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European Payroll for U.S. Companies: Complying With GDPR In One Go

By SD WORX | 09 Sep 2021

American companies that are spreading their wings in Europe to gain access to a wide range of business opportunities may also face a series of challenges. One of those potential challenges involves wrapping their head around the strict data security and privacy rules that apply in the European Union (EU)—commonly known as GDPR. For example, how do you ensure your German, French, or other European payroll is fully compliant with GDPR? The answer is surprisingly straightforward.

Entering European Labour Maze
The Old World is a patchwork of countries that all have their own laws and regulations. That means employing staff and managing local payroll requires a lot of expertise. From hiring your first employee to organising monthly payments and reporting taxes, U.S. employers should expect different layers of legal complexity. And there’s not a European counterpart for the American Payroll Association (APA) to guide you through the maze.

Did you know:

  • France has the shortest official working week (35 hours) in Europe
  • Luxembourg’s monthly minimum wage is as high as 2,201.93 euro/month
  • German parents of new-born babies get a combined paid leave of 12 months
  • Belgium workers receive 4.6% more perks on average, which include hospitalisation insurance, company bikes, and meal vouchers
  • In the Netherlands, you need permission from a district judge or a national employee insurance agency to legally dismiss an employee

European countries all have their own language and their own cultural habits, and that applies to business and payroll. For example, setting up business in no-nonsense Amsterdam or in hierarchical Paris—although only 270 miles apart—are two separate things. It’s best to make those connections—particularly with someone who has the expertise and know-how to help your business navigate the local legal requirements. In the long run, simply copying and pasting your U.S. processes won’t cut it.

Data Protection, Privacy as Fundamental European Rights
Data security and privacy are regulated on the European level. The GDPR is an all-encompassing regulation that protects the sensitive data of all EU citizens. Corporations that violate this regulation may be subjected to hefty fines if they fail to comply with its key principles. Companies that violate this regulation could be fined up to €20 million, or 4% of a firm's worldwide annual revenue from the preceding financial year—whichever amount is higher.

After all, data protection and privacy are considered fundamental freedoms under the European Union Charter.

This is significantly different in the United States, where data protection is the subject of numerous laws that often vary from state to state. Some of the laws may be up to GDPR standards, while others may not. Moreover, the focus of U.S. legislation is very much on data security, while privacy is rarely addressed—contrary to the GDPR.

“In the EU, individual privacy rights come before the interest of businesses—something that is less obvious across the Atlantic,” says Sandra Korteweg, Global Partnership Manager at SD Worx.

Added Value of ISAE 3000 Attestation
So, how do you make sure your local payroll is GDPR compliant when you employ staff in Europe? Again, the answer is to partner locally with someone who has the expertise and know-how. However, not any European HR partner will do. You should always go for indisputable proof of data security compliance. The EU recommends using ISAE 3000 attestation—an international standard that provides auditors with the necessary guidelines to accurately assess the data processing controls of an outside organization and is considered the go-to standard for GDPR compliance.

ISAE 3000 attestation has three added benefits, which include:

  1. Regulatory compliance: The corporation is confident they have chosen a reliable processor if the payroll provider has a with ISAE 3000 attestation
  2. Contingency planning: U.S. businesses have confidence their partner can mitigate risks in the event of an incident
  3. Internal support: An ISAE 3000 attestation provides HR outsourcing sceptics with confidence that your organisation can provide the needed data security

Pursue Your European Dreams With ISAE 3000 Payroll Partner
SD Worx, a global HR and payroll provider in Europe, earned its ISAE 3000 attestation in June 2021, making it one of the first companies to be able to provide secure outsourcing to U.S. companies.

The benefits of contracting with a partner that has an independently awarded ISAE 3000 attestation can hardly be overestimated. The peace of mind that comes with this type of ethical business conduct is something every organisation should look for.

Discuss your HR and Payroll requirements with SD Worx | SD Worx

Or, if you would rather have your own people on the ground, but need GDPR training, start here.

In today’s new world of work, people want to be inspired by what they do and have the freedom to focus on what matters. Organisations need a dynamic, motivated workforce empowered by smart technology. As a leading European provider of people solutions, SD Worx turns HR into a source of value for their customers’ business and the people that work for them. SD Worx delivers people solutions across the entire employee lifecycle, from paying employees to attracting, rewarding and developing the talent who make businesses succeed. SD Worx powers performance through four core capabilities: technology, outsourcing, expertise and data-driven insights. More than 76,000 small and large organisations across the globe place their trust in SD Worx and its +75 years' worth of experience. SD Worx offers its people solutions in 150 countries, calculates the salaries of approximately 5 million employees and ranks among the top five worldwide. The more than 5,300 employees at SD Worx operate in sixteen countries: Belgium (HQ), Austria, Estonia, Finland, France, Germany, Ireland, Luxembourg, Mauritius, Netherlands, Norway, Poland, Spain, Sweden, Switzerland and the UK. In 2020, SD Worx achieved a consolidated turnover of more than EUR 800 million (pro forma).

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