If no agreement between the UK and the European Union is reached at the EU summit on 18 and 19 October, the transitional period that would have applied until the end of 2020 will expire. As a result, on 29 March 2019, the UK’s membership in the EU will end, and EU law will no longer apply. If your company employs people in or from the UK, this change could be far-reaching. So, take the bull by the horns and avoid unpleasant surprises caused by a ‘no deal’ scenario by making the right preparations.
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In the following concrete example, we outline how much the situation will change in the case of a hard Brexit without a transitional period for international organisations.
Tom is a Belgian worker assigned to the UK for 12 months by his Belgian employer.
The Belgian social security system remains in place, allowing Tom to further build up his Belgian social security rights for, among other things, his pension, health insurance and unemployment. He doesn’t need a work permit and can move to the UK with a valid residence permit. Tom’s normal pay and working conditions apply there, unless they would be more favorable in the UK. His Belgian payroll structure will remain in place to handle his social security contributions and taxes.
During Tom’s foreign assignment, he is covered by the British social security system, which means that he will most likely have to pay and withhold British social security contributions from his salary. Even more, if his secondment lasts a maximum of 12 months, he will still pay social security contributions in Belgium if he chooses to do so. Since he can no longer invoke the ‘free movement of workers’ principle, he needs a UK work permit – and he will not automatically receive a valid residence permit. In principle, Tom will have to go through the full administrative merry-go-round. Also important: during his employment in the UK, British wage and employment conditions will apply. This means that Tom may lose his current pay and employment conditions. Finally, as an international employer, you will have to set up a payroll structure in the UK. If it is a short secondment, Tom may be listed on two payrolls.
Alex is a British employee assigned to work in Belgium for 12 months by his British employer.
The British social security system remains in place, meaning that Alex continues to build up his British pension rights during his secondment. He doesn’t need a work permit to work in Belgium and can move to Belgium with a valid residence permit. Alex is certain of his normal British wage and working conditions: unless they would be better in Belgium, British conditions would apply. Alex stays on the British payroll structure, which handles his social security contributions and British income taxes.
Alex could come under the jurisdiction of the Belgian social security system during his secondment. However, the British social security system may still also apply – leading him to pay social security contributions twice. He cannot transfer his accrued social security rights to another EU country – a problem for British nationals wishing to enjoy their pensions in the sunny south. Without the ‘free movement of workers’ principle, Alex must first apply for a work permit in Belgium. He can no longer just move here – doing so will require quite a bit of paperwork. Because Belgian wage and working conditions will apply during his temporary assignment in Belgium, he may lose his current British wage and working conditions. His employer may have to initiate a Belgian payroll structure for Alex, while he may also be simultaneously listed on the British payroll.
If no agreement is reached, the consequences of a hard Brexit for employers and their employees around the world could be challenging:
With the festivities over and the new year well underway, as we return to work, many may have already given up on their new year’s resolutions for 2019. However, when it comes to new year resolutions in the HR and payroll industry, there are many resolutions that HR and payroll teams should commit to which will ensure that their payroll is powerful and running efficiently throughout the year.10 January 2019
After a year and a half of negotiations, on 13 November 2018 British Prime Minster May and the European Union reached a technical agreement on the UK leaving the European Union. The deal sets out the general terms on how the United Kingdom and the European Member states will cooperate after the UK has left the EU. The impact for you as an employer with employees inside or from the UK is now also clear. What you should know.30 November 2018
Expanding businesses internationally can mean increased profit, a better reputation and more capital to invest in getting the best talent from your industry. But international businesses face newer challenges, chief among which is working with international teams that are based in various cities, regions, countries and potentially even continents.
12 November 2018
Business leaders are always searching for dynamic new ways to improve their business strategy, but there's one source of data which still remains largely untapped. There is a wealth of potential strategy ideas to be found in a place businesses already have unrestricted access to - their payroll system.
So, how can both large and small companies start utilising payroll data today to breathe new life into stale strategies?24 October 2018
On 31st October, SD Worx is hosting an exclusive webinar, in collaboration with Ascender (also a member of the Payroll Services Alliance), to discuss the General Data Protection Regulation (GDPR) and how it affects organisations outside of the EU19 October 2018
September: the month that children dread as they make their return to school after the freedom of the long summer months. But for adults, especially those in the payroll industry, after the quiet summer period September should be a time to be motivated and to adopt that ‘back to school’ thinking. It’s important for teams not to be stagnant. In the ever-developing payroll industry, adaptability is key and so learning shouldn’t stop just because you’ve left school—in payroll and HR it’s all about continuous learning.18 September 2018
Is your HR and payroll team feeling the heat this summer? With the weather heating up, most of us want to get out and enjoy the sun or escape on a holiday. However, with more staff members out of the office, this can mean that the payroll team might be running on reduced numbers. And, typically, less team members results in a higher workload for those in the office. This is where HR and payroll technology can help, giving HR teams a well-deserved summer holiday.3 August 2018
The HR and payroll industry is in a constant state of change. New laws and regulations are introduced around the world, some of which—including GDPR—change the way the whole organization handles its processes and services.26 July 2018
Payroll data. How often do we stop and think about how important it is to a business? Although payroll is often viewed as a back-office function, it is an essential part of any organisation, and is much more than just payslips.5 July 2018
The multinational payroll market is growing at an impressive rate, with the entire payroll services market expected to reach 4.8 billion by 2021. The demand for international payroll services are increasing, due to the heightened need for compliance to local laws and legislations, and a demand for more comprehensive technology. However, even though the payroll market is growing, many organisations still aren’t unlocking the power of payroll.3 July 2018
Payroll, and the importance of payroll, is everywhere. Whether in Italy, France, or in Belgium, payroll is a crucial part of any organisation. Employees are the heartbeat of an organisation, so ensuring that they are paid on time and correctly is essential17 May 2018
With just six months to go until the General Data Protection Regulation (GDPR) takes force, payroll departments need to ensure they know what’s coming, or risk paying for it later. The stakes are high, as businesses that fail to comply with GDPR could face fines of up to 4% of their total annual revenue.14 May 2018
The HR and payroll industry is in constant change, with digitalisation, GDPR, and the gig economy effecting the HR and payroll department in organisations around the world. So, how can you ensure that both your HR department and employees are able to keep up with the pace of change? It’s time to unleash the flexibility of your HR.26 April 2018
With the 25th May deadline only a month away, it is more important than ever for HR and payroll departments to ensure that they are GDPR compliant. If organisations are not compliant the penalties are significant, with fines of up to €20m or 4% of global revenue, and companies will undeniably suffer from significant brand damage.
So, what should HR and payroll teams do during the next month to ensure that they are compliant and ready by the deadline?9 April 2018
With just three months to go until the General Data Protection Regulation (GDPR) comes into force, the clock is ticking for HR and payroll managers to get the systems and processes in place to ensure compliance. The regulation, coming into effect on 25 May 2018, updates data rights for today’s networked world and organisations ignore it at their peril. A major infringement could cost a company up to 4% of its global revenue while there is a penalty of 2% of global revenue if records are not in order or a supervising authority and data subjects are not notified within 72 hours when personal data is exposed in a security breach.19 March 2018
Once GDPR takes effect on 25th May 2018, organisations that fail to process data correctly, report security breaches within a set time period, or comply with data regulations, will face fines and brand damage. These legislative changes emphasise how HR and payroll professionals need to be more security-conscious than ever before.14 March 2018
If you want to learn best practice in handling data in light of the General Data Protection Regulations (GDPR), you can do no better than to look at DuPont. Now part of science giant DowDuPont following a merger last year, data is part of the DNA of the organisation and it has a long history of embedding data protection into its culture.12 March 2018
PAREXEL provides best practice examples to international organisations.
With the General Data Protection Regulation (GDPR) coming into effect in May 2018, all organisations who handle data of EU citizens will need to comply with new guidelines. By nature, HR departments hold personal and sensitive employee data, including payroll data. However, with an increasing amount of payroll and HR departments adopting automated payroll processes, the question arises: how do you become compliant in a digital world, especially if you are an international company?12 March 2018
The end of the payroll year is typically a very stressful time for payroll teams. With an extensive amount of tasks to be completed within tight deadlines, any mistakes can be costly.
However, the end of year process can be drastically simplified by engaging with tailored payroll software. This technology can be utilised to assist payroll professionals throughout the year, but how can it help payroll teams in April each year?27 February 2018
Technological advancements are helping to turn a vision of digitally accessible, automated payroll processes into reality. Here’s five predictions for the future of payroll:5 December 2017
A recent survey carried out by SD Worx revealed that out of 4,000 European employees surveyed, 44% had been paid late by their employers and 48% of those that had been paid late had also been paid incorrectly. The research exposes several risks for businesses associated with not paying their employees correctly: let’s explore the top three.13 November 2017
With any outsourced service that a business requires, it’s important to understand the needs that service should fulfil before selecting a provider. This is especially true when it comes to choosing payroll services: it’s one of the most important requirements to get right, and choosing the wrong provider could lead to damaged business reputation in the form of disgruntled and less productive employees, a low staff retention rate and more.8 November 2017
With Britain voting to leave the EU last June, 2016 was a big year for pan-European news. And, while the full implications of Brexit remain to be seen, it is clearly creating much discussion amongst business leaders who are already starting to plan ahead for the legislative changes that will no doubt impact both their operations and compliance.
One of the business areas most likely to be affected is international HR and payroll, so with that in mind, ‘Brexit and Business’ will be one of the key themes at our upcoming 2017 SD Worx European Conference. This year’s event will be bigger and better than ever before, taking place on the 8th February at London’s Hilton on Park Lane.