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Navigating International Payroll: Benefits and Challenges

Oct 30, 2023 / Payroll Services

International Payroll

Running a successful company often means expanding your horizons and hiring the best talent, even if it means looking beyond your borders. The globalization of the workforce has made it easier than ever to employ international professionals, but it also presents unique challenges when managing international payroll. In this article, we’ll delve into the world of paying international employees, exploring the various options available and the factors to consider.

1. What are international employees, and how can you hire them?

Before we dive into the intricacies of paying international employees, it’s crucial to understand the hiring process. International employees are individuals employed by a company in a foreign country. The hiring process typically involves several key steps:

Hiring Process:

  • Acquire the necessary documentation for hiring foreign employees.
  • Offer a formal job contract containing all essential details.
  • Both parties sign the offer letter, with potential changes agreed upon.
  • Ensure the new employee thoroughly understands the terms to avoid complications.
  • Sign the work contract based on the offer letter and submit it to the relevant authorities.

Visa Process:

  • International employees must obtain an entry visa, residence visa, and an Emirates ID card.
  • Application for a work visa is initiated by submitting the required documents to the appropriate authorities.


  • Companies must obtain an establishment labour card and an immigration card from the UAE Ministry of Labour.
  • These documents are crucial for an employment entry visa to allow foreign employees to enter the country.


  • Companies hiring international employees must sponsor them.
  • Employees must possess professional competence or meet academic qualifications as required.
  • All foreign workers must legally enter the UAE and adhere to residency conditions.

Eligibility and Criteria:

  • Candidates must be at least 18 years old to apply for a job in the UAE.
  • The hiring company must possess a valid license to hire international employees.
  • Companies hiring international workers in the UAE should have a clean track record.
  • The job responsibilities of international employees must align with the hiring company’s nature.


  • According to UAE Labor Law, all employees, including expatriates, are employed on fixed-term contracts, which should not exceed 3 years.
  • Contract renewal is possible if both parties agree.

2. What steps should you follow for International Payroll?

Once you’ve successfully hired international employees, the next step is to ensure their payroll is efficiently managed. To pay international employees, companies in the UAE should consider the following four main steps:

  • Determine the method of hiring international employees. This includes options like establishing an in-country partner, utilizing an Employer of Record (EOR), classifying employees as independent contractors, or setting up a local entity where employees live and work.
  • Correctly classify employees. It is essential to differentiate between traditional employees and independent contractors to ensure accurate payroll and avoid legal complications.
  • Choose the necessary services your company requires, such as HR tools, effective payroll outsourcing services, or EOR and PEO services to streamline payroll processes.
  • Determine your expansion budget, considering whether to open a local entity, use an EOR, or classify your employees as independent contractors.

3. Which are the most recommended ways to pay a company’s international workers?

When it comes to paying international employees, UAE companies have three primary options:

Establishing a Local Entity Overseas:

  • Setting up a branch office, representative office, or foreign subsidiary in the country where your employees work and live.
  • Each entity type has its advantages and disadvantages, which should be carefully considered to align with your business needs and budget.

Using a PEO or an EOR:

  • The services of a Professional Employer Organization (PEO) or an Employer of Record (EOR) can simplify the payroll process.
  • These providers handle payroll responsibilities and other HR tasks like hiring, onboarding, and compliance with local regulations and laws.

Paying International Employees as Contractors:

  • Some companies classify their international employees as independent contractors instead of establishing a local entity or outsourcing payroll.
  • This alternative simplifies the payroll process, but ensuring employees are correctly classified is crucial to avoid legal issues.

4. What factors should you consider when paying international employees?

In addition to choosing the most suitable payment method, there are several critical factors to consider when managing international payroll:

  • Currency: Paying employees in their local currency is recommended for their convenience. Payroll outsourcing services can facilitate payments in foreign currencies.
  • Time Zones and Working Hours: Tracking employees’ working hours is essential for calculating overtime and ensuring proper compensation. Understanding their respective time zones is equally essential.
  • Benefits and Taxes: Different countries have distinct rules regarding employee benefits and taxes, which can vary depending on employment status (employee or contractor).
  • Payment Frequency: Employers and employees should agree on payment frequency, which can be weekly, bi-weekly, or monthly.
  • Labour Laws and Regulations: Familiarize yourself with the labor laws and regulations in the country where your employees are based. Payroll outsourcing companies can assist with compliance.

5. Learn about the services of an EOR, a PEO, and a payroll outsourcing company

You have three main options when outsourcing international payroll: an EOR, a PEO, or a payroll outsourcing company. While all of these options offer the advantage of handling payroll duties efficiently, they have distinct differences in terms of services and capabilities:

  • EOR: Provides a range of services, including tax declarations and assistance with the hiring process.
  • PEO: Offers services related to payroll, compliance, and hiring, making it a comprehensive solution.
  • Payroll Outsourcing Company: Specializes in payroll and can be a cost-effective choice for companies focusing on payroll needs.

6. Benefits you can get by working with an international payroll partner

Outsourcing your international payroll can offer numerous benefits, such as:

  • Significant cost savings and time efficiency.
  • Ensured payroll and legal compliance in multiple locations.
  • Enhanced data security through expert handling.
  • Reduced payroll errors, leading to increased employee satisfaction.
  • Streamlined expansion into other countries.
  • Effective salary benchmarking.

The benefits you receive may vary depending on whether you work with an EOR, PEO, or payroll outsourcing services provider.

Why should you choose UAE HRM & Payroll as your partner to pay international employees?

UAE HRM & Payroll is a trusted Employer of Record (EOR), providing tailored solutions for efficiently paying your international employees. Our team offers comprehensive services to help your company navigate the complexities of international payroll. Whether you need HRM solutions, payroll outsourcing, or consultation, we’re here to support your business and ensure smooth payroll operations.

In conclusion, managing payroll for international employees can be a complex endeavour, but with the right strategies and partners, you can streamline the process and ensure compliance with local regulations, all while reaping the benefits of a global workforce.


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