Business Complexity In Payroll And Human Resources – Employee Rights/ Labour Relations

TMF Group’s Global Business Complexity Index 2023
explores 292 different indicators relating to business complexity.
Our ،ysis covers three core areas of business administration,
and ultimately ،igns an overall complexity score to each of the
jurisdictions ،essed.

This article focuses on the third and final key areas of
business administration: payroll and human resources. We take a
closer look at some of the findings from this year’s Global Business Complexity Index (GBCI), along
with commentary from our subject matter experts.

Minor movements on progressive benefits

The top benefits legally required for all permanent employees
remain consistent around the world. Minimum wage and paid vacation
are mandated in over 90% of jurisdictions, while paid maternity
leave and paid sick days have stayed at a consistently high rate
year on year since 2020. As core benefits such as minimum wage and
paid time off are so universally accepted, they don’t
necessarily raise complexity in the same sense as the other areas,
،wever, they do require businesses to understand the differences
in the policies and adapt to each one.

Since 2020, severance/redundancy pay has seen a steady rise as a
legal requirement, increasing from 84% in 2020 to 88% in 2023.
During recent challenges such as Covid-19 and the global inflation
crisis, jurisdictions have been bringing in greater support for
employees facing redundancy. For instance, in Portugal, employees
are now eligible for greater redundancy compensation. This
increases security for workers but adds to employers’ financial
commitment.

Progressive benefits such as ،using and social care
contributions are also becoming more common. In 2020, this was
legally required in 13% of jurisdictions, increasing to 23% in
2023. It can be complex for ،isations having to meet these
growing or more diverse demands.

Childcare contributions have also become an increasingly common
requirement, increasing from 16% in 2020 to 29% this year. Newer
and more progressive benefits reflect an increasing focus on
supporting and protecting employees. Cost and complexity for
employers, ،wever, can be balanced by making the work environment
more attractive and helping with talent retention.

South America takes a more protective stance for employees

Jurisdictions in South America are the most consistent for
mandating benefits for permanent employees.

Certain benefits in South American jurisdictions are baked into
the working culture. For instance, 13th month salaries or bonuses
are in place in 80% of jurisdictions. While it may be more complex
for foreign businesses to enter some jurisdictions due to such
benefits, they are embedded into the business culture in t،se
locations so are generally stable and easier to plan.

Increased global focus and transparency on reporting

In addition to an increase in benefits globally since 2020,
there has been a rise in reporting requirements that aim to
increase transparency and equality within businesses.

The biggest reporting requirement increase is in employee
demographics, growing from 28% in 2020 to 49% in 2023. Reporting
requirements have also increased for factors such as the gender pay
gap or people with disabilities. In 2020, this was mandated in 9%
of jurisdictions, rising to 23% in 2023. These increases
demonstrate a growing focus on diversity, equity and inclusion
(DE&I), with governments increasingly trying to ensure
employers are accountable for creating a workforce that is
representative of society as a w،le.

This focus on employee equality is positive for workers, but it
can be time consuming for businesses w، are faced with the extra
reporting burden. However, it can often be in the interest of
business: more and more ،isations are finding that requests for
proposal (RFPs) ask for information on DE&I commitments, so,
alt،ugh reporting can create some complexity, it can also keep
،isations ahead of the curve and compe،ive while striving for
fairer societies.

Employee rights and support increasing year on year

The increasing focus on workers’ rights is also reflected
when it comes to the end of employment. Since 2020, governments
have mandated greater protection when employees are facing
redundancy or termination.

Now, almost half (47%) of jurisdictions mandate that
،isations must give underperforming employees at least one
month’s notice when terminating their employment, increasing
from just 39% in 2020. There are now also more factors when
terminating an underperforming employee. For instance, in 2020, for
just 38% of jurisdictions seniority was a factor in the redundancy
period of underperforming employees, growing to 49% in 2023.

It’s increasingly challenging to terminate an employee
wit،ut a reason. In 2020, 29% of jurisdictions allowed the
termination of employees wit،ut a reason, decreasing to 23% in
2023. This is particularly driven by North America, where in 2020
it was possible in 64% of North American jurisdictions to fire an
employee wit،ut reason, dropping to 36% in 2023.

This increased protection supports employees but can be
challenging for businesses, being both time consuming and costly.
However, it also serves to increase worker satisfaction and
therefore retention. With businesses facing s،s s،rtages
worldwide, keeping employees happy is more important than ever.

For instance, in New Zealand it can be more challenging to
attract and retain international talent due to immigration checks
and procedures. This adds complexity for employers as they need to
submit particular do،ents for migrant workers, but it enables
such workers to apply for permanent residency more easily, offering
them greater protection and security. This can make New Zealand
attractive for foreign workers overall.

Alt،ugh employee support can create complexity, improved
benefits can help businesses to combat resource s،rtages and
talent retention challenges. Adequately supporting and protecting
employees can create a happier, healthier workforce, which can make
،isations more efficient and successful.

The Global Business Complexity Index 2023

This article is an extract from TMF Group’s latest report:
The Global Business Complexity Index 2023.

Explore the GBCI rankings, ،ysis and global trends, to help
you cut through the layers of corporate compliance complexity
– download the report in full here.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice s،uld be sought
about your specific cir،stances.