How Employer of Record Services Ensure Global Payroll Compliance

Payroll issues often go unnoticed. A change in contribution rates, a shift in wage floors, or a new contribution ceiling might not seem like a problem for months. However, an employee's resignation or a claim about short contributions can reveal errors dating back to January.

The more countries you hire in, the more complex payroll compliance becomes. Hiring in Manila and Kuala Lumpur, for example, means managing two sets of contribution rates, payroll calendars, filing deadlines, and government audits.

This is where an employer of record (EOR) adds value. The EOR becomes the legal employer in each country.

In this guide, we explain how EOR payroll works, the responsibilities your provider handles, and what changed in 2026.

What global payroll compliance actually covers

Global payroll compliance means following every local law that applies when you pay someone. That covers registration, pay calculation, tax withholding, statutory benefits, and record keeping in every country you operate in.

Pay an employee on time and in the right currency, and you can still be out of compliance. Payment is only one part.

1. Register with the right authorities

Before you pay an employee, you must register with the required tax and social security authorities.

Many countries require registration with several government bodies.

• In the Philippines, you register with the BIR for tax, and with SSS, PhilHealth, and Pag-IBIG. Each has its own reporting and payment schedule.
• In Indonesia, you register with both BPJS programs. One covers healthcare. The other covers employment. Each requires separate reporting and payments.

If you miss a required registration, you cannot legally pay your employee. It does not matter if your payroll is ready.

2. Working out the pay

Running payroll means tracking several moving parts at once. You need gross salary, employer contributions, employee deductions, overtime, night differentials, allowances, and mandatory bonuses. Every country adds its own twist.

• In the Philippines, you must pay 13th month pay. You also add a 10% night differential for hours worked between 10 pm and 6 am.
• In Indonesia, you pay THR, a required religious holiday bonus, at least seven days before the holiday.
• In Singapore, your CPF contributions depend on the employee's age band. Rates go down after an employee turns 55, not up. The rates for staff over 55 changed again in January 2026.
• In Vietnam, social and health insurance contributions are capped at 20 times a government reference figure. Once a senior employee's salary passes that point, you stop contributing above it. That figure changes, so you need to watch it.

3. Withholding and filing

You withhold income tax from each employee's salary. You send it in along with your share of contributions. Then you file the returns on time.

Your filing calendar shifts depending on the country.

• Malaysia expects your EPF payment by the 15th of the following month. If you miss it, the late payment charge is tied to the fund's dividend rate.
• Indonesia withholds PPh 21 every month using effective rate tables. In December, you reconcile that against the progressive scale.

Filing late usually triggers a penalty, even when your numbers were correct from the start. You need to know these deadlines before they arrive, not after.

4. Paid leave and statutory benefits

Sick pay, maternity pay, paternity pay, and severance all belong to payroll. Each one turns into money you owe on a specific date.

Family leave changed the most this year, and those changes cost employers real money.

• In Thailand, employers now cover 60 days of maternity leave at full pay, up from 45.
• In the UK, employers now pay statutory sick pay starting from the first day of absence, not the fourth.

These shifts mean you need to update your payroll calculations as soon as new rules take effect, not months later.

5. Payslips and records

You need payslips in the local format and language, records kept for the required number of years, and a clear trail showing how each figure was worked out.

In Malaysia, there is no single answer for how long you keep records.

• The Employment Act 1955 requires employee records for six years from the date of the last entry.
• The Income Tax Act 1967 requires tax records for seven years from the end of the year of assessment.

In practice, you keep to the longer period.

In Thailand, once you employ ten or more people, written work rules in Thai become a requirement. Under the 2025 amendments, you also file an annual report on employment and working conditions.

The payroll changes that landed in 2026

Every market below changed a number on a payslip. Nobody wrote to employers about it. This is why cross border payroll solutions matter. Someone has to catch each change on the date it takes effect.

Philippines: rates changed twice in six days

Wage Order No. NCR-27 adds PHP 85 a day to the Metro Manila minimum wage, in two parts.

• The first PHP 60 started on 25 July 2026. The daily rate went from PHP 695 to PHP 755.
• The second PHP 25 is due on 20 January 2027, taking it to PHP 780.

Then it stopped. On 30 July, the Pasig Regional Trial Court blocked the order until 13 August. DOLE has said the PHP 60 already paid stays with workers, with no refunds and no payroll deductions.

A wage order moves more than one number. Overtime, holiday pay, night differential, and 13th month pay all come off the daily rate, so one change runs through your whole payroll. The position here can also change again before 13 August. An EOR tracks each order, applies it on the right date, and reverses it if a court steps in.

Vietnam: two decrees moved your contribution base

Decree 293/2025 raised regional minimum wages by 7.2% on 1 January 2026. Because contribution limits and the unemployment insurance cap went up, your contributions increased too.

On 1 July 2026, Decree 161/2026 raised the base salary from VND 2.34 million to VND 2.53 million. Social and health insurance are capped at 20 times that, so the maximum contribution base moved from VND 46.8 million to VND 50.6 million a month.

If your payroll still uses the old cap, you are underpaying for every senior employee in Vietnam. Under employer of record payroll, the provider updates the cap on the date it changes and reruns the affected employees. The shortfall never has a chance to build up.

Singapore: higher CPF ceiling, new rates over 55

Two CPF changes took effect on 1 January 2026.

• The Ordinary Wage ceiling rose from S$7,400 to S$8,000 a month, the final step of a phased increase.
• Rates rose 1.5 percentage points for ages over 55 to 65. You pay an extra 0.5, your employee an extra 1.0. Rates under 55 did not change: 37% total, 17% from you. The 55 to 60 band is now 34% total, 16% from you.

CPF still goes down after 55, so a senior worker does not cost more than a younger one. But the gap is closing. Two things to plan for:

• New rates apply from the first day of the month after the employee turns 55, 60, 65, or 70. Not on the birthday.
• The CPF Transition Offset covers half of your increase for citizens and permanent residents aged over 55 to 70.

Employees in this age group take home less pay, even though their salary has not changed. The extra amount goes into their Retirement Account. Explain this before they ask, or ask your EOR to do it.

Malaysia: EPF is now mandatory for foreign staff

For years EPF was optional for foreign staff, with a token RM5 employer contribution. That ended with October 2025 wages.

• EPF is now mandatory for non-Malaysian employees with a valid work pass, at 2% employer and 2% employee.
• Domestic workers such as maids, cooks, and cleaners are excluded.
• Rates are expected to rise toward local levels over time.

Check one older change too. Many employers still miss it. The SOCSO and EIS ceiling went from RM4,000 to RM6,000 in October 2024. If your system predates that, you have been paying too little for everyone above RM4,000 since. In an audit, that shows up across your whole workforce.

EOR payroll processing covers the registration, the new rates, and the correction of anything your old setup missed.

Indonesia: higher wage floors, higher pension ceiling

Government Regulation No. 49 of 2025 raised 2026 provincial minimum wages by 5% to 8%. Jakarta reached IDR 5,729,876 a month, up 6.17%.

• The floor follows the employee's work location, so one national figure will not work.
• City and regency rates can sit above the provincial rate. Check the local figure.
• The minimum wage only applies to employees with under one year of service. Beyond that, you need a formal wage structure and salary scale.

The BPJS pension ceiling also rose 5.11% to IDR 11,086,300 from 1 March 2026. It goes up most years, adjusted by GDP growth.

Using the right city rate for each employee is where international employee payroll usually goes wrong. An EOR keeps the rates by location and applies the correct one to each person.

Thailand: new paid leave rules raised your costs

You may still see these listed as future changes. The Labour Protection Act (No. 9) took effect on 7 December 2025.

• Maternity leave rose from 98 to 120 days. You now pay full wages for 60 days instead of 45, a one third increase in cost.
• Spouses get 15 days of fully paid leave, taken before the birth or within 90 days after.
• Employees get 15 days of infant care leave at half pay when a newborn has a certified medical condition.
• Employees get one day of menstrual leave per cycle, paid under your own policy.

Your EOR should have updated these leave costs from the date the law took effect, not the date it was announced. You should also have been told what it added to your monthly cost.

United Kingdom: sick pay is now a day one cost

On 6 April 2026, the Employment Rights Act 2025 removed the three unpaid waiting days for Statutory Sick Pay and the minimum earnings threshold.

• You pay SSP from the first qualifying day of absence.
• The rate is GBP 123.25 a week or 80% of average weekly earnings, whichever is lower.
• Part time and lower paid staff who did not qualify before now do.

Special rules apply if an employee was already off sick on 6 April, or if their SSP would drop under the new 80% calculation. An EOR checks these cases one by one instead of applying the same rate to everyone.

United States: W-2s must show tips and overtime separately

Under the One Big Beautiful Bill Act, the 2026 Form W-2 adds new reporting.

• Box 12 has three new codes: TP for cash tips reported to you, TT for qualified overtime, and TA for employer contributions to a Trump account.
• Box 14 is split into 14a for other items and 14b for the Treasury tipped occupation code.
• TT covers only the extra part of overtime pay, the "half" in time and a half.
• Box 14b is only required where the W-2 reports tips under TP.

The relief that let you skip this for 2025 has ended. Employees use these figures to claim their deductions.

EOR tax compliance means setting up these codes in payroll during the year. You do not want to find them for the first time in January.

What to look for in an EOR provider

Do not ask a provider if they know a rule. Ask what they did after it changed. A provider who handles international payroll compliance well will answer with dates and actions.

• They should have their own entities in your target markets, not subcontractors you cannot monitor.
• They should have a clear process for tracking rate changes, and a named person who monitors them.
• They should handle filings internally. A service that only pays salaries leaves the compliance work with you.
• They should apply the correct wage floor for each employee's location. This matters most in Indonesia and the Philippines.
• They should issue payslips and keep records in the local format, for the period the law requires.
• They should give you a specific contact who responds if an inspector calls.

Your own entity or an EOR?

Choosing between your own entity and an EOR affects your costs, compliance responsibilities, and how quickly you can hire in a new country.

Choose an EOR if:

• You want to hire quickly without setting up a local company.
• You want payroll, filings, and compliance tracking managed for you.
• You want employer of record tax obligations handled without a local compliance team.

Set up your own entity if:

• You have a larger team and long term plans in one market.
• You need direct control over employees and employment structure.
• You are ready to manage incorporation, accounting, audits, and filings yourself.

How the arrangement works in practice

Step 1: You choose the country and role. Share location, salary range, and hours. You should get a cost breakdown covering contributions, mandatory bonuses, and shift premiums, so you budget on real cost instead of gross salary.

Step 2: They onboard the employee. The EOR signs the contract and registers the employee with every required tax and social fund. This takes a few business days.

Step 3: They run payroll, filings, and benefits. They handle payroll for remote workers on the local calendar, pay contributions, withhold tax, file, and issue compliant pay slips. When a rate changes, you should know what changed and why before the invoice arrives.

Step 4: You manage the work. Your employee follows your processes and reports to you.

If you already use contractors overseas, most providers can move them onto proper employment without changing how you work day to day. To compare providers, check our EOR comparison guide.