International payroll guide: global payroll management

Your next great hire probably isn’t in your city. They might be in Manila, Kuala Lumpur or London. For Australian businesses expanding their teams overseas, that’s a great thing. The power of remote hiring pushes the talent pool wide open in a way that nothing else does. 

However with this comes more responsibility. Global payroll management is one of the most important things to get right, but it’s also one of the easiest to get spectacularly wrong. 

The thing that catches businesses off guard is that payroll gets significantly more complicated the further your team is spread out. Our Power of Automated Payroll Report found that troubleshooting payroll errors (33%) and navigating complex legislation (29%) are already among the top three challenges for Australian businesses. A distributed workforce adds another layer on top of both.

The talent is clearly out there too. Our 2025 Recruitment Report found that 32% of Australian employees who left their jobs were looking for remote or flexible work options their employer wasn’t offering. The real question is whether your payroll infrastructure can actually support them. 

We’ve broken down everything you need to know about global payroll management and how to get it right.

What is global payroll management?

Global payroll management is the process of paying people accurately and compliantly across multiple countries. It’s a simple concept with a complicated execution.

It involves tax withholding in each jurisdiction, multi-currency conversion, local compliance requirements, superannuation equivalents, employment contract localisation and payslip requirements that vary country by country. Each of those is its own rabbit hole.

For Australian businesses expanding into Southeast Asia, particularly the Philippines, Malaysia and Indonesia, or into the UK, the complexity is significant. Each market has its own labour laws, mandatory benefits and tax frameworks that operate vastly different from what you’re used to. The risk here is getting it wrong, which can create significant legal and financial exposure.

Why hire remote employees?

Blame the pandemic, but trust us, this movement was already underway for so many reasons and the business case is straightforward. It removes geographical limits on who you can hire, which means you can go after the best person for a role instead of the best person within driving distance.

The employee experience case is just as compelling. Our Wellness at Work Report found that 63% of fully remote employees rated their work-life balance as above average, which is nearly double the 35% of fully in-office workers who said the same. Without the daily commute, people get time back. That tends to show up in engagement, productivity and how long they stay around for.

Stay is the important word here. Our 2025 Recruitment Report found that 32% of Australian employees who left their jobs were looking for remote or flexible work options their employer wasn’t offering, making it one of the top reasons for turnover. Remember that the option for remote and flexible work is now both a recruitment and retention lever.

Key compliance considerations for Australian employers

Hiring overseas is the easy part. The compliance side is where most businesses get caught out, usually because they assume their existing payroll setup will stretch to cover a worker in another country. Here’s what you need to think about before you hire.

ATO obligations when paying overseas workers

When you hire someone based overseas, PAYG withholding generally doesn’t apply if that person is a non-resident working outside Australia. But residency status isn’t always straightforward. 

If the worker has Australian-sourced income or spends time working in Australia, your obligations change. The ATO has specific rules covering each scenario and getting this wrong can mean unexpected tax liabilities on both sides. Be sure to sort out residency status before the first pay run. 

Worker classification risk

Most countries have their own legal test for what separates an employee from a contractor. If someone works regular hours, does ongoing work and your business is their primary source of income, there’s a good chance local labour law will treat them as an employee, regardless of what your contract says. 

If a regulator in the Philippines, UK or Malaysia determines you’ve misclassified a worker, you can be liable for back-pay, statutory entitlements and penalties under that country’s laws. The fact that your business is based in Australia doesn’t insulate you from that exposure.

Permanent establishment risk

If you have employees working in a foreign country on an ongoing basis, that country’s tax authority may determine you have a “permanent establishment” there, which creates corporate tax liability in that jurisdiction. It doesn’t require a physical office. In some countries, simply having an employee working there regularly is enough to trigger it. 

Superannuation for overseas workers

The Superannuation Guarantee generally doesn’t apply to non-resident employees working outside Australia, so in most cases you won’t owe super on an overseas hire. But there’s an important caveat: if the worker is an Australian resident temporarily working abroad, different rules may apply and it’s worth getting specific advice.

What you are responsible for is the local equivalent in the country you’re hiring in. CPF in Singapore, EPF in Malaysia, BPJS in Indonesia, etc. These are legally mandated contributions that vary significantly in structure and rate.

How do Australian businesses pay overseas employees?

There are broadly three ways to structure it.

Direct employment (local entity)

You set up a legal entity in the country you’re hiring in like a subsidiary, branch office or registered business. You get full control, however the complexity is high. It’s slow to establish, expensive to maintain and creates ongoing compliance obligations in that market. 

If you’re building a significant long-term presence in a country, it might make sense eventually. However, for most businesses hiring their first few overseas employees, it’s a lot more than you really need.

Contractor arrangement

Fast to set up and low overhead… until it goes pear-shaped. The misclassification risk is there and regulators in markets like the Philippines and the UK are actively focused on it. If the relationship looks like employment, the fact that you’ve called it contracting won’t protect you when someone raises the question.

Employer of Record (EOR) via HeroForce

An Employer of Record lets you hire employees in another country without needing to set up a local entity first. The EOR becomes the legal employer for your team members in that country, handling everything from contracts and payroll to taxes, benefits and compliance with local laws.

With an EOR, you keep full operational control and still manage your employees’ work, projects and performance. The EOR handles everything behind the scenes for you.

This is exactly what HeroForce does. Employment Hero becomes the legal employer for your staff internationally, so you can hire anywhere without the admin overhead. Contracts, payroll, tax and compliance are all taken care of from day one.

An EOR is worth considering when you want to:

• Hire in a country where you don’t yet have a legal entity.
• Move quickly into a new market without months of setup.
• Remove the complexity of managing employment obligations across multiple countries.

Want to learn more about the different ways you can hire? Watch our Employment Insiders session below that covers the true cost of hiring.

How to craft a remote work pay policy

Once you’ve decided how you’ll hire, you need a policy that governs how you’ll pay. A clear remote work pay policy protects both you and your employees and it becomes especially important when your team spans multiple countries and time zones.

Employment contracts and classification

Every overseas employee needs a contract that’s compliant with local laws. A copy of your standard Australian employment agreement with a different name at the top isn’t acceptable. Local contracts need to reflect local entitlements, notice periods and statutory benefits. 

Before you get to the contract, make sure the classification is right. Whether someone is a full-time employee, part-time or a genuine contractor should reflect the actual nature of the work. 

Pay cycles and foreign exchange (FX) risk

Decide how often people will be paid and in what currency. Paying in local currency is generally better practice as it gives your employee certainty about what they’ll receive. 

It’s important to be aware that if the AUD weakens against the US dollar or British pound, your payroll costs go up without anyone getting a pay rise. Australian businesses paying overseas employees across multiple currencies often have no FX strategy at all and over time that exposure adds up. It’s worth thinking about early.

Localised benefits

Australian super doesn’t apply to overseas employees, but local statutory benefit requirements still do. If you’re using HeroForce, these are managed automatically as part of the EOR model, which removes one of the more complex parts of hiring overseas employees.

If you’re using HeroForce, these are managed automatically as part of the EOR model, which removes one of the more complex parts of hiring overseas employees.

Expense reimbursement

Set clear guidelines on what’s reimbursable like home office equipment or internet costs and give people a straightforward process for submitting claims. Without clear parameters here, it becomes a source of ongoing confusion that can be easily avoided.

EOR vs permanent establishment (PE): which is right for you?

If you’re not just employing remote workers but genuinely building a business presence in a foreign market, then permanent establishment becomes a more serious conversation.

A PE is essentially a fixed place of business in a foreign country that creates tax liability there. If the local tax authority decides you have one, you’re liable for corporate tax on the income attributed to that presence. It’s a big exposure and it’s worth getting proper tax advice before you’re deep into it.

For most Australian SMEs hiring their first handful of overseas employees, PE risk is less pressing than the payroll and classification questions above. But if you’re planning to grow a real team in a particular market, getting the structure right early is worth the investment.

Using an EOR like HeroForce also sidesteps PE risk for most scenarios because the EOR is the legal employer in that country. That means you can build a team in a new market, move quickly and stay compliant, without accidentally creating a tax liability you didn’t see coming.

How HeroForce takes the complexity out of global payroll

Managing payroll across multiple countries, currencies and compliance frameworks is hard work. The businesses that do it well aren’t necessarily bigger or better-resourced. They’ve just got the right infrastructure in place so they’re not reinventing the wheel every time they hire someone new.

HeroForce is Employment Hero’s Employer of Record solution. It lets you hire compliantly in 180+ countries without needing a local entity, handles local payroll and tax, generates compliant contracts and manages statutory benefits in each market. Everything connects back into the Employment Hero platform, so your HR and payroll stay in sync instead of living in separate systems.

Global hiring doesn’t have to mean global complexity. See how HeroForce works here.

If you’re an Australian business ready to hire great people regardless of where they live, it’s worth a conversation. Get in touch with one of our business specialists today.

The information in this article is current as at 24 June 2026 and has been prepared by Employment Hero Pty Ltd (ABN 11 160 047 709) and its related bodies corporate (Employment Hero). The views expressed in this article are general information only, are provided in good faith to assist employers and their employees and should not be relied on as professional advice. Some information is based on data supplied by third parties. While such data is believed to be accurate, it has not been independently verified and no warranties are given that it is complete, accurate, up to date or fit for the purpose for which it is required. Employment Hero does not accept responsibility for any inaccuracy in such data and is not liable for any loss or damages arising directly or indirectly as a result of reliance on, use of or inability to use any information provided in this article. You should undertake your own research and seek professional advice before making any decisions or relying on the information in this article.