minimum wage in Iran is different than minimum wage in Dubai.
Wage protection and social security, too, fall within the ambit of legislative regulation. Different countries in the Middle East have different WPSs and social security structures, with some countries having clear requirements in place, while others might not have any, or just basic requirements. When managing multi-country payroll in the Middle East, these forms of state insurance may require differing payments from employers and employees alike. Some countries might require employers to deduct the employee share of these insurances to be paid over by the employers directly, while others might not have this requirement, and the employee, or at least some employee classifications, must pay over their portion of the insurance themselves.
When outsourcing your payroll, ensure your third-party payroll partner is expert in the field in every country in the Middle Eastern region. This way you can rest assured that your business remains compliant everywhere in the region without the worry of surprise fines or costly legal procedures.
In some countries in the region different rules apply to migrant workers or non-citizen employees. From visa requirements, minimum wages, different percentage contributions depending on whether a staff member is a citizen or not, to employers’ responsibilities to uphold the rules governing the different classes of workers, a branch in each country has the responsibility of full compliance. It can be a lot to keep track of.
OPS offer unrivalled payroll expertise specifically focused on operations, single- and multi-country, in the Middle East. Get in touch for a comprehensive demo.