Payroll complexity in Latin America

Tackling payroll complexity in Latin America

26 MARCH 2015 | PUBLICATION | 17 pages

But for regional and global payroll managers, there are common challenges and opportunities – and as this research survey concludes, different kinds of demands on the senior payroll professional that may lead to a reassessment of the role of the regional payroll manager.

In 2015, Webster Buchanan Research were sponsored by TMF Group to conduct an in-depth study into the particular challenges presented by managing payroll in Latin America. They held in-depth discussions with a select group of senior international HR and payroll managers from multinationals responsible for Latam, along with country specialists with expertise in individual legislative issues and customs, the study looked at the following countries: Argentina, Brazil, Colombia and Mexico.

The challenges respondents cited included:

  • Compliance requirements can be complex and difficult to interpret, with frequent changes, onerous payroll reporting requirements, detailed paper-based record keeping and complex salary calculations.
  • Many HR administrative requirements impinge on payroll, including requirements around onboarding, separation processing, time and leave processing and records management.
  • Wages are paid weekly, bi-weekly or monthly - but different legal and customary norms mean employers can end up running more frequent pay cycles. One respondent reported having to run almost a dozen payroll cycles every week in Mexico for different employee groups 
  • Payroll managers must be able to respond to company-specific collective labour agreements (CLAs), sometimes at extremely short notice (two days being the minimum cited). This can lead to multiple challenges, not least from a system perspective.
  • With labor laws often tilted strongly in favour of the individual, organizations adhere to strict processes for voluntary and involuntary terminations, which makes processing leavers extremely burdensome
  • Benefits awards can be particularly complex in some countries, sometimes because of local custom rather than statutory requirements, and employers’ benefits obligations can make salary costs relatively high.

Read more about the TMF Group acquisition of Brazilian outsourcing division of ‘PwC Brasil'.

Read more about TMF Group named as a ‘Major Contender’ by Everest Group Research in its Multi-Country Payroll Outsourcing (MCPO) PEAK Matrix 2015.

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