The pandemic brought about several twists and turns in workforce management which had just been ‘Future of Work’ predictions till then. While social distancing opened a whole new world of remote working, it also propelled businesses to dip into global talent pools for skillset sourcing and acquisition.
Today, telecommuting has normalised the concept of the distributed workforce and the many advantages it brings. For example, companies can have access to diverse skill sets from remote corners of the globe without having to host them at the home office. This has accelerated the trend of remote hiring and allowed companies to maintain their distributed workforce without affecting overheads.
In the midst of all this are the permanent employees most of whom have returned to their homes in different continents owing to border closure due to Covid-19. Many global companies are still extending their WFH option for a longer duration to control and manage the returning-to-work crowd. Whether its distributed workforce or a temporary WFH phase, companies are still obligated to pay all their employees, based in every single location on the globe.
The challenges of running payroll for a distributed workforce are many. Here are some of commonly-found cases among MNCs in Malaysia:
Payroll & Tax Calculation
It is very important for companies to understand the correlation between payroll and hiring location. If a global brand hires a talent for its branch in Malaysia, then payroll ought to be furnished at the country of hiring, i.e., Malaysia. As far as taxation is concerned, Malaysian law says that if the expat is working outside Malaysian waters, they will need to pay tax in that country.
Payroll in Currency of Choice
MNCs based in Malaysia with expat talents can make choices regarding the type of currency they would like their employee to be paid in. If the company is based in Malaysia, payroll will be processed from Malaysia and not their global headquarters. Payroll can also be split into Malaysian Ringgit and currency of choice, according to the agreement drawn with the payroll outsourcing company.
Compliance for Distributed Workforce
In the event that an MNC decides to bring its remote employee to its office in Malaysia for on-site employment, then it is vital to ensure that the employee satisfies his/her tax status as resident as well as comply with Malaysia’s immigration requirements. Employees who will be arriving in Malaysia for short-term or long-term work will need to get the right entry pass as there is a striking degree of difference between the both, even for expat talents.
When Permanent Employees Return to Work in Malaysia
Re-opening of borders is set to bring employees back to their offices in Malaysia. While payroll remains unaffected during this transition, the main factor that MNCs need to watch out for is tax residency status and immigration compliance. In the case of tax status, it will shift from the previous country of residence to Malaysia.
Get Reprieve from Payroll, Compliance & Tax Calculation Woes for Remote Employees
To ensure that employees operate compliantly in the transition process, MNCs can choose to outsource these services to payroll and employee mobility solutions companies that are familiar with all kinds of compliance documentation for expat talents. Such companies can help MNCs solve:
How We Help
Having specialised in the payroll outsourcing business for the last 20 years, Propay Partners is the partner of choice for MNCs operating in South East Asia. We handle all kinds of payroll outsourcing services, including Professional Employer Organisation (PEO) services for companies requiring payroll assistance for their external workforce.
We are specialists in handling expat tax and immigration compliance requirements that meet all statutory obligations in Malaysia. We also take care of the distributed workforce of global MNCs and adhere to all payroll requirements of all their employees, right from salary, commissions, benefits, insurance and bonus pay. To learn more about our services or address concerns about expat employees stationed remotely, do reach us at www.propaypartners.com
