Payroll compliance is critical for HR anywhere in the world, but how do you ensure conformity and security while working across borders in the Middle East?
Your simple solution is outsourcing payroll to a trusted specialist.
In this article, we will look at what to look for in a service provider.
Key Payroll Compliance Challenges in the Middle East
Before we get into how you can ensure payroll compliance in the Middle East, let's look at some of the key challenges you will face (which we go through more extensively here).
1. Regional Labour Laws
Each country in the Middle East has its own legal framework governing payroll and employment. These include:
● Wage Protection System (WPS): Many countries, including UAE, Saudi Arabia, and Qatar, have implemented WPS to ensure employees receive their wages on time.
● End-of-Service Benefits (EOSB): Middle Eastern employers are tasked with calculating and providing gratuities or severance pay as part of a compensation package.
● Nationalisation Programs: Policies like Emiratization (UAE) and Saudization (KSA) mandate a minimum percentage of local employees in the workforce.
How do you understand what's needed and where? This is a job for your payroll service provider.
2. Data Security Concerns
Data risk policies are also covered independently by countries. Payroll compliance includes laws for cyber security risks and data protection. Again, understanding what you need and how to implement it is something your supplier should help you with.
3. Cultural and Economic Factors
The region hosts many expatriates working alongside nationals. Diversity requires businesses to streamline and nuance different employment contracts, taxation rules, and allowances, such as housing or education benefits, from border to border.
An example is catering for Hajj allowances in Saudi Arabia, designed for those who worship this religious pilgrimage - who gets it and when they are entitled to it is a complaint law that must be taken seriously.
Added to this are minimum wage and social security contributions, which vary widely from region to region (sometimes in the same country).
Your payroll partner should already have systems and processes to deal with this, alongside a framework for handling currency fluctuations or political change.
Best Practices for Payroll Compliance and Security in the Middle East
First of all, please be assured that working in the Middle East is no different to working in any other part of the world. So, no additional needs fall under compliance and security requirements. What we do have is regional variance in policy and new policies being implemented or updated, and that's where you need a little more forethought.
As Middle East payroll specialists and service providers, we look at compliance and security in the following way.
● Has invested in technology and data security: That's a mix of adaptable and scalable software that links directly into your HR platform. A system built for compliance and security while offering robust automation, reporting and audit trials.
● Has stayed up-to-date with labour and regulation changes: That might include a system of monitoring policy changes, connections with local experts or membership to local HR and payroll networks to enhance best practices.
● Has a framework for regular audits, plus compliance and risk assessments: Offering a system that identifies and rectifies gaps, ensures accurate reporting to authorities and delivers non-bias.
● Has streamlined multinational payroll: That may include implementing a standardised system incorporating country-specific requirements and centralised payroll oversight for accuracy and uniformity.
● Has invested in their team: Offering training, systems and processes to ensure compliance and security. And fostering collaboration where necessary across HR, finance and legal teams.
Middle East Payroll Compliance and Data Security at mselect
We have worked extensively across the Middle East, basing ourselves in several countries and working with clients such as Huaweiand Samsung. Among our business services is payroll. And it is a service we have spent time perfecting.
We understand the importance of payroll management compliance and data security and continuously refine our processes to meet these standards.
Our forward-thinking "local" networks have allowed us to prepare and build response plans for the change in our region. And by choosing mselect, our clients have been able to focus on their core operations, knowing that their payroll is in capable hands. Contact our payroll team today if you want to switch to an easier way of working across the Middle East.