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How can an outsourced payroll provider reduce the strain of GDPR?

The General Data Protection Regulation (GDPR) will apply not only to any company based in the EU, but also to any business that processes the personal data of EU citizens regardless of where they are situated. With GDPR less than seven months away, we all know it’s coming – but what does it mean for payroll departments?  Businesses need to carefully consider this question ahead of the May deadline, and look at ways to ease the strain on their organisations overall.

Here’s four key GDPR payroll challenges, and how an outsourced provider can help:

Soothing the compliance headache

Payroll is driven by local legislation, and businesses need to ensure these laws (for example those under GDPR) are followed in whichever regions they operate in, to ensure peace of mind. With an outsourced payroll provider, you don’t have to become an expert in each region in terms of governance and compliance. Instead, you can rely on that provider to ensure you remain compliant, whatever the legislation and in whichever region – GDPR or otherwise.

Outsourced payroll providers understand that achieving the right balance between the local and global aspects involved in payroll, in terms of ensuring compliance with all local market legislation—including GDPR—while optimising the efficiency benefits that a global offering can deliver, can be done by building systems with a global outlook and local knowledge in mind: a modern-day, bottom up payroll services approach.

Improving Accuracy and Reliability

Payroll mistakes can be extremely detrimental to any organisation. The pressure to avoid such mistakes increases with the strain of GDPR. Unless you have an automated system and fully trained, capable payroll staff, who are more than adept to deal with complex regulations in place, your payroll department will probably end up making the occasional mistake.

By making the mistake of failing to comply with GDPR, you risk angering not only the government but your employees too, who will be far from impressed to know you are handling their data incorrectly. In addition, you could be looking at fines of up to 4% of your total annual revenue. With a reputable outsourced payroll service provider, you are far less likely to become the victim of an error, including one related to GDPR non-compliance, than handling payroll processes in-house.

While your staff may be highly skilled, there is always the chance that one of them will fall sick or be on holiday. Even the slightest change to routine can cause problems for payroll departments: it’s essential to ensure that organisational output remains unaffected. Outsourcing payroll is a guaranteed way to ensure nothing changes, regardless of time off. It also saves huge amounts of time and provides peace of mind, simply because you won’t have to help new members of staff get to grips with your payroll system, or go through the processes of helping them to understand how GDPR affects payroll processes.

Staying secure

Organisations hold the details of personnel online in all offices, potentially all over the world, thus potentially exposing themselves to all sorts of sophisticated cyber-attacks. With financial data being a core part of payroll department records, it’s essential that every element of your business is prepared and able to robustly defend itself against attacks. To do so, your business needs to implement the right infrastructure: some companies simply don’t have the resources to ensure details are kept safe. Outsourcing to a payroll service means you’ll be benefitting from industry specific technologies which are able to prevent such attacks from occurring. When it comes to GDPR, organisations will have a 72-hour window in which to notify authorities of a breach: but with an outsourced payroll provider, you stand a much better chance of avoiding them happening in your payroll department altogether.

Minimising costs

It goes without saying that organisations look to save costs wherever they can, particularly if they are looking to expand globally (globalisation is expensive). With the risk of paying out hefty fines if they fail to comply with new GDPR laws, companies can’t afford to make unnecessary costs elsewhere, or make mistakes. By outsourcing, businesses can allow for the appropriate level to be paid in a lower cost location. Combined with the savings which come from consolidation and automation, a company will be much better placed to move forward with expansion, in addition to ensuring compliance with GDPR.


Organisations need to recognise payroll services as a key part of their journey to GDPR compliance: the regulation can appear daunting and complex; therefore, outsourcing can be a beneficial option to any organisation that is preparing for GDPR, and looking to improve overall processes. By relying on the expertise of a reputable payroll provider, businesses can ease the overall strain of GDPR by soothing the compliance headache and improving payroll accuracy, reliability and security. With the right provider, you can relax in the knowledge that you are in safe hands when it comes to achieving total GDPR compliance in your payroll department.

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An employee in Spain contributes less to social security than the same profile in France, Germany and the United Kingdom

  • Seresco and SD Worx, two leading experts in payroll outsourcing and members of the biggest international alliance of payroll solutions, the Payroll Services Alliance, has analysed the payslip of managers in Spain, France, the United Kingdom and Germany, with gross annual pay of 60,000€ and data from their partners.
  • Among the main conclusions, the comparison highlights that the employee in France only pays their personal income tax once per year. Thus, each month they receive a higher net pay, up to 86% more than in Spain.
  • In the same scenario, employees in Spain have a larger number of deductions (8) than in Germany and the United Kingdom, which is surpassed only by the employee in France (15).

Understanding the payroll we receive each month is a somewhat complex task due to all the concepts that are included. Seresco, a Spanish leading payroll service company, and SD Worx, the leading international payroll provider, have analysed, in collaboration with its global payroll network, the Payroll Services Alliance (PSA), the payslip of an employee in different countries across Europe. The results have revealed key differences between countries.

To develop the comparison, Seresco and SD Worx under the Payroll Services Alliance have marked the same scenario for four countries (Spain, France, the United Kingdom and Germany): an employee in a management position, with a gross annual pay of 60.000€, which includes payment in kind for a car, restaurant tickets and medical insurance. For each of these countries, Seresco and the PSA have carried out real payslip simulations, with the following conclusions.

Gross pay:

  • The employee in Spain is the only one, along with the one in Germany, that receives two extra annual payments. In the UK and France, the employee receives 12 payments per year.
  • Therefore, the monthly gross pay is higher in Spain and Germany than in the UK and France (4.285,70€ in contrast to 5.000€).

Deductions:

  • The employee in Spain contributes less to social security, 6.35% over the basic pay. The total amount for social security (238.20€) is less than half that of the employee in the United Kingdom, and even less in Germany and France.
  • The employee in France is the only one that does not have a personal income tax in his monthly payslip. This deduction is applied once a year and changes the employee’s perception over his salary. Even though the gross pay is the same in all the countries, the employee in France receives a higher net pay each month. In fact, they make up to 86% more than the employee in Spain.
  • The payslip in Spain has thee second most deductions (8). Only France has more, with 15. Germany is far below, with six, followed by the UK, with five.
  • In Germany, the employee has an extra mandatory tax: Solidaritätszuschlag or solidarity tax. This is a deduction that was established after the German reunification and is still in force. The goal of this tax was to provide support to the old East German Länder (GDR) from the West German Länder (FRG).

Deductions for the employer:

  • In both Spain and France the employee can check the deductions for the employer in his payslip, thus knowing the cost that the company assumes for the employee. However, this is not shown in the UK, and in Germany the employer does not pay any takes for the employee. Instead, he collects the taxes from the employee and gives them to the tax authority.

Payment in kind:

  • The payslip in Spain is the only one in which the payment in kind (medical insurance and restaurant tickets) isn’t included in the total gross pay and, therefore, doesn’t count in the personal income tax and social security. However, the payment in kind for the car does count in the income tax.
  • The deduction for social security of the employee in France includes payment in kind for the car. He also pays an extra tax for restaurant tickets.
  • Medical insurance isn’t included as a payment in kind in the payroll of Germany and France, since it is part of the social security system.

Net pay:

  • Based on the same scenario, although he has more deductions, the employee in France gets the highest net pay each month, with 3.762,29€.
  • Germany, Spain and the UK fall behind with 2.107,97€ (Germany), 2.061,83€ (Spain) and £1.849,90 (UK). Spain and the UK get a similar net pay due to the currency exchange.

Global payroll management with local knowledge and expertise

For global companies or organisations with expatriate employees, managing and processing payrolls face an extra challenge: integrating different payroll systems according to the legislation in each country. Given this fact, companies often rely on a payroll internationalisation. This allows them to save costs and, above all, work on the added value tasks for the business.