As the acceleration of the SaaS market continues, its growth has had some significant implications for the job market. SaaS businesses require highly specialized skill sets, and the numbers of suitable candidates available are struggling to match the demands of this surging industry.

The result has been a considerable shortage of the right skills, and companies are in close competition when it comes to pursuing available talent. The solution for many SaaS based businesses has been to hire remotely, unlocking access to a much broader global pool of prospects.

However, a remote team brings about some significant challenges, particularly regarding the management of multiple employees in a number of different countries – and ensuring they are (and remain) legally compliant.

Compliance is easily one of the most daunting tasks when managing a remote team. However, by understanding common problem areas, one is much better prepared to guard against them.

Compliance Simply Can't be an Afterthought

Needless to say, it is the responsibility of the employer to ensure that a remote worker is adequately taken care of. This care requires that all aspects relating to their employment, such as statutory payments and taxation, is in line with local requirements.

Compliance problems can be costly – not only in financial terms due to legal issues and fines but also concerning company reputation and workforce morale. And in the frenetic business landscape of the SaaS industry, it is paramount to retain top talent and to be recognized as a company that cares about its people. This is also an important quality when it comes to getting noticed and winning favor with potential investors.

Essential to note compliance is not a once-off task but a time-consuming, complicated, and unavoidable long-term endeavor. In this article, we explore three ways to avoid the pitfalls of remote compliance issues as your SaaS business scales.

1. Never Get Complacent When it Comes to Local Employment Law

Managing local employment laws is a profoundly complex undertaking. The regulations in some countries can even differ between individual states or regions. Moreover, when managing numerous employees from all corners of the globe, the complications multiply, especially for companies that are onboarding at a rapid rate to support growth. 

Researching simple legal requirements for different countries, such as maternity leave or overtime regulations, can be an extremely time-consuming exercise that often leads to contradictory or outdated information.

In this regard, it becomes essential to have a reliable, current, and consistent flow of information relating to these laws. Falling behind on keeping this information up to date is not an option.

This complicated and demanding administrative task requires a strategic and proactive solution to keep one step ahead. As a result, many companies opt to drastically simplify these issues and safeguard against penalties by partnering with a global PEO (Professional Employment Organisation).

A PEO minimizes compliance risk by taking over the responsibility of all legal employment requirements. A PEO also assists companies with remote hires by legally employing the person on behalf of the company and, therefore, managing all employment contract details. This provides a dependable solution for any SaaS company focused on retaining a positive remote workforce that will not become impeded by compliance issues.

International staffing

2. Stay on Top of Local Tax and Statutory Payment Regulations

Calculating the correct tax and benefits deductions from an employee’s pay can be a precarious operation, as once again, tax regulations can vary so much depending on where in the world the employee is based. Often tax deduction errors cause a shortfall which is then left up to the company to pay back, which is undoubtedly a costly mistake that should rather be entirely avoided.

Not only are there basic taxes to consider, but different countries may also have particular and unique tax requirements, such as tax to the church as enforced in Germany and Denmark, among others. However, the complexity deepens when even within a country such as Germany, the church tax is different in Bavaria than in the rest of the country.

But location is not the only determining factor for tax laws. In many countries, different industries and types of jobs carry their own taxation requirements. Equally important are the various statutory payments required by different countries – and these can range from public healthcare to social security to superannuation. 

Thorough research into these specifics is vital to gain the necessary knowledge and understanding that is required, as too is meticulous record-keeping. And when multiple remote employees are involved, the challenge can become too great for an in-house HR team to undertake. As a result, at this stage, many companies opt instead for outsourced support, such as partnering with a PEO.

By outsourcing the responsibility of this compliance, the risk to the company is significantly reduced – and the cost and time savings will also be considerable.

3. Leave No Room for Payroll Errors

The management of an international payroll presents another considerable challenge.

The data needs to be accurate and real-time, as payroll errors or delays can cause extensive problems for employers. 

Numerous factors also need to be taken into account – such as working with different currencies, time zone differences, dealing with foreign banks, ever-changing legislation, and potential language barriers.

Another concern is the management of sensitive online data, where the protection of confidential employee information is paramount. This requires a watertight platform where the payroll is managed and data is securely stored.

But most importantly, a well-configured plan is the best way to approach a global payroll system. The strategy must factor in the need for highly efficient technology that also has the capacity for a degree of flexibility regarding individual remote employee requirements.

A centralized solution can provide an effective system for managing and storing all data in one place. For many companies who have followed HR outsourcing trends, the best approach to this has been to hand over the reins to an outsourced HR company that is proficient in running a global payroll.

The outsourcing of a global payroll not only saves money and time but also ensures accuracy and legal and tax compliance – freeing up the business to focus more on other important matters.

Investment in Compliance Pays Dividends

It can be of comfort to any business looking to expand its workforce internationally to know that options of support to ease the process are readily available. While it does require some dynamic strategizing and investment, the end results in terms of risk minimization and cost and time savings will be especially rewarding.

With the correct measures and partnerships in place, while paying close attention to HR outsourcing trends, a scaling SaaS startup will not be impeded by complicated employment-related admin but can instead focus on fulfilling major growth requirements such as finding the best specialized talent, fine-tuning product development, elevating the customer experience, and strategic marketing.

By using the resources available, such as by partnering with an outsourced global HR agency, the all-important workforce that is vital for company growth will ultimately be stronger and happier, thriving in an efficiently run international team.

Keep informed with all of the latest industry insights, trends, and information by signing up for our newsletter today.