Virtual Open House Webinar Series – APAC

The most sophisticated global systems that have been developed from an enterprise standpoint are Oracle, SuccessFactors, Workday, and ADP. In terms of the type of workforce planning you can do in them and how you can do the projections. They can certainly handle currency conversions and FP&A activities but still in terms of a perfect system, they really don’t allow you enough in terms of covering what you need from an HR, as well as a payroll perspective. I would say from the global payroll and HR perspectives, it still is very much a work in progress.

The specific documentations required when onboarding an employee, for example, is the pension book and the employee bank book. Each country has a unique list of requirements, and it also depends on the type of entity. You must have a good understanding of how your company is set up to determine the proper steps for onboarding the employees to your company. In regards to Japan, involuntary termination and terminations in general are complex, and there are different requirements and laws. For example, the Labor Standards Act lays out a process, in which a company must follow, in regards to involuntary terminations.

In Taiwan, for example, you are required as an employer to contribute to an employee’s fund. Both employers and employees must have wages withheld, and the proceeds go to a general fund similar to our social security system here in the US.

Generally, Australia is very similar to other countries in terms of the payroll tax and the statutory benefit requirements. They do have a unique system: there is a superannuation fund or the pension savings plan which is very important. They can participate individually as well as a company. When you are starting out, if you are talking about a small number of employees, they may want to exercise that option to participate individually, but it is a great pension system.

The other item to mention is work cover. Here in the US, we have worker’s compensation insurance, however, in a lot of countries you have a work cover program that covers the worker’s compensation through the social program. However, Australia is one exception where it is separated from the social program. So, that is definitely one item to keep your eye on.

In a country like Singapore, the workers are compensated to an individual vs. to a company. So you can’t just have worker’s comp coverage. Every time you hire or somebody leaves, you have to adjust up or down your coverage associated with that employee.

In Singapore, employee A is covered specifically and underwritten for the plan. If employee A were to leave, you just can’t move employee B into the plan of the employee A.

Here in the US, we rely a lot on the international law firms such as Baker McKenzie and DLA Piper. There are some very large law firms in China that also do a great job in terms of getting specific employment information, such as Yingke Law firm.

In regards to local payroll companies in any country, it is important to look at how the system is structured, how the operations are structured, and what is going to match your organization. Global Upside provides payroll services in China and can help you choose the right software. The offshore pension plan is taxable in China. They are very complex for employment. I would definitely recommend seeking counsel when implementing these types of plans in China.

From a general perspective, Global Upside has been doing payroll for 19 years internationally and we have our network of in-country providers that have locally authorized systems that are kept up to date to make sure they are in conformance with the payroll tax and statutory benefits deductions. It is important to make sure that you go with a reputable firm that is using a system that is connected to the payroll tax and statutory benefit authorities and doing the filings. The firm should be responding timely to the government questions and queries. It is most important to have in-country providers with systems that are compliant with a tax and statutory benefit perspective.

Global Upside has local brokers that provide anything from the medical insurance, life insurance, enhanced pensions and savings plan. Some of them are available individually, some of them you have to have five or more employees. We can use our network to find out what is available.

One word of caution, for example, in Japan, when looking at a supplemental plan, you must look at how it’s going to interact with the mandated program as well and make sure that those plans are in compliance because there are specific pension rules and regulations.

We highly recommend that employment agreements or contracts are in compliance with the local labor law and statutory requirements.From the perspective of making an offer, the candidate would have an expectation that you would enter into a formal employment agreement with them, and it would address specific issues, especially around holidays, vacations, statutory leaves, benefits, as well as most importantly the termination severance provisions that need to be addressed when you are entering into the agreement. It’s important to remember that the employment agreement really governs everything as it relates to that person’s employment, and is going to be the governing document over everything they do when they work for the company.

The only word of caution is: if somebody has made an offer, assuming it’s a verbal offer, be very careful not to present the offer as a final offer to them or as containing all the employment requirements, and that in fact a written employment contract will follow. Consult with a lawyer or the right service provider to get that proper template, and use that.

You have statutory requirements in Japan similar to many nations internationally. But you have pensions, social security, worker’s compensation, and in those three areas they also include the medical expenses and medical coverage from the government. Supplemental plans are not mandated but may be customary.