HR and Payroll Compliance Across EMEA: Your Expert Guide

Did you know that:

• In the United Kingdom, there’s no minimum or maximum duration for fixed-term contracts?
• In Slovakia, you need explicit employee consent to increase overtime hours up to 400 hours a year?
• In the EU, temporary workers and independent contractors are protected by a special directive that gives them access to similar amenities as permanent employees?

In a global business environment, you must stay up-to-date with such laws and regulations in the countries you hire from and implement adequate policies to protect your company from liability, financial penalties, and damaged reputation.

This task becomes more complex and carries more risk when you hire globally, as each region or country has its own set of labor laws, tax regulations, and employment standards. On top of that, HR and payroll laws are subject to frequent change: in 2022, there were over 61,000 regulation changes worldwide.

This article will guide you through the basics of HR and payroll compliance in different European countries, the Middle East, and Africa.

What does HR and payroll compliance include?

HR and payroll compliance means adherence to legal regulations, standards, and requirements governing human resources management and payroll processing within a company. This ongoing process entails a wide range of obligations, such as employment laws, tax regulations, social security contributions, data protection laws, and employee benefits.

Compliance ensures that businesses operate ethically, legally, and responsibly while protecting the rights and interests of employees.

For businesses operating in multiple regions, payroll and HR compliance is crucial for several reasons:

• Mitigates the risk of legal liabilities and penalties by ensuring that the organization follows applicable laws and regulations in each jurisdiction
• Helps maintain a positive reputation and fosters trust among employees, customers, and stakeholders
• Promotes consistency and fairness in HR practices, leading to better employee relations and retention
• Contributes to the overall success and sustainability of the business

Here are the key components of HR and payroll compliance:

• Employment laws governing the relationship between employers and employees and covering aspects such as agreements and contracts, working conditions, discrimination and harassment policies, termination procedures, and employee rights
• Tax regulations dictating employer obligations regarding payroll taxes, income tax withholding, and other tax-related matters
• Social Security contributions provide employees with benefits such as retirement pensions, healthcare coverage, and disability insurance
• Data protection laws governing the collection, use, and processing of personal data, including employee information
• Employee benefits encompassing various non-wage compensations provided to employees, such as paid leave, health insurance, retirement plans, and other perks
• Labor relations: Labor relations laws govern the relationship between employers, employees, and labor unions
• Record-keeping and reporting or maintaining accurate records and fulfilling reporting requirements mandated by law

💡Read more: 3 Cost-Effective HR Compliance Solutions for HR Managers

Compliance challenges in Europe, Middle East, and Africa

Complying with regulations in Europe presents unique challenges for businesses, particularly due to the complexity of European Union (EU) regulations and the diversity of legal systems across different countries.

The three most significant compliance challenges in Europe include:

GDPR compliance for data protection

The General Data Protection Regulation (GDPR) is one of the most stringent data protection regulations globally and applies to all organizations processing personal data of individuals within the EU. Noncompliance with these laws can expose your company to serious legal risks, including lawsuits in case you fail to protect employee data privacy.

Key challenges businesses face in GDPR compliance include:

• Stringent requirements: GDPR imposes strict requirements on data processing, including obtaining explicit consent, implementing data protection measures, appointing data protection officers, and notifying authorities of data breaches.
• Cross-border data transfers: Transferring personal data outside the EU requires complying with GDPR's restrictions on international data transfers, such as implementing appropriate safeguards or obtaining adequate decisions for countries outside the EU.
• Complexity of compliance: GDPR compliance involves complex legal and technical requirements, making it challenging for businesses, especially smaller organizations or those without dedicated legal and compliance teams.

Dealing with multiple countries and legal systems

Although a single continent, Europe isn’t a homogeneous market nor can it be viewed as a single legal environment. Operating in multiple European countries adds layers of complexity to compliance efforts due to the diversity of regulatory frameworks, cultural differences, and language barriers.

Cultural nuances may also impact HR practices, communication styles, and business norms. Understanding and respecting these cultural differences is crucial for compliance and building successful operations in each country.

Language differences pose challenges for businesses operating in multiple European countries, particularly when translating legal documents, communicating with employees, and understanding local laws and regulations.

💡Read more: Doing Business in Europe: A Comprehensive Guide

Challenging economic and geopolitical context

In the Middle East and Africa, there may be significant economic disparities across the region, with some countries having advanced economies and others facing economic challenges.

Businesses operating in less developed countries may face resource constraints, including limited access to legal expertise and compliance resources, which can hinder their ability to ensure compliance.

Changes in government policies, regulations, and enforcement practices can create uncertainty for businesses operating in the MEA region, requiring them to stay informed and agile in their compliance efforts and potentially have a market exit plan ready.

Examples of HR and payroll compliance diversity around EMEA

Below, we’ll share a few examples of how employment and payroll laws can vary depending on the country you hire from. From record-keeping requirements to annual leave, you must know all these regulations to ensure full compliance in any given country.

United Kingdom

• Written employment contract: Optional
• Annual leave: 28 days per year (including holidays)
• Minimum wage: May depend on a worker’s age
• Payroll cycle: Monthly
• Overtime payment: Not mandatory
• Employee records keeping: Six years

Note: Since the UK left the EU, the employment laws that apply to the union don’t necessarily need to be followed in the UK.

Germany

• Written employment contract: Mandatory for fixed-term contract
• Annual leave: 20 days per year
• Minimum wage: 2,088-2,253.30 EUR (~2,250-2,430 USD) per month
• Payroll cycle: Monthly
• Overtime payment: Compensated in time off or financially
• Employee records keeping: Timesheets for two years, other documents for six years

Note: The minimum statutory notice period for employees in Germany is four weeks prior to either the 15th or the last day of the next month. 

France

• Written employment contract: Mandatory for some types of contracts & must be in French
• Annual leave: 25 days per year
• Minimum wage: 1,709.28 EUR (~1,843 USD) per month
• Payroll cycle: Monthly
• Overtime payment: May depend on contract type
• Employee records keeping: At least five years

Note: Unlike in most other countries, where the standard working hours are 8 hours per day, 40 hours per week, in France it’s 7 hours per day, 35 hours per week.

Italy

• Written employment contract: Statutory
• Annual leave: 20 days per year (+ additional 32 hours)
• Minimum wage: No requirements
• Payroll cycle: Monthly
• Overtime payment: Mandatory, 150% of the hourly rate for the first 8 hours
• Employee records keeping: Five years

Note: In Italy, 13th and 14th salary are included in the employee’s gross salary and are paid in December and June.

The Netherlands

• Written employment contract: Optional
• Annual leave: 20 days per year
• Minimum wage: 2,317.83 EUR (~2,500 USD) for employees over 21
• Payroll cycle: Monthly
• Overtime payment: Not mandatory
• Employee records keeping: At least seven years

Note: Employees in the Netherlands receive a holiday allowance. This cost is included in the employee’s annual salary.

Ireland

• Written employment contract: Mandatory
• Annual leave: 20 days per year
• Minimum wage: 11.30 EUR (~12.20) per hour
• Payroll cycle: Monthly
• Overtime payment: Not mandatory (maximum hours are 48 per week)
• Employee records keeping: Three years

Note: Ireland has the Pay As You Earn (PAYE) tax system, meaning that employers are required to deduct tax and social security contributions from wages as employees earn them. 

Belgium

• Written employment contract: Verbal contracts allowed for some types of agreements
• Annual leave: 20 days per year
• Minimum wage: 1,593.81 EUR (~1,718 USD) monthly
• Payroll cycle: Monthly
• Overtime payment: Mandatory for hours exceeding 38 hours per week
• Employee records keeping: Three to 10 years, depending on documentation

Note: In Belgium, there are no probation periods.

Switzerland

• Written employment contract: Some types of contracts must be in writing to be valid
• Annual leave: 20 days per year, unless under 20 or over 50 years old, in which case 25 days
• Minimum wage: No national minimum wage
• Payroll cycle: Monthly
• Overtime payment: Not mandatory
• Employee records keeping: At least five years

Note: In Switzerland, the standard workweek can vary from 38.5 to 42.5 hours.

United Arab Emirates (UAE)

• Written employment contract: Mandatory
• Annual leave: 2 days per month during the first year of employment, after which 30 days per year
• Minimum wage: No minimum wage requirements
• Payroll cycle: Monthly
• Overtime payment: Mandatory for non-managerial positions
• Employee records keeping: At least two years

Note: In the UAE, employees pay no income tax. However, certain employees may be subject to social security contributions.

Nigeria

• Written employment contract: Mandatory no later than three months after the start of employment
• Annual leave: Six days per year after 12 months of employment
• Minimum wage: 65,000 NGN (~50 USD) per month
• Payroll cycle: Monthly
• Overtime payment: Not mandatory
• Employee records keeping: Three years

Note: In Nigeria, there is no statutory requirement to provide a notice period. However, best practice includes 30 days notice for non-senior employees and a minimum of 30 days for senior employees.

Get more details about 150+ countries in our Global Hiring Guide.

How Deel’s customers navigate EMEA compliance with success

Deel has already helped thousands of businesses ensure HR and payroll compliance around the world, including within the EMEA region.

Take Us2.ai, for example. This company used Deel’s EOR to hire compliantly across Europe because opening their own office around the world would have taken too much time and required “numerous compliance regulations, legal works, admin tasks, and associated fees.”

We helped the APAC-based startup navigate statutory requirements in EMEA, enabling them to hire eight international workers with ease and securely digitize, store, and organize key HR documents on the platform.

An efficient approach to compliance allows our clients to improve their time to market. Like Zoomo, an Australian business that hired workers from Spain, Germany, and France, with an onboarding process of several business days at most.

Forget compliance issues in EMEA with Deel

Outsourcing compliance to experts is the most secure way to reduce legal and financial risks when hiring across EMEA countries.

Deel’s EOR, independent contractor management, global compliance and payroll management, HRIS, visa application assistance, and other services enable you to hire anyone, anywhere, without worrying about whether you’re adhering to local employment and tax laws.

Our in-house legal team of 200 experts and unique Continuous Compliance feature keep you up-to-date with applicable regulations and policies in over 150 countries, mitigating any noncompliance risks that could hinder your growth.

Simplify onboarding and offboarding of global talent and get ahead of your competitors in EMEA. Schedule a demo with our team to learn more about how our platform works.