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Global Payroll Complexity Index 2017 Ranking countries and regions on their payroll complexity levels

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NGA HR Research | Global Payroll Complexity Index 2017

© 2017 NGA Human Resources

Contents Forward

Introduction

About the research

Global Payroll Complexity Index

Categories Impacting the Payroll

Complexity Index

Payroll Parameters

Payroll Calculations

Government Reporting and

Declarations

Geographical Influences on Payroll

Regional and National Key Findings

Conclusions

Thanks and Acknowledgements

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5

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9

11

13

15

17

19

28

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Forward

Welcome to the ‘Global Payroll Complexity Index: Highlighting industry and regulatory trends per country and

region’. The 2017 edition of this report has been produced by NGA Human Resources, in collaboration with

Chartered Institute of Payroll Professionals (CIPP), American Payroll Association (APA), Global Payroll

Management Institute (GPMI), Canadian Payroll Association (CPA), TAPS (The Association for Payroll Specialists

(Australia), and South African Payroll Association (SAPA). We would like to thank our payroll association partners

for their collaboration on this project. Their support and insight has provided a unique perspective to this research.

Underpinned by detailed analysis of a global survey among 3,000 HR and payroll professionals and experts, and

supplemented with interviews with major industry stakeholders, this report explores current and emerging trends,

opportunities and challenges faced by organizations managing payroll processing and compliance in one of more

countries.

The 2017 report is the third Global Payroll Complexity Index studies and the first published since 2014. It presents

significant changes in payroll complexity, highlighted by the rise of digital technologies, transforming workstyles,

tougher data regulations, enhanced workforce legislations, and the expansion of high-growth business into new

regions including Latin America, Asia and Africa.

What does payroll complexity mean for businesses? In this report, we identify how payroll strategies are, or need to

adjust to the ever-increasing threat of the regulatory fines and data disruption, and how payroll structures need to

adapt to greater convergence between payroll, HR and wider business processes.

As HR and payroll specialists, NGA Human Resources has led the way for 50 years, creating some of the most

innovative and effective local, regional and global payroll solutions for organizations around the world, all designed

and built to circumnavigate the technical, cultural and legislative challenges that are unavoidable irrespective of

business type, size or location.

It is our hope that this report will give you and your payroll, HR and business contemporaries, a marker to navigate

the fast moving and challenging world of payroll so you can be confident that you can pay your employees

accurately and within the confines of the law.

Michael Custers

SVP Strategy & Marketing, NGA Human Resources

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Introduction

For anyone in the HR and payroll sector, these words could not be more appropriate. According to the findings of the

2017 Global Payroll Complexity Index, traditional ways of managing the payroll process are being challenged faster than

ever, accelerated by technology, more complex legislation and data privacy regulations, advancements in benefits and

rewards, and the changes in workforce structures.

New competitors are emerging from growing economies and changing business models threaten to disrupt

established companies unable to respond by expansion and opening new offices to compete on a global, or at least,

regional scale.

Our 2017 research finds that change is the only constant in payroll and it’s making it more complex to forecast and

manage corporate performance. The surge in digital payroll solutions, especially in growth economies where there are

no legacy systems, only adds to the challenge and the need to seek out solutions to payroll complexity.

Competitive advantage is now matched to the ability to unlock value across the business, with the workforce being

the greatest cost to any business. As such, payroll data analysis can learn management teams a lot about what they

need to know about business efficiency and performance. Employee, workforce, workplace and output models need to

be aligned with business objectives to meet the new criteria for competitive advantage. In addition, regulatory

challenges, especially when growing a business or expanding internationally, are increasingly complex to navigate.

This report is not just for directors and C-level executives, it’s for anyone needing to make payroll key to business

and operational success. The key to creating the workplace of the future is leveraging payroll data to help inform

business strategy.

Anne Clifford

Global Payroll Senior Director, NGA Human Resources

“Payroll is no longer just about paying people. It’s about managing data: the handling, control and security of data in an ever more complex tax and legal landscape.”

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About the research

The Global Payroll Complexity Index (GPCI) report offers an overview of how

countries and regions rank in terms of complexity when it comes to compensating

a local and/or international workforce and how these can impact your corporate

planning and decision making.

NGA Human Resources based the research on the following five categories

impacting payroll complexity:

Payroll data – managing, storage and security

Payroll parameters – population groups and types

Payroll calculation – salary and rewards

Government reporting - tax and social security deductions, reporting and

legislation

Geography – scope of and emerging markets

The first chapter of this report provides a global overview and ranking of each

country based on its payroll complexity - the Global Payroll Complexity Index.

Thereon in, we look closer at the impact of each individual category on payroll

complexity. Finally, we look at the key regional and national findings of the

research.

Sample Description

The Global Payroll Complexity Survey 2017, compiled by NGA Human

Resources provides insight into current trends, challenges and complexities

relating to payroll process management. By sharing a questionnaire with payroll

experts globally, and by conducting online interviews among a sample of local

HR experts with deep payroll expertise, we have compiled a representative

overview of the critical payroll complexities in each individual country.

Geographical scope: 48 countries

Respondent profiles:

Subject matter experts in payroll

Local, regional and global payroll consultants and outsourcing experts

System engineers responsible for updating global payroll systems

Respondent volume: 2,874 submissions (734 fully completed)

Survey methodology: Online questionnaire

For a complete overview of the specific characteristics that make up each country’s

payroll complexity level, we refer to my.ngahr.com/payrollcomplexity-2017

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Global Payroll Complexity Index 2017

Payroll departments have the single same performance objective – to ensure all

employees are paid accurately, legally and on time, every time. For most, this is

where the exact parallels end.

To add to the compliance challenge, many of the rulings relating to payroll data

were not written with the cloud in mind. This has led to reluctance from many

organizations to adopt cloud payroll solutions. Retaining legacy systems, or

optimizing these with in-house solutions has added to payroll complexity and

potential data risk.

Regulation is maturing and tightening in many growth regions, especially as more

international businesses move in. In Asia, Africa, South America and parts of

Europe, new workforce laws and tax mandates are published every other day

meaning no two pay runs are ever the same.

In the European Union and United States of America, where legislation is more

established, change is surprisingly frequent, and the zero-tolerance approach

many regulators are now taking against breaches suggests non-compliance fines

are becoming a secondary tax, not only a complexity threat, but a wider business

risk as well.

These regular payroll and workforce legislation updates make it very hard to plan

and design payroll processes, but organizations report to be more attuned to

regulatory demands and concerns of business leaders and shareholders over

audits and due diligence.

The certainty from this GPCI

study is that payroll processes

must be viewed and managed

with specific in-country focus.

In some cases, laws and

regulations differ between

regions within a single country.

As it will be demonstrated in this

report, it’s these local aspects

that have significant impact on

the payroll complexity index

rating of countries.

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“The results of the Global Payroll Complexity Index confirm that multinational organizations face myriad demands such as managing employee data, employment and taxation compliance, data storage and privacy, salary and benefit calculations, and a wide range of work rules, and time-off benefits.”

“Many of these are mandated by statutory country laws, work councils, and collective bargaining agreements. Organizations are challenged with managing risk exposure, increased government audit, standardizing processes, and steering governmental changes while ensuring the integrity of their company brands.”

Mary Holland Global Payroll Management Institute (GPMI)

high complexity low complexity

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Country Global Complexity Index 2017 (scale 1-10)

France 7.59

Italy 7.56

Belgium 6.89

Bosnia & Herzegovina 6.68

Singapore 6.50

Japan 6.49

Denmark 6.34

Netherlands 6.25

Spain 6.12

Brazil 6.11

Russia 5.97

Ireland 5.90

New Zealand 5.90

Hungary 5.85

Sweden 5.83

Poland 5.78

United States 5.78

Germany 5.65

South Africa 5.61

Australia 5.55

Czech Republic 5.53

Philippines 5.52

United Kingdom 5.37

China 5.35

Portugal 5.33

India 5.30

Slovakia 5.27

Switzerland 5.26

Argentina 5.22

Canada 5.07

Turkey 4.97

Colombia 4.92

United Arab Emirates 4.87

Saudi Arabia 4.76

Papua New Guinea 4.45

Greece 4.31

Angola 4.21

Zambia 4.20

Thailand 4.11

El Salvador 4.03

Mexico 3.56

Botswana 3.54

Luxembourg 3.28

Hong Kong 3.17

Bangladesh 2.83

Mozambique 2.77

Malaysia 1.18

The following chapters focus on each of the 5 individual categories impacting

payroll complexity that have been analyzed during our research.

Global Average: 5.54

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Factors Impacting Payroll Complexity

1. MANAGING PAYROLL DATA & POPULATIONS

To accurately pay and reward your workforce, data is required from multiple

sources. Typical data fields include employee name, address, age, pay scale,

tax code, bank account number, employment contract status and employee

population type.

Key findings

Data items: The average number of data fields required to remunerate a

single employee is 17. This is consistent with the 2014 GPCI findings.

Employee populations: The average number of employee population types

per country is eight, a slight reduction compared to the 2014 Index. The

greater the number of employee populations, the greater the payroll

complexity.

Western Europe continues to have the highest number of populations, with

Germany, France, Italy and Spain all topping the table.

Typical examples of employee populations include blue collars, white collars,

seasonal workers, students and pensioners.

Managing employee populations: The quantity of employee populations is

only one element; the characteristics of each population group add further to

complexity.

In 2017, early retirees have emerged as the most complex population to

manage, followed by expatriates/inpatriates. Hourly workers have dropped

from the top two, suggesting greater use of time & attendance and workforce

management tools.

Students and interns remain the easiest populations to manage.

Population type Global Complexity Score 2017 (scale 1-10)

Early retiree 7.58

Expatriate/Impatriate 7.36

Intern 4.54

Student 4.50

TOP

BOTTOM

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o From a geographical point of view, employee populations in France remain

the most difficult to manage (7.34/10), with Italy moving into second place

(6.96/10). This is consistent with Western European countries tending to

report more difficult than average populations to manage, except for the UK

and Ireland.

Complexity of employee data management

When aggregating the above key findings, the survey clearly shows that the top

complexity levels for managing employee data continue to be found in Western

Europe. This is the result of a larger number of employee populations combined

with a higher complexity level to manage these populations.

Conversely, a diverse mix of countries, including both the US and Canada, have

employee data which is easier to manage.

The below graph highlights the top and bottom five countries in relation to the

complexity of managing employee data:

4.82

5.46

5.93

6.05

6.13

7.18

7.73

8.01

8.12

8.36

0 1 2 3 4 5 6 7 8 9 10

Philippines

Portugal

Canada

Poland

United States

Germany

Belgium

Spain

Italy

France

Complexity Score

Countr

y

TOP 5

BOTTOM

5

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2. PAYROLL PARAMETERS In addition to employee data, an employer also requires payroll related data,

such as an employee’s gross salary and extra-legal benefits, to be able to

calculate an employee’s net payroll amount. In addition, other payroll related

parameters-sickness, leave, overtime, economical unemployment, court ordered

actions, taxes, social security, etc.- also impact an employee’s net salary.

Key findings

Payroll parameters: An average of 14 different parameters impact the result

of a net salary – virtually identical to the figure recorded in 2014. Just as in the

previous chapter, our survey demonstrates that Western European countries,

including Belgium, France, Italy and Germany, a slightly higher number of

parameters (16-17) than other geographies.

o Italy (7.40/10), France (7.37/10) and Poland (7.15/10) top the parameter

complexity ranking, contrasting sharply with Canada (4.92/10) and

Switzerland (4.78/10) at the bottom.

o When taking a closer look at each parameter at a global level, we see that

whereas, in 2014, tax and social security had the biggest impact on payroll

complexity, in 2017 these have been replaced by benefits and attendance.

However, data related to the personal and family situation of employees

remain the easiest to manage when running a payroll:

Benefits: In most countries, non-wage compensations provided to employees

in addition to their normal wages or salaries are taxable. Typical employee

benefits include group term life insurance plans, transportation benefits, vision

and dental plans, child care benefits, etc. These can be given to the entire

workforce, to just specific individuals or population groups.

The number of benefits provided in 2017 has halved when compared to the

2014 Global Payroll Complexity Index, falling from around 12 to just six. South

America and Europe offer the highest number, peaking in France and Belgium

at 8 and 9 out of 10.

In the same time, the complexity of managing employee benefits has become

significantly simpler, possibly linked, in general terms, to the reduced number of

benefits available. The complexity rating has decreased from 6.64 in 2014 to just

5.88 in 2017. Complexity is now highest in Europe and lowest in Oceania.

Parameter type Global Complexity Score 2017 (scale 1-10)

Benefits 5.96

Attendance 5.91

Personal Employee Data 4.61

Family situation 4.58

BOTTOM

TOP

BOTTOM

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Complexity of managing payroll data

The below ranking relates to the complexity of managing payroll data according

to the aggregation of the results of the individual categories described above:

6.65

6.76

6.84

7.12

7.19

7.81

8.16

8.51

8.64

9.17

0 2 4 6 8 10

Switzerland

Canada

Australia

United Kingdom

United States

Netherlands

Brazil

Belgium

Italy

France

Complexity Score

Countr

y

TOP

5

BOTTOM

5

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3. PAYROLL CALCULATIONS Payroll managers face multiple components that influence the complexity of the

payroll process. From basic payroll to the most complex situations, the complexity

level of running gross-to-net payroll calculations is determined by different

parameters, such as the number of payroll runs per month, the number of legal or

HR-related updates per year, retro-calculations, changes in currency, etc.

Key findings

Payroll runs: On average, employers run payroll for their workforce once or

twice a month in most geographies included in this survey. Payroll runs are

highest in North America, and lowest in South America and Asia.

In terms of individual countries, France tops the most frequent table with 4.11

runs, followed by Italy (3 runs) and the US (2.57). In 2014, the most frequent

payroll runs were made by the US (avg. 4.57 per month), followed by the UK

(4) and Australia (3.64).

Technical / Legal / HR updates: Ongoing government changes, regulatory

updates and HR related modifications necessitate that organizations must

continuously update their payroll systems and processes.

Ensuring that all changes are applied correctly is time-consuming and the

frequency of updates directly impacts the payroll calculation process. Some

countries group the required changes and update them simultaneously. Others,

such as Argentina, update and apply new rules on a more regular basis.

The 2017 survey suggests that countries now apply fewer updates (9.70) than

in 2014 (12.33). Overall, Asian and African countries typically perform the

fewest number of updates per year.

In contrast, the kings of performing payroll related updates remain as France

and Italy – with each applying 20 plus updates to their payroll systems and

processes per year. Europe is emerging as the continent in which updates

tend to be most frequent.

Notably, organizations in Germany have significantly reduced its updating

(from around 16 in 2014 to just 5 currently). New Zealand and Portugal also

perform a comparatively small – around 5 – number of updates per year.

Retro-calculations: All countries surveyed allow retro-calculations on previous

payroll periods according to the survey. The number of annual retro-calculations

performed per employee is showing a greater variation across countries.

The average number of calculations is rising from 9.46 in 2014 to 12.43 in

2017. This is particularly evident across Europe and Oceania, both of which

undertake the highest number of retro-calculations in an average year –

almost three times as many as those being processed in South America.

In line with 2014, Italy, France and Spain continue to have the most complex

retro-calculations, with all three countries showing an average complexity

score of at least 7.82 out of 10.0.

Across Europe and South America, complexity is highest, with lowest

complexity in North America and Africa. Overall, retro-calculations are getting

easier, with complexity decreasing to 5.50 from 6.62/10.0 in 2014.

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Complexity of the payroll calculation process

The complexity of the gross-to-net calculation process is influenced by a

multitude of changes, decisions and processes. Combining the above results, we

can highlight the following ranking of top and bottom 5 countries:

4.08

4.16

4.16

4.33

4.33

5.47

5.50

6.14

7.24

7.92

0 1 2 3 4 5 6 7 8 9 10

South Africa

Switzerland

India

Germany

Canada

Poland

Philippines

Belgium

Italy

France

Complexity Score

Countr

y

TOP

5

BOTTOM

5

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4. GOVERNMENT REPORTING & DECLARATIONS The responsibility of payroll departments is not limited to HR & payroll data

management and gross-to-net calculations. Reporting on employee and payroll

data to multiple instances, both internally (e.g. the finance department) and

externally (such as social security instances and tax authorities) is a legal

requirement. This chapter focuses on the complexity of government reports and

declarations.

Key findings

Data items: Locally, all organizations must provide payroll related information

to local government departments to determine the social security and/or tax

contribution of each citizen. Globally, companies must include an average of

16 data items per employee to the government in the mandated reports and

declarations.

Overall, this shows a reduction of four items from 20 since 2014. However,

both South America and Europe, report the number of necessary items to be

notably higher – standing at around 35. The number peaks in Italy, followed by

The Netherlands and France.

Reporting frequency: Differences in reporting frequency have a direct impact

on the overall complexity and workload for an HR department. Around two-

thirds (64%) of countries report to the government once or twice a month.

Canada, followed by Brazil, Germany, Poland and the US tend to have the

highest reporting frequency.

Reporting complexity: The difficulty in creating each report and declaration

requested by the government is a third parameter impacting the complexity of

the payroll process. Regionally, South America has the most complex

calculations and reporting.

However, nationally, and as in 2014, Italy (8.9/10) and France (8.66/10)

continue to have the most complex. In contrast, Canada (just 5.0/10) emerges

as the easiest country for government reporting and declarations. This is

consistent with North America also emerging as the easiest region for

government reporting and declarations.

Private sector comparisons: The complexity of government related payroll

calculations, in comparison to the private sector, is particularly high in South

America (7.88/10), and notably so in Brazil. In contrast, it is reported to be

simplest in neighboring North America (4.90/10).

Government instances: The number of government instances companies

must report to continues to vary widely from one country to another. However,

the average number has remained largely unchanged since 2014 – at around

5. This figure peaks in North America, with US reporting at a level almost twice

the average. In contrast, Africa has the lowest number.

Payroll report creation/reporting: Countries, on average, must create and

report approximately 11 types of payroll reports per year. This figure varies

significantly across regions, with Asia tending to produce the lowest number of

reports (around 5), a figure less than half that produced in North America (12).

Within North America, the US figure is higher still at between 16 and 17

reports, a figure exceeded only by Italy (18) and New Zealand (23).

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Dependency on government authority feedback: The percentage of the

reporting process dependent on feedback and information from government

authorities has risen minimally since 2014, increasing from 37% to 41%

currently. Dependency is highest in South America (exceeding the 60% mark)

and lowest in Oceania (at less than 30%).

Government/authority responsiveness: The survey results suggest that

governments and tax/payroll authorities are slightly less responsive in 2017

than in 2014. This finding emerges across several countries, including the US,

Germany, the UK, Portugal, Belgium and Italy. While the decrease in

responsiveness is relatively small, it is nevertheless significant to payroll

complexity.

Complexity of government reporting and declarations

Aggregating the parameters which influence the complexity of providing

declarations and reports to government instances results in the following

overview:

The complex and often changing nature of government legislation is reported to

significantly increase payroll complexity, made only more so due to differing

regulations across different regions, according to many of the payroll professionals

who participated in the study.

They highlight potential difficulties of complying with multi-level legislation while

simultaneously raising awareness of change.

2.77

2.84

2.90

3.06

3.16

4.36

4.60

4.61

5.21

5.79

0 1 2 3 4 5 6 7 8 9 10

Canada

Switzerland

Philippines

India

Australia

Brazil

Belgium

Netherlands

France

Italy

Complexity Score

Countr

y

TOP

5

BOTTOM

5

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5. GEOGRAPHICAL INFLUENCES ON PAYROLL The payroll process is influenced by many parameters, but the greater

‘geographical environment’ also plays an important role in defining its complexity.

By geographical influences, we mean the different geographical and company

related ‘decision making levels’ that can impact an employee’s net salary –

ranging from international guidelines, over industry related policies to employee-

specific agreements.

Key findings

Levels impacting payroll: The number of levels impacting the payroll

calculation and reporting process is the first geographically related parameter

we analyzed to determine its impact on payroll complexity.

o As in 2014, our study shows that all companies worldwide must consider

national/federal rules and most consider company-specific agreements

when processing the payroll. Additionally, around two-thirds of the analyzed

countries must manage rules at a regional/provincial/state level.

o Besides (inter)national or company related legislations, certain industries

may also have specific labor agreements. These industries must apply any

specific regulation to their payroll process. Most of the countries allow

industry-specific regulations.

o Each country has its own cultural and regulatory traditions that determine

the impact of unions on payroll. As in 2014, the clear majority of countries

are impacted, to some degree, by union involvement.

o Additionally, in 60% of countries, payroll can be influenced by employee-

specific agreements. As this type of agreement can impact each payroll

calculation or reporting process individually, employee-specific agreements

have an important impact on the overall workload for a Payroll Manager.

Frequency of changes: Multi-level rules, legislations and agreements are

continuously adapted to comply with evolving economic reality and changing

work environments. These updates need to be monitored and punctually

implemented to guarantee consistently accurate payroll output. This implies a

significant workload for HR departments.

Globally, agreements at an employee-specific level, and at a country/federal

level, are most frequently adapted. However, despite their high frequency,

employee-specific agreements are not found to be particularly complex to

manage in contrast to country/federal level changes, which are considered

complex, alongside union agreements. Work council agreements, international

rules and departmental rules change the least often and are as such easier to

manage.

In overall terms, and across each rule/agreement type, the complexity of

managing change has largely remained the same over the last three years.

18



Complexity of geographical levels on payroll

The following graph highlights countries in which managing guidelines, rules and

agreements from a multitude of levels is the most and least complex. Results are

based on the frequency of changes applied to these rules and their complexity to

implement them in the payroll process:

Language related payroll complexity: Around 60% of countries have

language related payroll complexities, a percentage that peaks in South

America and is notably lowest in Oceania. Most countries report just one or

two language related complexities, with minimal impact on their payroll

processing.

Non-local currency payments: Consistent with 2014, just under 70% of

countries say that payments are sometimes made in currencies other than the

local currency – where Asia is the region in which this is most likely to occur.

However, this is an infrequent occurrence across all regions (just 1-14% of the

time).

The complexity of running a payroll in another currency averages at 6.79/10 –

only slightly higher than in 2014 (6.06/10). This complexity peaks in North

America, with both Canada and the US reporting higher than average

complexity in this regard.

5.11

5.40

5.56

5.69

6.03

7.16

7.26

7.30

7.48

8.03

0 1 2 3 4 5 6 7 8 9 10

United Kingdom

India

Canada

Portugal

Germany

Philippines

Netherlands

France

Belgium

Italy

Complexity Score

Countr

y

Population type Global Complexity Score 2017 (scale 1-10)

Union agreements 6.73

Country/federal rules 6.44

Dept. rules 5.31

Work council agreements 5.18

TOP

BOTTOM

TOP 5

BOTTOM

5

19



0.2

0.5

0.6

1.4

0.1

-1.0

0.5

0.3

-2.7

0.3

-1.0

-0.5

0.6

1.7

1.9

2.7

2.2

1.1

0.5

2.4

-2.1

1.6

1.6

1.9

-0.3

1.1

-1.8

-1.0

0.4

-1.1

-0.1

-1.6

-2.7

-0.8

-1.2

-0.9

-0.3

-1.8

-0.4

-4.3

-3.5

-2.1

-3.2

-2.6

-2.3

-1.4

-0.9

-2.2

-2.7

-3.0

-2.8

1.1

-1.1

-0.4

1.2

-0.2

-1.1

-1.7

0.1

-0.3

-1.5

-0.4

0.8

-0.2

-0.7

-0.4

-0.3

-5 -4 -3 -2 -1 0 1 2 3 4 5

Complexity Change 2014 - 2017

Employee data complexity Payroll data complexity Payroll cal. complexity

Tax reporting complexity Geog. Impact complexity Overall complexity

Regional and National Key Findings

Complexity Change 2014-2017

A trend towards simplification is a clear change when comparing the geographical

analysis of payroll complexity scores in the last three years. This is particularly

evident in relation to Germany and Italy, two countries where ALL complexity scores

have reduced since 2014.

Simplification is notably apparent in relation to tax reporting, across many countries.

In contrast, where increased complexity is evident, this often relates to payroll data.

Additionally, based on the results of the research, we can highlight the following

key regional and national findings.

Australia NZ India

OCEANIA ASIA

Less complex More complex

France

Italy

Belgium

Netherlands

Spain

Germany

UK

USA

Canada

Brazil

India

Philippines

New Zealand

Australia

-4.1

-2.9

Australia

20



Europe

Europe’s overall payroll complexity is

the highest across the globe. Within

Europe, complexity is clearly highest

in France and Italy, with Belgium

following these two countries.

Western Europe – as in 2014 -

continues to have the most payroll

populations, with these tending to be

more difficult than average to manage.

France and Italy (and to a lesser extent Spain) repeatedly emerge as those

countries in which complexity across several payroll aspects is highest. These

aspects include managing payroll data and employee populations, retro-

calculations, payroll related government reporting and geographical levels.

Western Europe also has the highest number of payroll parameters which

impact the result of a net salary.

While the complexity of managing employee benefits has simplified across the

globe in the last three years, it is most complex in Europe.

Europe has the highest number of technical/legal/HR payroll updates per year,

with France and Italy again topping this table. These two countries also

conduct the highest number of payroll runs, a number which has increased

since 2014.

In Europe, the number of necessary items to report per employee to

government per payroll run is notably and increasingly high (35) – at more

than twice the average (16).


France 7.59

Italy 7.56

Belgium 6.89

Bosnia & Herzegovina 6.68

Denmark 6.34

Netherlands 6.25

Spain 6.12

Ireland 5.90

Hungary 5.85

Sweden 5.83

Poland 5.78

Germany 5.65

Czech Republic 5.53

United Kingdom 5.37

Portugal 5.33

Slovakia 5.27

Switzerland 5.26

Turkey 4.97

Greece 4.31

Luxembourg 3.28

21



United Kingdom and Ireland

Payroll complexity in the UK and

Ireland is ranked relatively low,

because there are standardized annual

tax, National Insurance reviews and all

changes to working practices are well

publicized.

Change is ahead and there are a

growing number of wider factors, such

as Brexit, that must be considered.

Gender pay is adding an extra level of reporting.

Payroll parameter numbers have grown with, for example. working time

regulations and IR35 to be added.

Rewards and benefits factor highly in white collar salaries with salary sacrifice

and shared parental leave widely taken up.

Automated time and attendance tools are being adopted in hourly work

environments.

The Apprenticeship Levy, GDPR and Brexit are expected to add to complexity

in the next 12 months.


United Kingdom 5.37

“Anybody who is managing payroll, looking to run payroll or setting up operations in the UK not only need to understand the complexities of payroll, but also appreciate its strategic value in any organization.” “Payroll impacts not only on factors such as time and attendance, reward and benefits, but also wider reaching effects on recruitment, employee motivation and even brand.”

Elaine Gibson, Chartered Institute of Payroll Professionals (CIPP)

22



North America

North America’s overall payroll

complexity is slightly lower than

average. Complexity is higher in the

US than in Canada.

HR staff in this region work with

employee data which is easier to

manage than average.

North American companies tend to

update their payroll more frequently

than average.

Retro payroll calculations are getting easier in North America.

North America has fewer legal/fringe benefits available than evident in most

other regions.

North America has the lowest number of employee data pieces needed to

report to government, but the highest number of actual reports to government

each year and government instances to report to.

Despite this high reporting level, and possibly due to the lower number of data

pieces needed, government reporting complexity in North America is the

easiest for all regions, and considered largely comparable with that of the

private sector.

Both Canada and the US report higher than average complexity in dealing with

running a payroll in another currency.

Zero tolerance for non-compliance in North America is increasing and fast

becoming a secondary business tax.

“When factoring in the added challenges of two official languages, the multifaceted legislative requirements and disparate governing bodies of Quebec, and the multijurisdictional challenges placed upon practitioners who operate in this province and others, the complexity of Canadian payroll remains exceptionally high.”

Steven van Alstine, Canadian Payroll Association

23



In 2014, the US ranked 6.44/10, well above the global Complexity Index

average of 5.77/10. Of the five categories analyzed in the research, the US

appeared in only two categories: Managing Payroll Data (in the Top 5

countries at 6.72/10), and the Payroll Calculation Process (in the Top 5

countries at 7.91/10).

For 2017, the US now ranks 5.78/10, a decrease of 10.25% from the previous

study. Even so, this year’s ranking is slightly higher than the global Complexity

Index average of 5.54/10.

The US still appears in only two categories. However, the results dramatically

shift from the Top 5 countries (more complexity) to the Bottom 5 countries

(least complexity) within Managing Employee Data (6.13/10) and Managing

Payroll Data (7.19/10).


United States 7.59

Canada 5.07

“The Unites States would consider itself to have complex payroll operations with the never-ending challenge of balancing federal, state, and local regulations, new reporting requirements, and the recent trend for accelerated reporting deadlines within various levels of government.”

Steve Hodgson, American Payroll Association

24



South America

South America’s overall payroll

complexity is slightly higher than

average, with Brazil sitting at 11th in the

overall complexity rankings.

South American companies require the

least number of data items to manage

and remunerate a single employee.

The average number of potential legal/ taxable/fringe benefits is highest in this

region. However, managing these benefits in terms of payroll is not deemed to

be particularly onerous.

The frequency of payroll runs is lowest in South America.

Retro-calculations are particularly complex in South America. This may be

either why, or due to the fact, that they perform the lowest number of retro-

calculations across all regions.

The task of calculating government reported payrolls is also felt to be most

arduous and complex in South America, and particularly so in comparison to

the private sector.

In several countries in South America including Argentina, there is no fixed

pattern to tax changes and these can happen as often as monthly.

This is possibly due to the region needing the highest number of data items to

report to government and having the highest dependency on

feedback/information from government authorities in undertaking the reporting

process. However, reporting to government is done less frequently than in

most other regions.

Language related payroll complexity peaks in South America, with a relatively

small number of languages felt to make a moderate impact upon payroll

processing.


Brazil 6.11

Argentina 5.22

Colombia 4.92

El Salvador 4.03

Mexico 3.56

25



Africa

Africa’s overall payroll complexity is

slightly lower than average, with South

Africa sitting towards the mid-point

(20th) in the overall complexity

rankings. This is a finding which typifies

Africa’s ‘averageness’ in relation to a

number of findings in this study.

Africa tends to run slightly fewer payroll

runs than other regions and undertake

fewer technical/legal HR related updates per year than other regions.

Africa also has one of the simplest, and lowest number of retro-calculations

per year, with South Africa undertaking just 7.64 annually, compared to the

average of 12.43.

South Africa also has the lowest complexity score in relation to the overall

payroll calculation process.

In terms of payroll related reporting to government authorities, this is

something which South Africa undertakes significantly less frequently than

other countries.

Africa has the lowest number of local government instances to report to across

all regions, and is relatively non-dependent on government feedback/information

in terms of their reporting process – useful in the context of the region’s

government, tax and payroll authorities being considered as least responsive.

Africa has a higher than average number of languages which impact upon

payroll processing. However, their impact on complexity is not overly high.

Africa also has a higher than average instance of non-local currency

payments.


Zimbabwe 6.91

South Africa 5.61

Angola 4.21

Zambia 4.20

Botswana 3.54

Mozambique 2.77

26



Asia

Asia’s overall payroll complexity is the

lowest of all regions, with India ranking

27th and the Philippines 23

rd in the


Within this region, the Philippines has

the least complex score for managing

employee data.

Asia is the region with the fewest

potential legal/taxable/fringe benefits.

The frequency of payroll runs is lower in Asia than in most other regions,

decreasing in both India and the Philippines in the last three years.

Asian countries perform a lower than average number of technical/legal/HR

updates per year. The number of retro-calculations undertaken is also lower.

Asia creates and reports an average of just 5 types of payroll reports per year,

making it the lowest producing region in this respect, across the globe.

In Asia, the complexity of government reporting and declarations is slightly

higher than average.

However, in relation to language related payroll complexities, Asia is typically

impacted more than average, with the highest number of languages to contend

with.

Additionally, Asia is the region most likely to have employees who necessitate

payment in a non-local currency.


Singapore 6.50

Japan 6.49

Russia 5.97

New Zealand 5.90

Australia 5.55

Philippines 5.52

China 5.35

India 5.30

Papua New Guinea 4.45

Thailand 4.11

Hong Kong 3.17

Bangladesh 2.83

Malaysia 1.18

27



Oceania

Oceania’s overall payroll complexity is

higher than average, with both New

Zealand (14th)

and Australia (21st)

sitting towards the upper range of the


However, Oceania has the simplest

gross-to-net calculations.

Since 2014 there has been an increase

in the average number of potential

legal/taxable/fringe benefits available in New Zealand (rising from 3.67 to 6.0)

and a decrease in this number in Australia ((8.09 falling to 6.54). In Oceania,

the complexity of managing benefits is the lowest amongst all regions.

Similarly, Australia is one of the least complex countries for managing payroll

data.

Oceania undertakes the highest number of retro-calculations per year, with a

notable increase evident in New Zealand over the last three years (rising from

just 3 in 2014 to around 14 per year currently).

There has also been a notable increase from 2014-17 in the number of

government instances which New Zealand companies need to report, with a

rise from just 1.33 to 5.60.

Note also that New Zealand tops the ranking for the number of payroll reports

which need to be created and reported to government, with more than twice

the average number. Interestingly, despite these findings, Oceania has the

lowest dependency on actual feedback and information needed from

government authorities.

Oceania exhibits the least complex language related payrolls.


Australia 5.55

New Zealand 5.90

“Australia does indeed have a simple gross to net calculation; however, the complexity of determining gross pay is not to be underestimated with a complex system of awards, enterprise agreements, national employment standards, superannuation and salary packaging.” “With the imminent introduction of Single Touch Payroll, the way we process and report to the Australian Taxation Office is set to dramatically change. Don’t be surprised if Australian payroll is more complex than our rating indicates.”

Jason Low, Head of TAPS

28



Conclusions

Highlighting the fundamental elements that influence payroll complexity, and

providing a transparent insight into global payroll practices and requirements, the

research findings are both current and inclusive. They provide organizations with

key findings relating to payroll across many different territories, in turn aiding a

greater understanding of payroll complexity and its associated risks and workloads.

Whilst establishing a multi-country payroll solution is still seen by some as a high-

risk prospect, managing payroll correctly and efficiently, via an awareness of local

payroll nuances, provides a company with substantial economic process and

cultural benefits. In contrast, a badly managed payroll process is accompanied by

potential damage to not only your business, but also to your external reputation

and the engagement of your staff.

At NGA Human Resources, we continue to be increasingly aware of a burgeoning

interest in exploring multi-country payroll solutions, because of maturing Cloud

technologies and an increasingly connected globe.

Employing an international workforce is becoming more and more common for

companies of all sizes, across all industry sectors. As such, payroll, once a

mechanical administration function, has become an increasingly complex, detailed

and important tool in retaining top-quality talent around the world.

More and more organizations are recognizing the benefits of a complete payroll

solution in standardizing process and minimizing risk. Other benefits include

ensuring standard compliance, raising employee engagement and loyalty and,

ultimately, delivering financial savings.

For organizations aspiring to elevate their business to the next level, having a

robust payroll system and process in place is, without a doubt, fundamental.

29



Thanks and Acknowledgements

We would like to thank all the contributors to this report who agreed to take part

in our surveys based on anonymity, and the Payroll Associations who continue to

support the Global Payroll Complexity Index. Without you, this piece of vital

payroll industry intelligence would not have been possible.

Our research covers every continent in the work and provides insights from every

organization type imaginable.

Anne Clifford, NGA Human Resources

www.ngahr.com

Steven Hodgson, American Payroll Association

www.americanpayroll.org

Steven van Alstine, Canadian Payroll Association

www.payroll.ca

Elaine Gibson, Chartered Institute of Payroll Professionals (CIPP)

www.cipp.org.uk

Mary Brumm Holland, Global Payroll Managers Institute (GPMI)

gpminstitute.com

Jason Low, The Association for Payroll Specialists (TAPS)

www.payroll.com.au

http://www.americanpayroll.org/

http://www.payroll.ca/

http://www.cipp.org.uk/

http://gpminstitute.com/

http://www.payroll.com.au/

30



Conclusions

Highlighting the fundamental elements that influence payroll complexity, and

providing a transparent insight into global payroll practices and requirements, the

research findings are both current and inclusive. They provide organizations with

key findings relating to payroll across many different territories, in turn aiding a

greater understanding of payroll complexity and its associated risks and workloads.

Whilst establishing a multi-country payroll solution is still seen by some as a high-

risk prospect, managing payroll correctly and efficiently, via an awareness of local

payroll nuances, provides a company with substantial economic process and

cultural benefits. In contrast, a badly managed payroll process is accompanied by

potential damage to not only your business, but also to your external reputation

and the engagement of your staff.

At NGA Human Resources, we continue to be increasingly aware of a burgeoning

interest in exploring multi-country payroll solutions, because of maturing Cloud

technologies and an increasingly connected globe.

Employing an international workforce is becoming more and more common for

companies of all sizes, across all industry sectors. As such, payroll, once a

mechanical administration function, has become an increasingly complex, detailed

and important tool in retaining top-quality talent around the world.

More and more organizations are recognizing the benefits of a complete payroll

solution in standardizing process and minimizing risk. Other benefits include

ensuring standard compliance, raising employee engagement and loyalty and,

ultimately, delivering financial savings.

For organizations aspiring to elevate their business to the next level, having a

robust payroll system and process in place is, without a doubt, fundamental.

For a complete overview of the specific characteristics that make up each country’s

payroll complexity level, we refer to my.ngahr.com/payrollcomplexity-2017

NGA Human Resources is a global leader in helping organizations transform their business-critical HR

operations to deliver more effective and efficient people-critical services.

We help our clients become better employers through smarter, more streamlined business processes - to

save money, manage employee life cycles and support globally connected, agile organizations. This is how

NGA makes HR work.

What sets us apart is The NGA Advantage. It’s a combination of deep HR expertise and insight, advanced

technology platforms and applications and a global portfolio of flexible service delivery options.

www.ngahr.com

mailto:my.ngahr.com/payrollcomplexity-2017

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