Ensuring organisations remain compliant in the face of complex and constantly changing compliance requirements is one of the biggest challenges facing those who manage payrolls in Latin America.
A new report commissioned by TMF Group, a leading provider of high value Global Business Services to clients operating and investing internationally, and compiled by Webster Buchanan Research, explores the needs and challenges of the very distinct Latin American payroll market. These include requirements to keep paper records, rules concerned with hiring and firing and and the administration of a large number of mandatory and customary benefits.
The in-depth study comprised interviews with senior representatives from multinationals of different sizes, with regional or global responsibility for payroll in Latin American countries – primarily, Argentina, Brazil, Colombia and Mexico.
The report found that not only must payroll managers navigate their way through layers of complexity to get to grips with how strict labour laws, tax rules and other statutory legislation apply to their operations, but they also need to differentiate between a statutory requirement and a commonly accepted practice – and for the latter, understand the potential impact on employee relations if a common practice were not observed.
“Latin America comprises a very distinct and complex group of markets,” explained Deborah Williams, Head of Global Business Services for TMF Group. “However, there are two key actions that can be taken in order to abreast of upcoming legislative changes.”
“The first is to work closely with other internal functions, such as tax and treasury, legal, compensation and benefits, and to take advice and guidance from any system suppliers and/or outsourcers. It could prove a false economy to try and customise your own systems to keep pace with the volume of change.”
“The second is to bring in targeted expertise on the ground. This could be an in-house expert or a local and experienced payroll supplier, but they need to understand the complexity of the jurisdiction and have the resource and capacity to respond quickly to change.”
To read the full report, ‘Tackling payroll complexity in Latin America” (March 2015), visit www.tmf-group.com/payrolllatinamerica