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Accolade A magazine for global payroll & HR industry professionals

International Payments: Making money go further


Is the Landscape of BPO Changing?

South Africa Data Protection

Karen Paterson forecasts the industry future

EU Study Demonstrates Urgent Need for VAT Rethink

NHS payroll ‘human error’ was avoidable


New Zealand Employment law update Blueprint for workplace health and safety announced


Does your organisation really have a workforce strategy?

Hong Kong: Mandatory Provident Fund (MPF)

Jumping the gun on EU data protection Europe’s data protection regime is now nearly 20 years old, predating the cloud, social media and smartphones.


• It requires businesses to notify data security breaches to their local data protection authority within 24 hours but a committee of the European Parliament suggests that it should be 72 hours.

It is fairly well known that changes are afoot to the existing Data Protection Directive and the UK’s associated Act. The changes currently being proposed would affect all businesses, great and small, and we are frequently asked what they should be doing to prepare. However, it will be some time before an agreement is made, and then even longer until the new regulations are implemented into UK law.

• The draft suggests that the new rules should apply to data on EU citizens processed anywhere in the world, but the ICO questions how this could possibly be enforced.

hen the current law was passed, I was just getting the hang of surfing the web with Netscape Navigator and was about to be granted my very own email address at university, accessed through Pine. Suffice to say that the current regime is looking more than a little out of date.

Pistols at dawn

Data protection is a contentious issue in the European Parliament, with MEPs disagreeing over more than they agree. The European Council has proposed three thousand amendments to the 95-page draft prepared by the European Commission - and it’s only just beginning to sink its teeth into the detail. A number of major issues have been raised about the draft regulation that are yet to be resolved, for instance: Original story found here: ctg/opinion/2285394/jumpingthe-gun-on-eu-data-protection/ page/1


• It places a significantly greater burden on data controllers to make sure that their processes are compliant. The UK’s Information Commissioner’s Office (ICO) has complained that the suggested new rules in this area are too prescriptive.

Accolade OCTOBER 2013

• The draft gives data subjects the ‘right to be forgotten’, for example on social networking sites, but nobody seems to understand how this would work in practice.

The ICO is also getting worried about how his office will fund the significantly more rigorous regulation if it isn’t allowed to charge data controllers for their annual registration renewals. Will the European Council really pass a law that requires governments to increase taxes to pay for an expanded role for an EU-mandated non-departmental public body? Given all of this uncertainty, what should UK businesses do now? First, they should get their houses in order under the existing regime. It may be 20 years old, but many of the existing principles look to be here to stay. Complying with the current regime is a good stepping-stone to compliance with whatever replaces it - and in my experience, few businesses can afford to be complacent about their existing processes.


Singapore drops 45 places in global ranking of labour and human capital

Secondly, businesses should consider lobbying MPs and MEPs. Data processors, including most IT services companies, look set to take on new risks and responsibilities and with them new costs. Businesses with 250 employees will need to appoint an independent data protection officer with protected employment rights, reporting to the board. A whole team could well be needed to comply with the new accountability requirements. How will the right to be forgotten work for social media, data storage and archiving businesses? If minor security breaches need to be notified to the ICO this will create an unnecessary and costly administrative burden.

Singapore has tumbled 45 places to 56th in the world for dynamic labour and human capital.

The new law will need support from the UK government and European Parliament and there is still time to influence the outcome.

Aw Eng Hai, partner at Grant Thornton Singapore, admits that the issue of labour productivity will be trickier with the need for foreign manpower a fairly sensitive issue.

Shots in the dark

Some commentators are starting to speculate that the draft law will flounder owing to the number of issues outstanding. This seems unlikely, as there is widespread agreement that change is needed. Businesses (particularly IT firms) should seriously consider what the changes might mean for them. However, with so much still to be resolved, it is still too early to carry out detailed planning for the new regime. For now, businesses must concentrate on complying with the current law - and make their views heard about the new law while they still have the opportunity.

This comes ahead of the government’s promise for tighter foreign labour laws.

Original story found here: news/latest-news/singaporedrops-45-places-in-globalranking-of-labour-and-humancapital/179440/


ingapore’s low birth rate and ageing population are likely to weigh further on productivity growth. More needs to be done to achieve the right local versus foreign manpower pool to keep the economic wheels churning,” he added.

The GDI ranks 60 economies on their dynamism based on 22 economic indicators in five key areas – economics and growth, science and technology, business operating environment, labour and human capital and financing environment.

Based on the Grant Thornton Global Dynamism Index (GDI), weaker labour productivity and slow economic growth also caused Singapore to drop six places from the top spot in a global ranking of economic dynamism.

Singapore’s real GDP growth fell to 1.3% last year from 5.2% for 2011. This caused the country to fall from ninth place to 36th in the “economics and growth” sector.

In addition, five of the top 10 economies in last year’s report also fell down the leader table this year. Finland slipped from second to sixth and Sweden dropped from third to ninth. Meanwhile, Australia, Chile and China rose to become the three best economies for growing business. “We should be clear what the index measures ... Singapore has not worsened as an economy where dynamic businesses can flourish, but rather, the six economies above us have seen their business growth environments improve relatively more over the past 12 months,” said Aw.

“2012 was a tough year for our economy with weak external demand depressing growth. However, business growth fundamentals remain robust with the best financing environment in the world, a robust regulatory framework and high levels of investment in R&D. All these should support renewed growth in the economy,” said Aw. Meanwhile, Singapore was still ranked first for its financing environment and drew top scores for the quality of its financial regulatory system, as well as for translating a high percentage of its GDP from the private-sector credit.

Accolade OCTOBER 2013


Acrede appoints new Financial Director

Deanne has joined Acrede as Group Finance Director. She has worked in commercial finance for over 20 years and has held a number of senior positions both in Jersey and the UK. Her most recent role was with the Jersey Government where she led the team responsible for the financial planning and accounting function. Deanne will be working closely with the CEO to drive the company forward. Deanne believes in the power of teams and is excited to be joining Acrede at such a pivotal time in its growth. The finance function will be developed and strengthened to match the growth of the organisation. Outside of work, Deanne is a mother of two teenage children. A keen walker, she recently completed the round Jersey walk in under 14 hours and has just returned from a trip to Switzerland where she walked part of the Eiger Way. Deanne Le Gresley Group Financial Director


Accolade OCTOBER 2013

Tackling Workplace Bullying and Other Fair Work Changes


he Australian Federal Government has responded to the House of Representatives Standing Commission on Education and Employment Inquiry Report Workplace Bullying “We just want it to stop” by introducing changes to the Fair Work Act (FW Act) in the Fair Work Amendment Bill 2013, which was passed on 6 June 2013, but is still awaiting Royal Assent and a Proclamation date. The changes that relate to bullying and harassment will enable a worker who reasonably believes that they have been bullied at work to apply to the Fair Work Commission (FWC) for an order to stop the bullying. The dates relating to the bullying and harassment changes are to be fixed by proclamation, which is interesting, because some of the other changes do not take effect until 1 January 2014. Currently the health and safety laws in each state and territory give work health safety regulators the power to investigate serious bullying complaints. Also, it is not uncommon for allegations of bullying to be raised as issues in other proceedings under general protections legislation

and anti-discrimination laws. The changes amend the FW Act by defining workplace bullying as repeated, unreasonable behaviours that are directed towards a worker or group of workers, that creates a risk to health and safety. A new subsection will be included in the FW Act to clarify that reasonable management action, when carried out in a reasonable manner, will not result in a person being ‘bullied at work’. The FWC will have an obligation to deal with an application within 14 days after the application is made. The FWC will also have the power to make any order it considers appropriate to prevent a worker from being bullied at work. Examples of the orders that the FWC can make include an order requiring the individuals or group of individuals to stop the specified behaviour, regular monitoring of behaviours by an employer, compliance or review of the employer’s workplace bullying policy, and the provision of information and additional support and training to workers. An order by the FWC cannot extend to ordering reinstatement or the payment of compensation.

However a failure to comply with an order of the FWC may attract a civil penalty of up to $33,000. At this stage it is difficult to assess the impact of the proposed changes. However one of the key issues identified by the Government is the need for an individual right of recourse for persons who are bullied at work to help resolve the matter quickly and inexpensively. Alternatively some employer groups are concerned that the proposed changes will give employees an avenue to pursue speculative claims which are already governed by the health and safety regulators. In light of the proposed amendments, it would be prudent for employers to reassess their internal policies and procedures related to workplace bullying, to ensure compliance with the proposed legislative framework and promote a workplace which is free from bullying.

Trend for 2013

OTHER CHANGES ARISING FROM THE FAIR WORK AMENDMENT BILL 2013 • provide that any period of unpaid special maternity leave taken by an eligible employee does not reduce that employee’s entitlement to unpaid parental leave; • increase the maximum period of concurrent (both parents) unpaid parental leave from three to eight weeks;

Original story found here: News-270-Tackling_Workplace_ Bullying_and_Other_Fair_Work_ Changes.aspx

• allow that leave to be taken in separate periods within the first 12 months of the birth or adoption of a child;

• enable pregnant employees to transfer to a safe job regardless of their period of service; • requires the FWC to take into account the need to provide additional remuneration for certain employees; • establish a framework under which permit holders may enter premises for investigation and discussion purposes;

• expressly confers on the FWC the function of • expand access to the promoting cooperative right to request flexible and productive working arrangements; workplace relations and preventing disputes. • require employers to consult with employees about changes to regular rosters or ordinary work hours;

Accolade OCTOBER 2013


More small businesses turning to Independent Contractors — and why it’s a potentially dangerous move A recent SurePayroll study (http://blog. august-2013-scorecard/) says that 22% of small business owners are more likely to hire independent contractors than full-time workers in the coming months.


hy? Of those who said they’re planning on going the IC route, about half said it’s just simpler to hire somebody to perform a specific task than to bring on a full-time employee, SurePayroll president Michael Alter wrote recently on Inc. com. ( What’s more, Alter said, using an IC means not having to worry about payroll taxes and benefits, which saves businesses money. At the same time, they’re able to take advantage of the specialized skills these contractors offer. Thirty-six percent of small business owners said reduced tax and benefits costs was the top reason they hire independent contractors. And (surprise!) healthcare reform comes into the picture, too. Almost one in four (23%) of the owners leaning toward ICs said they were doing so to keep their full-time workforces under the magic number of 50 — where all those complicated Affordable Care Act rules and regs kick in.

Stakes get higher

The advantages of using independent contractors aren’t hard to see. But the tactic carries some fairly serious legal risk. Why? The ACA will now require employers to put even more effort into making sure workers are classified correctly. Original story found here: more-small-businesses-turningto-ics-and-why-its-a-potentiallydangerous-move/


Prior to the passage of Obamacare, difficult economic conditions and tighter budgets sparked many employers to start using more independent contractors. Unfortunately, some of those employers overstepped their bounds

Accolade OCTOBER 2013

and misclassified individuals who should’ve been employees as independent contractors. As a result, the IRS and DOL started an all-out war to hunt down employers who misclassify workers and slap them with large fines, and back pay and tax penalties. The added incentive to classify workers as independent contractors combined with increased enforcement by the IRS and DOL is a dangerous cocktail for employers. The inherent danger in misclassifying employees as independent contractors grows exponentially when the clock strikes midnight on Jan. 1, 2015 — that’s when enforcement of the shared responsibility requirement will kick in. At that point, the penalty for misclassification could go far beyond paying the now standard-fare IRS and DOL fines and enter the zone of uber-expensive Obamacare fines.

What if you were audited?

The ACA’s shared responsibility requirement states that large employers (those with 50 or more full-time equivalent employees (http://www. must offer its employees “minimum essential coverage.” (

health insurance on an exchange — then the employer must pay a $2,000 per-employee penalty for every full-time equivalent employee on staff (minus the first 30 employees).

First and foremost, when classifying workers, follow the IRS’ three-point checklist (http:// ) for determining a worker’s classification:

So how would this impact an employer guilty of misclassification?

1. BEHAVIORAL CONTROL. The IRS says if your company has the right to control or direct not just what work needs to be completed, but how it gets Say your company employs 45 full-time employees. completed, the worker is most likely an employee. It considers itself a small employer under Obamacare and therefore isn’t subject to its 2. FINANCIAL CONTROL. There’re two financial shared responsibility requirement. Therefore, it signs that can indicate whether a worker is an doesn’t offer health coverage to its workforce. independent contractor: The person is most likely an independent contractor if he or she But your company also uses 35 independent A) has a significant personal investment in contractors. If an audit reveals those the work, or B) can incur a profit or a loss. contractors are actually full-time employees, your company will become a large employer 3. TYPE OF RELATIONSHIP. The IRS also looks subject to Obamacare’s shared responsibility at how the worker and company perceive the penalty — which will be quite expensive. relationship. For example, if the person receives benefits — like insurance, a pension or paid leave The feds will say you have 80 full-time employees — that’s a giveaway the person’s an employee. who aren’t being offered health insurance. It’ll • There are also several telltale signs independent then subtract the first 30 employees from the contractors should actually be employees: number, giving you a total of 50 — for each of • They don’t have a business license whom you’ll have to pay the $2,000 penalty. • They don’t have their own place of business That’s $100,000 per year. • They lack their own equipment That penalty, however, can be broken up into • They are solely dependent on your business, or one-month increments until your company • They perform the same work as comes into compliance with the ACA. So the those classified as employees. penalty is actually $8,333 per month — in addition to the other fines, back pay and tax If any of these conditions apply to penalties the feds are likely to slap you with. independent contractors working for you, it’s time to revisit their classification.

If a large employer fails to offer minimum essential Rules of the IC road coverage to at least one full-time employee — So how can companies protect themselves and that employee receives a federal premium from classification audits and/or claims tax credit or cost-sharing reduction to purchase of employee misclassification?

In addition, for the feds to consider someone a bona fide independent contractor, the workers must be in business for themselves, have the power to use their own employees or subcontractors and should NOT be working full-time for your company.

Does your organisation really have a workforce strategy?


A workforce strategy is critical to making the most effective decisions about managing people, performance and risk, but according to expert Colin Beames, very few organisations actually have one.

eames, the director of Advanced Workforce Strategies (http://advancedworkforcestrategies. com/), says given that people management can amount to 30-to-80 per cent of an organisation’s costs, the business case for developing a workforce strategy would appear to be “overwhelming”. Too often, however, business goals, plans and strategies are developed without any accompanying detail describing how people will be managed and assisted to achieve what the business has set out to do. Beames says in a recent HR Daily webcast (http://www. that while many organisations have bundles of HR policies and practices, and some undertake a form of workforce planning, succession planning and talent management, this is very different from having developed an integrated, whole of workforce strategy. A workforce or human capital strategy is an important form of asset management, and is the sum of actions taken to acquire, retain, develop, motivate, and deploy human capital in the service of an organisation’s mission - it goes “well beyond” workforce planning, he explains. Further, a workforce strategy shouldn’t be confused with an HR strategy, which is focused on transactional, policy and process functions, he says.

Signs that you don’t have a strategy According to Beames, factors that suggest your organisation might not have an effective workforce strategy include:

• applying a “one size fits all” HR policy approach, by paying all employees at the market midpoint, for example; • using the same recruitment process for all positions; • adopting the same employment value proposition (EVP) for all roles; • reporting turnover only for the workforce as a whole; • segmenting the workforce on an organisational level or job/salary level basis; • using the same performance management system and forms for all roles; and • not defining a methodology for identifying critical roles, or those that should be outsourced. These practices are “a recipe for mediocrity”, he says, and can indicate that an organisation is not differentiating its workforce roles sufficiently. “They indicate a complete lack of understanding of how the characteristics of roles vary and their importance to the execution of the business strategy and business outcomes.”

Two guiding principles

Beames says two principles should guide development of a workforce strategy. Original story found here: nl06_news_selected.php?act =2&stream=All&selkey=2756 &hlc=2&hlw=

The first is workforce segmentation, which includes identifying various role categories (critical roles, specialist roles, those roles suitable for outsourcing, and so on) and differentiating HR policies and practices for those various roles.

“Segmentation is the key to treating workforce assets as a portfolio that can be managed and analysed,” he says. The second principle is strengthening organisational critical capability and the core competencies connected to achieving business goals and sustainable competitive advantage. “Those roles that are more closely linked to these capabilities and competencies, and their drivers, should attract disproportionate investment,” he says. Beames says best practice in developing a workforce strategy is about identifying the principles underlying the choice of practices, rather than the practices themselves. He recommends combining a number of human capital models, including: • the five ways of building human capital (developed by Wayne Cascio); • the psychological contract (Guest), as a basis for determining the EVP; • a skills-based workforce segmentation model (Lepak and Snell), which analyses roles according to their value and uniqueness; and • the people data cube, which defines three categories of HR data and allows professionals to analyse numerous scenarios, such as the turnover of high performers, to understand the risks and strengths of the organisation. Ultimately, the approach should result in a document that clearly articulates how existing HR policies and practices are aligned to the business strategy, and guides how to reconfigure the workforce, report HR data, and make better people decisions, Beames says. “Those who can effectively translate their business strategy into an actionable workforce strategy can drive a new kind of competitive advantage - one that is extremely difficult for others to imitate,” he adds.

Accolade OCTOBER 2013


EU Study Demonstrates Urgent Need for VAT Rethink


The European Commission has published a new report on the VAT Gap across 26 member states in 2011, revealing that 18 percent of member states’ theoretical valueadded tax-take goes uncollected owing to fraud and evasion, legal tax avoidance, bankruptcies, financial insolvencies, miscalculations and the poor performance of tax administrations.

he study, funded by the Commission, has been released to back up its efforts to win support for a substantial reform of the VAT system in Europe, as well as its wider campaign to clamp down on tax evasion. The VAT Gap is defined as the difference between the amount of VAT that could theoretically be collected, and the actual VAT collected by member states. Prior to this study, the most recent estimates for the VAT Gap dated back to 2006. The study newly includes statistics from Bulgaria and Romania, but not Croatia, which wasn’t a member state when the statistics were collated. Figures from Cyprus are not included in the study either, due to ongoing data-collection reforms. The research shows that the VAT Gap across 26 member states in 2011 amounted to EUR193bn (US$261bn), or 1.5 percent of these states’ combined gross domestic product (GDP).

Original story found here: news/EU_Study_Demonstrates_ Urgent_Need_For_VAT_ Rethink____62107.html


Accolade OCTOBER 2013

Italy (€36bn), France (€32bn), Germany (€26.9bn) and the UK (€19bn) contributed over half of the total VAT Gap in quantitative terms, owing to the size of their economies. Relative to the size of their economies, Romania (€10bn), Greece (€9.7bn), Lithuania (€4.4bn) and Latvia (€0.9bn) were the countries with the largest VAT Gap in 2011.

The study shows a marked upward trend in the VAT Gap in many member states since 2008 as a result of the economic crisis. This was especially the case in Spain, Greece, Latvia, Ireland, Portugal and Slovakia. On average, the VAT Gap across the EU increased by 5 percentage points once the economic crisis hit. Commenting on the figures, Algirdas Semeta, Commissioner for Taxation, said: “The amount of VAT that is slipping through the net is unacceptable; particularly given the impact such sums could have in bolstering public finances. However, there is also a positive message to be drawn from today’s findings. Our ambitious reform of the VAT system, the EU measures to combat tax evasion and our recommendations for national tax reforms, are all targeted in the right direction. We know the problem; we have identified solutions to it, and now it’s time for member states to act. Today’s figures will serve as a baseline to assess their progress in improving VAT compliance in the years ahead.” Critically, the study also assesses the Policy Gap, looking at the difference between the yields member states could achieve if they applied uniform taxation to all consumption, compared with the revenues actually received due to the various tax expenditures in their systems.

The study shows considerable dispersion in the Policy Gap across member states, ranging from the lowest in Romania (14 percent) to the highest for Spain and Poland (48 percent). The Commission underscored that the Policy Gap is a significant figure to take into account when considering how member states could use their VAT systems to better effect for fiscal consolidation. In fact, the average Policy Gap (36 percent) is approximately twice as high as the average VAT Gap (17 percent) across the EU. The Commission pointed out that this shows that the most important loss of VAT revenue is not due, in fact, to non-compliance but due to policy choices which have resulted in multiple rates and exemptions in national tax systems. “This confirms the Commission’s consistent position that member states should broaden their tax bases and minimize exemptions and reductions in order to improve the efficiency of their tax systems. This would not only result in substantial new revenue, but it would also create simpler tax systems for businesses to work within, thereby facilitating greater compliance,” the Commission said.

“Today’s report also suggests that complicated tax systems with multiple rates can contribute to non-compliance. Therefore, the Commission’s repeated call to member states to broaden national tax bases and to limit tax exemptions and reductions, should be given particular attention. Not only would this help simplify tax systems, but it may enable member states to avoid standard VAT rate hikes.” Discussing recent measures taken to tackle fraud, including the Quick Reaction Mechanism, and also its ongoing review of the EU VAT regime, the Commission highlighted the importance of the forthcoming Brussels Tax Forum, which will bring together high level tax experts from across the EU on November 28, 2013, to focus specifically on how VAT can be made more efficient.

Acrede Chooses Jaspersoft’s Platform to Provide Real Time HR & Payroll Reporting and Analytics in the Cloud

Acrede believes in providing organisations with technology and services that enable them to effectively deal with the challenges of global workforce management and payroll delivery. This is one of the main drivers behind this partnership, as industry leading reporting meets with unrivalled global payroll capabilities to improve organisational processes.


ondon, UK & San Francisco, USA – October 1st 2013 - Jaspersoft, the intelligence inside apps and business processes, today announced that Acrede HR & Payroll Solutions Limited, the global payroll company, has chosen to deploy Jaspersoft inside its cloud-based Acrede Touch application suite. Acrede required an embeddable business intelligence (BI) solution to allow its customers to produce reports drawn from its HR & Payroll database to better understand their business processes. Acrede’s cloud technology removes the challenges that organisations face by centralising global workforce management, payroll processing and payroll reporting. The Acrede Touch cloud application suite is simple to implement, highly configurable and can be accessed from any device, anywhere in the world, securely in real-time. Jaspersoft’s Embedded BI has made Acrede’s SaaS application and their users more intelligent, raising the opportunity for operational applications to deliver greater end user engagement and value.

“HR & Payroll involves a wealth of important information that can shed light on some of the more necessary business processes and the costs that are incurred. Jaspersoft’s embeddable BI solution provides our clients with the ability to quickly generate and report on any information from within our application,” said Karen Paterson, CEO at Acrede. Neil Barry, Manager Northern Europe at Jaspersoft said, “We are very pleased that Acrede has chosen Jaspersoft to complement their innovative Payroll solution with new self-service reporting and analysis capabilities for business users. It’s a great example of how analytics delivered in the context of an application can drive significant value and save money at the same time.” Acrede originally deployed Jaspersoft’s open source Community Edition reporting functionality when it was built three years ago, but has now upgraded to the full BI Suite, to provide a more sophisticated reporting tool to match the development of the rest of Touch application suite. Touch Reports, the reporting area of Acrede’s solution, is a major Unique Selling Proposition (USP) when it comes to centralising and simplifying global HR & Payroll.

Accolade OCTOBER 2013


Payroll: The Republic of Korea

Photography: Gary Wallis.

With the world’s 15th largest ecomony we take a look at South Korea’s key employment rules


he Republic of Korea has been progressively walking the path to mature democracy and economic prosperity. With its modern technology and rich cultural heritage, South Korea’s economy is the 15th largest in the world. Also among Korea’s greatest strengths are its excellent pool of human resources and its optimal business environment. Despite the legacies of the Cold War that still exist on the peninsula and having global economic crises disrupting, South Korea has been demonstrating remarkable capabilities in dealing with these challenges. Some measure includes its central government, in conjunction with its provincial and municipal governments, working consistently to overhaul regulations and systems related to foreign investment in terms of law, taxation, labour, financing and accounting, and aim to upgrade them to international standards. With measures in place, employers are largely concerned with recruiting new employees and whether they are complying with the employment law and payroll obligations.


Accolade OCTOBER 2013

The following are some key employment rules in Korea: • The Minister of Employment and Labour (MOEL) determines by August 5 of each year the minimum wage to be applied for the following year. Before making this determination the MOEL seeks the recommendation of the Minimum Wage Council, an executive agency established pursuant to the Minimum Wage Act. The minimum wage may be fixed on an hourly, daily, weekly or monthly basis. From Jan. 1 to Dec. 31 2013, the minimum wage for workers covered is KRW 4,860 per hour. This is also equivalent to a daily rate of KRW 38,880 (8 hours a day) and a monthly rate of KRW 1,015,740. • Companies, with 10 or more employees, in Korea need to have its employment conditions documented in a “Rule of Employment”. This has to be filed with

the Labour Authority as per the “Labour Standard Act”. Either one “Rule of Employment” or different “Rules of Employment” by employment type or occupation type are allowed. Employers are also allowed to prepare its own “Rule of Employment” but is obliged to hear opinion from at least 50% of their employees or get consent where an amendment will lead to worse off working conditions. • An employer shall establish a retirement allowance system whereby an average wage of more than 30 days shall be paid for each year of consecutive years employed as a retirement allowance to a retired worker; however, if the worker was employed for less than one year, this shall not apply. This mandatory retirement allowance should be paid in cash when employment is terminated no matter what the reason for termination. If employer and employee agree to pay more than this basic amount, the multiplier must be stipulated from the internal by law.

Income tax table for 2013

• Employers are encouraged by the government to switch from retirement allowances to retirement pension, because retirement allowances are typically spent before employee’s later years. Defined benefit (DB) or defined contributions (DC) are two types offered in retirement pension. New companies are obliged to establish a DB or DC retirement pension plan within a year after formation of business. • Taxes and social security charges are deducted through monthly payroll with the payment of individual income tax and social security charges withheld due by the 10th day of the following month. • The National Pension Scheme is a social insurance scheme. The contribution of workplace based insured persons is equally shared by the employer and the employee (the insured person), while individually insured persons, including voluntarily insured persons and voluntarily & continuously insured persons, pay all amount of their contributions themselves.

• The contribution is calculated by multiplying the worker’s reported (by the employer) monthly income by the 9% rate (between minimum KRW 240,000 and maximum KRW 3,890,000). Both the employer and the employee each pay an equal amount of the required 9% contribution. The employer deducts 4.5% from the employee’s wage and must make the matching 4.5% contribution payment at the same time. • South Korea has a National Health Insurance (NHI) system, which is compulsory and required by Korean law. It is paid by an individual’s employer and is taken from the employee’s salary; half of the total contribution is paid by the employer and half by the individual at approximately 3.1378975% respectively. The contribution is proportional to the wage earned with an income ceiling of KRW 78.10 million per month for the monthly contributions.

• Employers would be required to pay approximately 0.60% to 35.40% of total payroll for industrial accident compensation insurance, which would be divided into 4 quarterly payments. Insurance payment rate may vary depending upon the total payroll amount and the type of industry. • Employment insurance system has several subcomponents within the system, such as the employment stabilisation program, the job skills development program and unemployment benefits, etc., and the calculation of the employment insurance payment is rather complex, taking into account of insurance fee rate applicable to each component. Contribution rate approximately 0.80% to 1.40% for employers and 0.55% for employees

Taxable income bracket

Total tax on income below bracket

Tax rate on income in bracket

From KRW

















300,000,000 15,900,000






• Employers are required to withhold payroll taxes monthly, finalize their tax liability, and issue a tax settlement certificate at the end of the tax period with the tax year-end 31 December and tax return due on 31 May of the following year. • Child benefit allowances and Meal allowances are commonly referred to as non-taxable income. Non-taxable allowances must be paid as such as well as being shown separately. Allowances that are paid to compensate expense incurred such as car allowance may be excluded as well. • It is required for employers, by “Labour Standard Act”, to give 30 days advance notice of dismissal to any employee.

Accolade OCTOBER 2013


About Indonesian Payroll As the largest economy in Southeast Asia we take a look at the national specifics of payroll in Indonesia


ndonesia has the largest economy in Southeast Asia and is one of the emerging market economies of the world. The country is also a member of G-20 major economies. Foreign investors are primarily attracted by Indonesia’s wealth of natural resources, its large and cheap labour force and relatively high domestic consumption. Whilst it is understood that there are benefits in Indonesia’s emerging economy, the labour environment is becoming complicated due to the frequent changes to the labour laws and regulations. The following sections of this article present the minimum considerations on understanding the statutory requirements on worker’s compensation. Indonesian tax residents are required to file annual individual tax returns when their total income derived from sources in and out of Indonesia exceed the minimum threshold, which is between IDR24,300,000 for a single individual and IDR32,400,000 for a married individual with three children/dependants effective from 1 January 2013. Non-residents are taxed on income from Indonesia only, at a final flat rate of 20%. Spouses may choose to file jointly or separately. The law requires couples with separate Tax Identification Numbers to calculate the tax payable based on the combined family gross income, then report the tax payable in each tax return based on the prorated income.


Accolade OCTOBER 2013

The obligation to withhold, remit, and report tax on cash compensation paid in connection with employment rests with the local employing entity. Income tax withheld by employers must be remitted on a monthly basis by the 10th of the following month and reported by the 20th of the following month. Whereas annual individual tax return should be filed by 31st March of the year following the end of the calendar year. If there is any amount due, the payment has to be made before the tax return is logged.

Social Security Workers (Jaminan Sosial Tenaga Kerja or “Jamsostek”)

The obligation to remit and report tax on income received from non-employment sources for a calendar year, such as interest, dividend, rental income, and capital gain, rests with the individual.

An employer who has implemented its own healthcare program for workers with benefits, which is better than the basic healthcare package under the Jamsostek program, is not obligated to participate in the Healthcare security.

An individual taxpayer is obliged to comply with registration, payment of monthly instalments, lodgement of an annual individual income tax return and deregistration. In order to file a tax return, an individual must register to obtain a tax identification number (NPWP- Nomor Pokok Wajib Pajak).

Manpower Social Security Scheme (Jaminan Sosial Tenaga Kerja or “Jamsostek”): all employers employing ten or more employees are required to participate in the Jamsostek program. Under this Law, those employers are obligated to cover their employees through the Jamsostek program and make contributions to the programs for the benefit of the employees.

PT Jamsostek is the body that administrates Employee Social Security. The Social Security program provides basic protection to meet the minimum requirements for workers and their families, by providing certainty of ongoing revenue streams of family income as a substitute for partially or completely lost income, due to social risk. PT Jamsostek (Persero) provides four protection courses, which include the Employment Accident Insurance Program (JKK- Jaminan Kecelakaan Kerja), Death Benefit (JK- Jaminan Kematian), Old Age Security (JHT- Jaminan Hari Tua) and Health Care (JPK- Jaminan Pemeliharaan Kesehatan), for the entire workforce and his family.

Provident Fund Benefit The Social Security Program is the basic protection for workers who aim to ensure the security and assurance of social and economic risks. The program is the guarantor of the current means of receiving income for workers and their families, resulting from the occurrence of social risks in financing, affordable by employers and employees. Socio-economic risks addressed by this program are limited during the times of accident, illness, pregnancy, maternity, disability, old age and death, which result in reduced or cut off labour income and / or require medical care of the Implementation of Social Security.

Old Age Security Program (JHT, Jaminan Hari Tua) The Old Age Security Program is intended as a substitute for labour income due to disconnection of death, disability or old age. The Old Age Security Program provides assurance that revenue receipts are paid at the time an employee reaches the age of 55 or has fulfilled certain requirements. Old Age Security Program contributions are 3.7% for company contribution while 2% for charged labour.

Health Care Benefit (JPK, Jaminan Pemeliharaan Kesehatan)

Death benefit (JK, Jaminan Kematian)

JPK is one of the Social Security programs that helps employees and their families cope with health problems. Ranging from prevention, care at health clinics, hospitals and treatments, all provided effectively and efficiently. Any labour that has followed the JPK program will be given a KPK (Health Care Card) as proof of identity to get health care.

Death Benefit is for the heirs of the Social Security program participants who died for a reason other than work accidents. Death collateral is required for alleviating the burden of families for funeral expenses and compensation in the form of money. Employers are obliged to bear the tuition guarantee program for 0.3% of deaths where a guarantee of death was given as IDR 21 million, consisting of IDR 14.200.000 in compensation for the death, compensation for funeral costs at IDR 2 million and further periodic compensation.

JPK dues paid by the company are: • Three percent (3%) of wage labour (max USD 1 million) for single workers • Six percent (6%) of wage labour (max USD 1 million) for family labour • Basic calculation of the percentage contribution from wages as high as Rp 1.000.000,-

Work-Related Accident Benefit (JKK, Jaminan Kecelakaan Kerja)

Accident, including diseases caused by work is a risk that must be faced by most workers. To overcome the loss of part, or all, income caused by the existence of social risks such as death or disability due to accident, the guarantee of work accidents is needed. Health and safety of workers is the responsibility of employers, so employers have an obligation to pay a guarantee fee, which ranges from workplace accidents, 0.24% - 1.74% depending on the type of business.

As mentioned earlier, there are frequent changes in the labour laws and regulation and because of this, workers’ compensations are affected. Furthermore, these changes present challenges in keeping the workers’ compensation up to date. Payroll information systems are a great tool in keeping up with the changes in the workers compensation as it is user-friendly, efficient and provides assurance on compliance to the ever changing labour laws and regulations.

Employment Accident (JKK) provides compensation and rehabilitation for workers injured at the times between when they left to go to work until arriving back at home, or if an employee suffers from illness due to the employment. Contributions for JKK are fully paid by the company.

Accolade OCTOBER 2013


Understanding French Payroll French payroll sometimes appears complex compared to that of the English, just because of the length of the French payslip!


his seems difficult to comprehend, especially when you understand why there are so many lines of deductions for taxes on wages. In general, an employee in France pays between 20% and 25% of taxes on his salary spread over 5 major points: 1. Health and social security 2. Retirement 3. Unemployment insurance 4. Taxes 5. Other The deductions are calculated on a basis of Bands A, B or C that represent the monthly limits of social security. The monthly ceiling for social security in France is €3036 and you should know that there are 8 ceilings divided as follows: - Band A = 1 scale (plafond) who is €3086 - Band B = 1 to 4 monthly ceilings from €3086, €6172, €9258 to €12344 - Band C = 4 to 8 monthly ceilings from €12344, €15430, €18516 to €21602

Photography: Gary Wallis.


The French social legislation has set a National minimum wage at €9.43 per hour, or €1430.22 per calendar month. This amount is reviewed and amended if needed twice a year on 1st January and/or 1st July, depending on the Government in place and inflation levels.

Accolade OCTOBER 2013

2. Retirement/Pension • “VIEILLESSE”: contribution “vieillesse plafonnée” using the Band A with a contribution of 6.75% employee and 8.40% employer. There is also the “Vieillesse déplafonnée” which is based on the gross salary with a contribution of 0.10% employee and 1.60% for the employer. This deduction is used to fund the general retirement fund managed by the State. • AGFF (ASSOCIATION FOR THE MANAGEMENT OF THE FUND’S FINANCING OF THE AGIRC AND ARRCO): concerning the supplementary pension which the basis of calculation uses all the 8 levels of the monthly social security and the status of the employee (manager or not).


• ASSEDIC: contributions limited to 4 monthly ceilings (Bands A + B) with 2.4% of the employee share and 4% for the employer.

1. Health and social security

• FNGS (National wage guarantee fund): dues only paid by the employer at the rate fixed by 0.30% (since April 1, 2011). Unemployment insurance paid if they were to stop paying his/her employee.

Includes: • SICKNESS: the calculation uses the gross salary; the employer’s contribution is at the rate of 12.80% while the employee pays 0.75%. This deduction is used to fund the national health insurance system.

• ACCIDENT AT WORK: the rate is set each 1st January for each company. The rate depends on the number of accidents at work registered by Social Security for each employer. This is an employer’s payroll charge based on the gross salary. • WIDOW/WIDOWER’S INSURANCE: contribution of 0.10% based on the gross salary and only paid by the employee.

• APEC (Association for employment of managers and executives): contribution on the basis of the Bands A and B with a rate of 0.024% for the employee and 0.036% for the employer. Unemployment insurance for managers. • AGS (insurance executive salaries): insurance to be paid to the employee should the Company they work for go out of business. It’s paid by the use at the rate of 0.30% of the Bands A to B.

4. Taxes FNAL (National Fund for housing): • HOUSING BENEFIT CONTRIBUTION TAX. In France it is not uncommon for families to receive a monthly government allowance to help pay their rent (like a housing benefit). The contribution is 0.50% on the basis of the gross wage is only paid by the employer for companies of employing 20 or more workers. Employers with fewer than 20 employees contribute on the basis of Band A and no more than 0.10%. • FAMILY BENEFITS: tax that is used to finance the monthly government allowance that most families with children receive. This contribution is paid by the employer on the basis of gross wage at a rate of 5.40%. • CSG (GENERALIZED SOCIAL CONTRIBUTION) AND CRDS (SOCIAL DEBT REPAYMENT CONTRIBUTION): deduction which is used to pay off the debts and deficits that some social service agencies incurred during the early nineties.

5. Other deductions • COMMUTING ALLOWANCE/ TRANSPORT CONTRIBUTION: Compulsory non-taxable payment to the employee that depends on the distance of the worker’s residence and Company location. For example, in Paris and surrounding, the use is to pay back up to 50% of the employees monthly train ticket. • MEAL VOUCHERS: non-compulsory (but quite common in some industries) non-taxable payment towards meals and subsistence. The company sometimes gives to each of its employees’ one meal voucher per day worked in the office. The company pays between 50% and 60% of the cost of the meal voucher, the rest is withheld from the employee’s net salary. The highest possible lunch voucher face value is € 10.42. So in summary there is not that much difference between French payroll and English payroll: the main difference is that the English show the social security deductions in one line and leave it to HMRC to split contributions between health, retirement, etc. The French play on transparency in accordance with the social legislation and show where both the employee and employer money is allocated. There are other nuances with French payroll but if it is explained simply as we have done so above then most people can understand it! If there are other queries you have on French Payroll our experts are happy to assist in any way they can. Contact us at and we can share our knowledge and improve your business processes.

Accolade OCTOBER 2013


Is the Landscape of BPO Changing? The industry is littered with case studies of abandoned projects, contracts rolled out with SLAs being broken, but managed by the outsourcer. New developments in technology is changing the business map. ver the last 20 or more years, we have seen


enormous changes in technology and services. It could be said outsourcing was the buy-in to a solution for a global template for technology and services. It enabled a company that did not have the necessary skill and expertise in-house to outsource administration, a major part of which would be an ERP delivery and business process, re-engineering and a migration de facto, into a shared services environment. We have all learnt, I hope, best practice in this respect; different BPO companies delivered this with differing levels of quality. I think there are more horror stories than there are success stories. The industry is littered with case studies of abandoned projects, contracts rolled out with SLAs being broken, but managed by the outsourcer. When it comes to contract renewal, businesses could insource or obtain a technology upgrade by continuing the engagement. Karen Paterson MBA, Dip BA, ACIB ATT Group CEO Acrede


Accolade OCTOBER 2013


o where is this all going to go? Cloud technology will disrupt this model. So now let us explore the reasons why.

The major BPO providers have been restricted by the size of deals they can handle for a number of reasons; these include but are not limited to: • Inflexible technology that will not scale down to small numbers • Languages – it used to be hard to find the right skill base in one centralised location to support smaller country head count especially with tier one voice support • Sub - contract of services for smaller countries could not be made profitable. This has forced an approach of a minimum deal size and minimum size per country as a part of the overall risk management and profitability assessment. Capability has also been an issue. Alongside this, the positioning of the major BPO players in the world was changing. Many small companies were becoming international. The problem domain was control visibility and compliance over the countries which could not easily be catered for with in-house skills, especially payroll. This could be overcome with larger companies, albeit very manual and hard to manage, but for less than 2,000 employees (which is a sizable business) it was nigh on impossible. Smaller international businesses face the same problem as large multinational companies. They have a globally diverse employee base; they need control visibility

(as stated above) and accurate information to manage their businesses. They need a good HCM system, they need to automate processes to drive efficiency and, most importantly, be able to pay their people accurately and comply with local country legislation. They cannot afford traditional outsourcing. A bureau service in every country simply does not work because there is decentralised information. They cannot afford a traditional ERP; regional systems are a balance but do not really work and most are not truly regional because they are a data mash or aggregation of local services which are expensive. Large multinational conglomerates face a similar problem too. They will most likely have grown by acquisition, meaning different product lines and each division having the equivalent to a SME’s number of employees per entity. Conglomerates are commonly using an ERP system to manage out of date HR master data that requires either an upgrade or a new installation and is feeding payroll with multiple files that are in the wrong format. Also, there is often no localised data and it is frequently out of date. This type of situation can easily start to become unstable and if you do not pay your people correctly, your organisation can be severely disrupted. Then, finally, let’s look at the retail industry which, by default, will have a mini business per retail outlet. No matter how good the management KPIs and accounting controls are, these are only as good as the information they

can be measured by. This type of organisation is often using its own communications network for global ERP access which can suffer hugely from latency. It is very expensive to build a global infrastructure and pay for your own MPLS. Payroll solutions tend to be regionally or country based and very fragmented with low use of ERPs and lots of spread sheets. There are many other sectors that suffer the same way.


ffshoring was once seen to be the panacea for outsourcing with there being a high skill base and a way of lowering costs. Again there are many case studies of difficult implementations, issues with telecommunications, bandwidth infrastructure, staff labour turnover and often staff just doing the wrong things. The call centre approach is definitely no longer vogue in the western world. During the growth period of offshoring, information security seemed to be forgotten: there have been horror stories of data being sold illegally which have certainly brought this to the forefront of every organisation’s compliance programme. The final mix is the aggregator model which consolidates the data from the above solutions, often badly. Our last magazine explained the broken nature of the aggregator model which revolves around the poor quality of service, the elongated pay cycles, all fed by an ERP system with incomplete data output files, sometimes multiple files that the payroll system cannot easily accept because payroll needs a complete

Properly designed cloud based services can give the customer a new choice. Welldesigned software in this environment can therefore can give businesses the choices they need in order to improve their global processes. set of specific data. The result often leads to a lot of people re-keying, as well as manipulating data in Excel. This takes the organisation straight back to the decentralised model, but to their benefit, it is often the supplier who provides one contract and one set of very nice unlimited liability clauses and a SSAE16 certificate alongside a SLA. It is astonishing that through the aggregation method, the SSAE16 certificate can be maintained. This will be the subject of another paper. This broken model has lost the suppliers a huge amount of money as it cannot make a working business model. Bankruptcy of your supplier is a high probability with a bad outcome all round. All of these problems are driving the change we are seeing in the market and new technology is accelerating this. The advance in cloud technology is the enabler for this change. Cloud based solutions allow the technology service provider to match the cost of hosting and supplies the technology needed in order to deliver the service to the customer. Properly designed cloud based services can give the customer a new choice. Well-designed software in this environment can

therefore can give businesses the choices they need in order to improve their global processes. There is then the issue of service. Companies considering outsourcing really need a solution that can scale up as well as down, as well as a boutique approach of insourcing and outsourcing, to obtain “best of breed” by business process type. This is because different countries and/or divisions within an organisation will have different capabilities. Skills also differ by entity and this can significantly impact pricing. To expand this point further, an organisation is no different to a BPO company once it has established its shared service environment, using the right solution by country, which would depend on full time employee (FTE) utilization. If a business unit only uses, say, 10% of a person’s time to fulfil payroll services, then outsourcing will not reduce internal cost: it will add the cost of those services plus the outsourcer margin. There would be no reason to reduce headcount as that FTE would still be needed to perform its other duties. The maths does not add up and, in this situation, the pure SaaS solution works. At Acrede we call this the Hybrid approach. This brings the customer’s choice, guaranteed ROI and the power of selection by country or division for the business process it wants to outsource. The only way this can be managed is by a true cloud solution, which takes advantage of an elastic cloud and manages full HR & Payroll end to end insourced or outsourced; exactly what Acrede is pioneering.

Accolade OCTOBER 2013


International Payments: Making money go further


t is an obvious statement, but failing to pay staff the correct amount, on the right day, to the right destination depletes employee satisfaction and confidence and can send the payroll department’s phones into meltdown.

Original story found here: http://www. pab/article/internationalpayments-making-money-gofurther-12341091

Representing a significant proportion of a company’s expenditure, payroll and its management is a highly scrutinised area in any organisation.

As a result, payroll often delivers the greatest operational efficiencies and professionals in this area have a clear focus on mitigating risk and delivering excellent service. In contrast, making international payments often creates a logistical headache for payroll departments. Many businesses find these payments inefficient and costly to manage, and prone to foreign exchange movements, errors and delays. This may come as a surprise as international payroll payments are predicted to grow up to as much as 10 per cent for some employers in the coming years. This article seeks to provide some insight into the often opaque world of international payments, and delves deeper into various payment methods and the benefits of using forward contracts.

The foreign exchange rate

The headline foreign exchange (FX) rate is important because it is the key component of the currency exchange. However, it fails to take account of the additional transactional charges and the timeliness and accuracy of payments; the latter two can add significant costs that can dwarf a 0.2 per cent difference in rates..

Payment delivery methods

There is a plethora of options depending on your provider and where you are sending the money from, and to. It is also quite possible that larger international companies might be advised to use more than one transfer method depending on where their employees are working and where the company that they are employed by is domiciled. This is important as international employees may be employed by offshore subsidiaries.


Accolade OCTOBER 2013

Securing Currency Requirements

You don’t necessarily have to be a currency trader to take advantage of forward contracts, which can provide certainty against currency fluctuations. These enable organisations to secure currency requirements some months in advance and the payroll costs can be predicted with greater certainty.

International payments

Although we often consider our domestic banks as global players, the reality is that most may have a global footprint in major cities and currencies, but beyond this they rarely have a local presence. Banks have created an infrastructure to overcome this issue using external systems and/or arrangements to assist identification of destination banks, and to communicate the transfer details. This is achieved in two standard ways: first, through a bank-to-bank partnership agreement and, second, by a globally accepted standard platform. If you bank with a smaller domestic bank or your employees are in remoter parts of the world, transfers between banks with no partnership agreement normally necessitates the use of a globally accepted wire service platform such as SWIFT (Society for Worldwide Interbank Financial Telecommunication). SWIFT is a member-owned cooperative of more than 8,000 banking institutions in more than 200 countries.


SWIFT’s wire service platform allows member banks to communicate financial information securely using standardised messages. Each member bank is assigned a unique BIC (Bank Identifier Code). It is also common for a bank to have more than one BIC, each representing a different operation. For example, a bank may have separate BICs for personal and corporate banking customers. It is also worth mentioning at this point IBAN, which is a

standard format adopted by banks in the European Union, Israel and some other countries to uniquely identify bank accounts with an alphanumeric code of at least 27 characters in Europe and 34 characters outside Europe (except Germany, which has 22 alphanumeric characters).

Bacs is a not-for-profit, membership-based, industry body that provides payment-processing services to its members. Bacs, which provides two principal electronic payment systems, Direct Debit and Bacs Direct Credit, is owned and operated by a 15-member group of banks and building societies in the UK.

Alternative Payment Methods

In the past five years, Bacs has been challenged by the Faster Payments Service (FPS), which allows individual customers to make a transfer to another individual of up to $100,000 and the process will take a couple of hours. However, as most payroll payments are regularly scheduled, the Bacs solution remains the system of choice for payroll processing. The service has 10 bank or building society members as well as the Bank of England, Bank of Ireland and Bank of Scotland.

Currently, most international payments use wire services. While these fulfil an essential need and may be the only option for some currencies, they can also be expensive and lengthy. Payments can take a number of days because they are often batched together. If, however, you bank with a larger domestic bank and your employees are in one of the larger economies, it is likely that a partnership will already exist between banks. Transfers are therefore processed according to a set arrangement for which each bank has an agreed fee. Many organisations are unaware of this option existing in selected currencies and, as a result, could be missing out on operational efficiencies and the opportunity to reduce cost. The logistics are simple and use real-time gross settlement systems (RTGS) where transfers of money or securities take place from one bank to another on a “real-time” and “gross” basis. Settlement in “real-time” simply means that a payment transaction is not subjected to any waiting period – the transactions are settled as soon as they are processed. “Gross settlement” means the transaction is settled on a one-to-one basis without bunching or netting with any other transaction. Once processed, payments are final and irrevocable. The two RTGS systems that everyone will be familiar with in the UK are Clearing House Automated Payment System (CHAPS) and Bankers’ Automated Clearing Services (Bacs). CHAPS provides a platform for bank-tobank (and business-to-business) same-day payment processing (either sterling or euro) in the UK. CHAPS is one of the largest RTGS systems in the world.

When making international payments, however, it is also advisable to look outside your domestic RTGS providers because some of the international operations, notably Automated Clearing House (ACH), which is a United States RTGS, can provide even greater operational efficiencies. Although ACH was developed primarily for the US domestic market and is operated by the Federal Reserve and Electronic Payments Network, it also has a very significant international reach.

The benefits of forward contracts

The final consideration for international payments is the use of forward contracts to provide certainty against currency fluctuations. Currency/FX fluctuations can be problematic for payroll and finance departments because they can significantly increase (or, if you are lucky, decrease) the payroll costs of international employees by many percentage points over the short and longer term. For example, if you have employees in the US and are paying in dollars you would have been hit by a 10 per cent increase in costs in the first quarter of 2013. Bearing in mind that the dollar is far from the world’s

most volatile currency, it highlights the huge “unknown” costs that many payroll departments can carry on what are usually some of the most expensive employees. A forward contract, more commonly referred to as a forward, can help reduce this risk and provide certainty of payroll exposure. Simply, a forward is a contract between two parties to buy or sell an asset, in this case currency, at a specified future time at a price agreed in advance. There are two broad types of contracts available: a fixed forward, which allows you to purchase select currencies at an agreed price and take delivery of your forward currency on a specific date in the future; and an open forward, which allows you to draw down smaller amounts of your forward currency when you need it over a set period. Many organisations don’t use forwards owing to a misunderstanding of the complexity of how much it will cost based on the assumption that you pay a premium for a financial institution to take a gamble on the future price. The reality is much more mundane. In simple terms, the pricing of FX forwards is just simple computation based on the current exchange rate of the currency being bought or sold and the difference in the interest rates on the two currencies involved. If interest on foreign currency is lower than your currency, you will pay a forward rate, which is higher than the exchange rate (compensation of yield to the seller) at the time. The forward rate should not be seen as a forecast of future exchange rate movements, but rather as a computation category derived from the interest rate differential. In summary, most international payroll departments should consider reviewing processes and looking at whether financial products such as ACH payments and forward contracts could help provide improved efficiencies, savings and certainty of costs.

Accolade OCTOBER 2013


NHS payroll ‘human error’ was avoidable with process automation

The payroll ‘human error’ which resulted in 8,500 workers at South Tees Hospitals NHS Foundation Trust being paid late could have been avoided with the right automation strategy.


t’s time for the public sector to take a fresh look at its IT processes. The latest news that thousands of staff at South Tees Hospitals NHS Foundation Trust were not paid on time because of a payroll ‘human error’ should be an eye opener.Most organisations rely on their IT processes more than they realise. However, many still support important procedures, such as payroll, with manual ‘human’ activities, which as we all know aren’t always perfect. After all, it only takes one little slip-up to destroy the whole workflow. Whether it’s the wrong account data being manually entered or simply the accounts team triggering payment on the wrong day – any mistake could have a knock-on effect, which not only inconveniences the payee, but also damages the reputation of the organisation in question. In the case of the South Tees payroll glitch, the board of directors understands that payment delay may cause “real hardship” to a number of affected staff and has promised to honour any bank charges caused by the delay. Considering the circumstances, this is the best course of action that the NHS could take to resolve the situation after it had occurred. However, one of the best long-term solutions would be to take a step back and look at how processes can be permanently improved, so that this situation never happens again. Of course, the most obvious solution is to remove the possibility of ‘human error’ altogether. Using process automation it’s possible to easily eliminate manual tasks, freeing up staff from repetitive mundane roles, which inadvertently, but inevitably lead to human errors. This isn’t about making staff redundant either - it’s about giving them the time to work more efficiently across the wider organisation.


Accolade OCTOBER 2013

Automation Facts

I’ll return to the topic of people enablement in a moment. However, first I wanted to explain some of the reasons that organisations, including elements of the public sector, are turning to process automation. First and foremost, the automation of repetitive processes ensures that organisations have the correct level of accuracy, speed, efficiency, consistency and quality they need every time. For example, instead of using staff to manually complete payroll data entry, businesses can now automate the process so there is no need for human intervention or risk of ‘human error’. Automatic, repeatable processes also ensure that organisations have standard practices in place, which results in faster, more reliable and cost-effective workflows. With the ability to guarantee that the same processes are conducted in the same manner and to the desired specification every time, it becomes possible to ensure quality and consistency in every step, regardless of whether you’re collecting staff data or arranging payments.

Enable rather than replace a workforce

As promised, I want to discuss one of the most common myths associated with automation – its reputation as a replacement for people. This is particularly pertinent in the UK public sector today.

With pressure currently on the government to display greater efficiency and results, but at a reduced cost, many parts of the public sector are looking closely at automation. However, while many are approaching this from the angle of automating away the need for staff, from my experience I know that the long-term value of process automation depends on how people use it. Sure, replacing your workforce with automation can reduce costs in the short term, but a far greater return on investment comes from using automaton to drive human innovation, and this requires coordination between people and the technology they use. This is because when highly skilled and knowledgeable staff are freed from repetitive, mundane tasks, they can refocus on more strategic activities. If the NHS was to empower its staff with automation, rather than replace them, it could divert its resources to updating and improving both human and IT processes across its entire operation. The long-term value of automation is to see it as an enabler—not a replacement—for people. Automation is the brawn of any enterprise, and this includes the public sector. However, human beings should still provide the insight, leadership and brains behind the operation.

‘Fire-Fighters’ in the NHS?

With automation, the public sector can move from ‘fire-fighting mode’ and avoid repeats of serious errors like South Tee’s August payroll issue. Instead of cleaning up after a glitch, it becomes possible to avoid it altogether. However, while reduced manual intervention eliminates ‘human error’, ensuring organisations get their steps completed right first time around, intelligent automation of payroll, or any other business and IT process, goes much further than this. Imagine a system where IT users automatically receive notification of tasks errors. Public sector staff would be informed of any potential issues before they have time to cause a delay. For example, if the payroll data entry isn’t correct for one employee, this can be flagged and resolved before it is passed further through the workflow and causes an issue when it reaches or doesn’t reach the correct payee. Today, many businesses already benefit from the improved visibility and control provided by automation. For example, automation of IT processes enables retailers to improve their stock replenishment processes because they can pool greater quantities of sales data and more effectively share it within a 24-hour window.

Global Reach Partners appointed by Acrede to power its global payroll solution

In addition, intelligent automation elevates IT teams from time-consuming, daily fire drills and manual process patches. Smart automation, can even be supported by a mobile phone app so that IT users can actively monitor and manage business-critical processes anytime, anywhere. There is no need for an alert notification to be missed ever again.

Time for Change

With plans to digitise court rooms and make the NHS paperless, the public sector has committed to considerable investments in technology over the past few months, as they seek to make the most of the resources available to them. Now it is vital, particularly in light of the South Tees payroll glitch, that it looks at improving the processes that support its critical IT activities. Manually completing repetitive tasks is risky, costly, inefficient and unsustainable. However, when organisations automate standardised processes, they take the best possible route to reduce error, use staff wisely, accelerate processes and improve efficiency.

Global Reach Partners Ltd is pleased to announce that it has been appointed payment provider of Acrede HR & Payroll Solutions Ltd. Whilst Acrede firmly remains in ‘The Cloud’, this strategic alliance will ensure safe and secure payments of clients’ staff globally.


xperts in corporate and personal foreign exchange, Global Reach Partners’ online payments platform is able to handle multiple payments across 130 currencies, via its network of global counterparties. Coming together, these companies will be able to offer all clients a completely safe and secure payroll service. Acrede’s payroll solution adheres to Sarbanes Oxley and SSAE16 (formerly SAS70) standards, whilst Global Reach Partners Online uses the latest international SSL protocol, advanced firewall and encryption methods.

Acrede’s CEO, Karen Paterson added, “We are very excited by the opportunity to work with Global Reach Partners, who are recognised experts in international payments solutions. This is an exciting time in Acrede’s history and it is through these strategic relationships that we are able to offer our new and existing clients HR and end-to-end Payroll solutions that are continually one step ahead of the game.’

Zeb Bhan, Senior Commercial Dealer at Global Reach Partners commented ‘We are delighted that Acrede has chosen to use our international payment platform to service the payments of their global clients. We have worked very hard to create a robust and powerful solution – which coupled with Acrede’s innovative technology, means that clients are getting the very best solution the market has to offer.’

As with private companies, the public sector has to innovate if it wishes to remain at the top of its game. It’s time to change.

Accolade OCTOBER 2013


South Africa Data Protection Measure clears Parliament and heads to the President

It remains to be seen whether South Africa’s Protection of Personal Information Bill(PoPI) --which recently cleared Parliament and will likely be signed into law by the end of 2013--will be a paper tiger if enacted, attorneys in the country recently told BNA.

The effectiveness of what would be the country’s first data protection framework law is in doubt, given the uncertain ability of the planned data protection authority to enforce it, they said. If it is strictly enforced, PoPI “will be a big additional burden for business. Many companies will be very diligent in doing their best to adhere to its requirements, some will not and some simply may not be able to due to lack of capacity and resources,” Robby Coelho, a partner at Webber Wentzel, in Johannesburg, which is associated with Linklaters, said in a statement provided to BNA Aug. 28. The law “needs to be more conservatively implemented,” or it would run the risk of negatively affecting “the country’s attractiveness as an investment destination,” he said. Original story found here: ttp:// Full text of the 80-page Protection of Personal Information Bill, as amended by the National Council of Provinces and passed by the National Assembly, is available at: r?Open=dapn-9azgbc


Accolade OCTOBER 2013

According to the European Commission, in 2011--the latest year for which figures are posted--European Unionbased foreign direct investment inward stocks to South Africa was €7.4 billion ($9.8 billion). “International companies do a multijurisdictional review and establish a country matrix before they decide

where to invest,” Coelho said. “While they want to invest in countries with strong laws and good systems, they don’t want to invest in countries that are over-regulated and where it is difficult to do business.”

Decade-Long Process It has taken a decade for the legislation to reach this point. The South African Law Reform Commission began considering the need for new data protection legislation in 2003. In 2005, the first draft data protection framework legislation was distributed for comment (4 PVLR 1304, 10/24/05). PoPI was introduced in Parliament in August 2009 (8 PVLR 1317, 9/14/09). PoPI cleared Parliament Aug. 22, when the National Assembly, the primary legislative body of Parliament, unanimously approved the bill as amended by the National Council of Provinces, according to a procedural notice released by the Legislature. The National Assembly sent the bill to the National Council of Provinces in September 2012 (11 PVLR 1447, 9/24/12).

The legislation was sent to President Jacob Zuma for consideration, according to the notice. He is expected to sign the bill into law “before the end of the year,” Pamela Stein, a partner at Webber Wentzel in Johannesburg, told BNA Aug. 28. If Zuma assents to the bill, PoPI would take effect after a minimum one-year transition period for businesses to take measures to comply with the new law. The bill allows, however, for an extension of up to a maximum three-year transition period for certain businesses or classes of information, if requested by the office of the Minister of Justice and Constitutional Development, after consultation with the newly established data protection authority. It is likely “more time will be needed for both private and public sector organizations to prepare for this complex legislation,” Coelho said.

EU Adequacy? At the time of the legislation’s introduction, lawmakers said it could help ensure a finding by the European Commission that South Africa’s privacy

regime provided a sufficient level of privacy protection consistent with the EU Data Protection Directive (95/46/ EC) (8 PVLR 1317, 9/14/09). An adequacy finding would ease the flow of personal data from the European Union to the country. Although “on paper the South African law compares favourably with the most comprehensive data protection regimes in the EU,” Stein said, “the real test for adequacy will not be in an assessment of the content of PoPI.” Implementation and compliance enforcement by the new data protection authority, the Information Regulator, will be the true test of adequacy, she said. “A big issue will be how well resourced the Information Regulator is, in an environment where other regulatory agencies are facing serious funding and skills challenges,” Stein said. Coelho agreed, saying that he “foresees major problems arising from the enforcement and policing of the legislation via the office of an appointed Information Regulator which could be flooded with issues that it will be expected to resolve.”

According to the EC, in 2011 the EU exported €26.6 billion ($35.5 billion) in goods and €7.1 billion ($9.5 billion) in services to South Africa. EU imports from South Africa in 2011 totalled €20.5 billion ($27 billion) in goods and €4.4 billion ($5.9 billion) in services, the EC said. Coelho said, however, that “South Africa’s ambition to become a major outsourcing venue for foreign companies would be adversely impacted by PoPI.” Companies will face regulation of “every aspect of the processing of personal information, from before it is even collected and throughout the lifecycle of personal information until it is ultimately destroyed,” he said. “There is a very real danger” that the new law “will discourage rather than encourage investment in South Africa,” Coelho said.

Data Protection Conditions PoPI incorporates several data protection “conditions,” including accountability, transparency, and limitations on processing of personal data tied to data subject consent, data collection minimization, and purpose specification.

Stein said that it is important that the legislation presents the overarching framework items “as ‘conditions’ rather than principles, to emphasise that they are an absolute prerequisite for the lawful processing of personal information.” The new law includes not just protection for individuals but for “juristic persons”--legal entities, such as corporations and partnerships.

 • require data subject notice of and consent to the collection and use of their personal information;  • limit the retention of data to, in most instances, no longer than necessary to achieve the purpose for which it was collected; • require data subject access and a right of correction to their collected personal information;

“This is consistent with the approach of the South African Constitutional Court that, although juristic bodies do not have all the personality rights, they do have a right to privacy,” Stein said, adding that the new law would “greatly enhance a corporation’s right to protect its confidential information.”

• create an independent Information Protection Regulator commission as the country’s data protection authority;

Consent, Breach Notice, Right to Sue

• detail restrictions on spam;

PoPI would, among many other things: •  govern the cross-border movement of personal information to require that those transferring data ensure that companies in other countries have binding corporate rules or other agreements establishing a level of data protection consistent with PoPI requirements;

• require companies to appoint data protection officers to ensure compliance with the new law and coordinate with the Information Protection Regulator;

• mandate data breach notification to affected individuals and the new DPA; and  • demand that businesses employ reasonable data security safeguards.

The new law will allow individuals to file, or have the DPA file on their behalf, lawsuits seeking injunctive redress and damages. Stein said that it is significant that PoPI introduces “strict liability for the data controller” and adds aggravated damages as “a new statutory form of damages.”

Amendments Limit Fines PoPI would give the DPA authority to carry out investigations and seek fines of up to ZAR 10 million ($960,934). The version of the bill sent to the National Council of Provinces would have allowed unrestricted fines. A previous fifth draft of the bill, released in October 2011, limited fines to ZAR 1 million ($96,093) (11 PVLR 213, 2/6/12). PoPI would allow for the imposition of up to 10 years in prison for obstruction of the activities of the Information Protection Regulator, and a prison term of up to 12 months for other violations of the new law.

Accolade OCTOBER 2013


New Zealand Employment law update Blueprint for workplace health and safety announced On Wednesday 7 August 2013, the Government announced a package of reforms that represent the most significant changes to our workplace health and safety system since the Health and Safety in Employment Act 1992 (HSEA) was introduced over 20 years ago.


Accolade OCTOBER 2013


he key changes include an overhaul of the law, additional funding for health and safety, and better coordination between government agencies. With a new Bill expected in December 2013, it is imperative for employers to learn what these reforms may mean for them. The reforms are the Government’s response to the recommendations issued by the Independent Taskforce on Workplace Health and Safety (Taskforce), referred to in our July 2013 update. With the Royal Commission’s report on the Pike River disaster as the catalyst, the Taskforce was set up in April 2012 to advise the Government on ways to achieve its goal – to reduce the rate of workplace fatalities and serious injuries by at least 25 per cent by 2020. The reform package is described in ‘Working Safer: a blueprint for health and safety at work’. It broadly accepts the Taskforce’s recommendations and the reforms will largely be led by the soon to be established, stand-alone, workplace health and safety Crown agent, WorkSafe New Zealand.

What was wrong with the HSEA framework

What does the package of reforms include?

The Taskforce found that there was no single critical factor that has led to New Zealand’s poor workplace health and safety performance and therefore there is no one solution.

• Replace the current HSEA with the Health and Safety at Work Act, based on current Australian law. The new Act and associated regulations are expected to be in place by the end of 2014

• Increase worker participation, involvement and consultation

• Develop a government-led strategy to reduce workplace harm

• Develop capability and knowledge at all levels.

Instead, there were significant weaknesses across the system and no drivers for improvement. The performance-based, selfmanagement approach that we currently have under the HSEA is still appropriate, but we have not been implementing it in the correct way. The Government considers that the package of reforms will refresh our approach to health and safety. The vision is to “work smarter, target risk and work together to ultimately work safer” and the different reforms fall under each of these three categories in the blueprint document.

• Target high risk areas through WorkSafe New Zealand, which will be operational from December 2013 • Provide for stronger penalties and court powers, more enforcement tools, and new directors’ duties (including the due diligence duty explained below). The Minister of Justice is still considering corporate manslaughter and the corporate liability framework generally • Increase the focus on occupational harm • Improve coordination between government agencies, for example WorkSafe New Zealand and ACC will create a shared programme of workplace injury prevention

• Increase collaboration between Government, business, workers and experts

These changes are intended to deliver: • Strengthened Government leadership and collaboration between agencies • A greater focus on addressing acute, chronic and catastrophic harm in high risk sectors and major hazard facilities • A balanced and proportionate system for small to large, low to high risk businesses • A well resourced regulator with a firm regulatory stance focused on the areas of most risk • Robust data, monitoring, reporting, analysis and evaluation of the system.

Key Changes for Employers

Due diligence governance and senior management

Hazardous substances

Going Forward

RESPONSIBILITY The new law would change the definition of who is responsible for workplace health and safety. Under it, the definition of a duty holder would be changed to “a person conducting a business or undertaking” (PCBU – which in Australia they refer to as “peekaboo”). A PCBU must ensure, so far as is “reasonably practicable”, the health and safety of workers and others affected by the work. The “reasonably practicable” test takes account of risks and other circumstances but is intended to be different to the current “all practicable steps” test. There may be multiple PCBUs involved in work at the same location and they must work together to meet their workplace health and safety obligations. For example, there are many PCBUs involved in a typical construction industry supply chain (construction firm, principal contractor, contractor, subcontractor, worker) and all of the members of the chain, except the worker, are a PCBU. Each PCBU in the chain must manage the health and safety of those below it, through supervision and monitoring.

CURRENTLY, INDIVIDUALS are liable for the failure of a body corporate if they directed, authorised, assented to, acquiesced in, or participated in, the failure.

CONTROLS WILL BE introduced to manage hazardous substances in the workplace, as the current legislation in this area is seen by many as confusing. In the proposed reforms, businesses using hazardous substances would only have to engage with one agency, WorkSafe New Zealand.

WHILE THESE CHANGES are significant, the philosophies contained in our current legislation, such as the current principled performance-based approach and the requirement to take “all practicable steps”, will remain the same. The changes are intended to improve the implementation of those philosophies, and the emphasis on increased leadership and collaboration, expected particularly of government, directors and senior managers, reflects this.

The new law would extend this and create a positive due diligence duty for “officers” to proactively manage health and safety in the workplace. Increasing personal responsibility and liability is seen as the most effective way of improving New Zealand’s health and safety culture and outcomes. The due diligence duty is likely to extend to directors, chief executives and other senior managers, but won’t apply to people acting on a voluntary basis who only receive out-of-pocket expenses (for example, members of a school board of trustees or unpaid company directors).

The duty will be personal, and if an officer has acted with due diligence, he or she will not be held liable for the conduct of other officers or the PCBU. The expectation is that officers will take reasonable steps to understand the PCBU’s operations and associated hazards. They will ensure that compliant health and safety processes are in place, sufficiently resourced and implemented, and verify the provision and use of the processes and resources. The duty will probably also not be dependent on there being an incident or accident. In Australia individuals’ and organisations’ actions can be investigated at any time, and it is not uncommon for improvement notices to be issued or for prosecutions to be taken if they are found to be falling short of due diligence. Original story found here: http://www.buddlefindlay. com/article/2013/08/12/ employment-law-updateblueprint-for-workplace-healthand-safety-announced

Accolade OCTOBER 2013


HONG KONG: Mandatory Provident Fund (MPF)


Accolade OCTOBER 2013

This article will focus on understanding one of the main aspects that is to be taken seriously in processing payroll in Hong Kong; that is, the Mandatory Provident Fund (MPF).


nder the MPF Scheme Ordinance, it is the employer’s obligation to ensure that each employee is enrolled in an MPF scheme. All full time and part time employees aged between 18 and 65 years old, who are employed under a continuous contract for at least 60 days, must participate in an MPF scheme. Employee and employers are required to contribute 5% of the employee’s relevant income*.

MPF Rules and Exemption Limits: DEFINITION OF TERMS: • RELEVANT INCOME: “refers to all monetary payments paid or payable by you to your employees, including wages, salary, leave pay, fees, commissions, bonuses, gratuities, perquisites or allowances (including housing allowance or other housing benefit), but excluding severance payments, long service payments, payments in lieu of notice and compensation for occupational injuries.”

HONG KONG LEGISLATION CHANGE The Legislative Council for Hong Kong passed the amendment of the minimum relevant income level and the maximum relevant income level. The minimum relevant income level has been increased from $6,500 to $7,100 per month (or from $78,000 to $85,200 per year) (the new level applies to contribution periods commencing on or after 1 November 2013). The maximum relevant income level has been increased from $25,000 to $30,000 per month (or from $300,000 to $360,000 per year) (the new level applies to contribution periods commencing on or after 1 June 2014). Accordingly, the maximum mandatory contribution amount has been increased from $1,250 to $1,500 per month (or from $15,000 to $18,000 per year)

30-DAY CONTRIBUTION PERIOD: It means that employees are not required to make contributions on the following criteria: • for the first 30 days of employment and • any incomplete payroll period that immediately follows the 30-day period (if the employee’s wage period is monthly or shorter than monthly); or the calendar month in which the 30th day of employment falls (if the employee’s wage period is longer than monthly). PERMITTED PERIOD: • In the case of a regular employee, the first 60 days of employment within which the employer is required to enrol the employee into an MPF scheme; • In the case of a casual employee, the first 10 days of employment within which the employer is required to enrol the employee into an MPF scheme CONTRIBUTION DAY : • contribution day is on the 10th day after the last day of a calendar month within which the contribution period ends (or the 10th day after the last day of the month during which the permitted period ends if this is a later date) for regular employees; • for casual employees, which are under Industry Schemes, contribution day is on the 10th day after the last day of the contribution period, or the next day after payment of relevant income for the contribution period. For those under Master Trust Schemes and Employersponsored Schemes, contribution day is on the 10th day after the last day of the contribution period (or the 10th day after the last day of the contribution period during which the permitted period ends if this is a later date)



Monthly Relevant Income

Mandatory Contributions Employer Portion

Employee Portion

Less than $6,500

Relevant income x 5%

No contribution required

$6,500 to $25,000

Relevant income x 5%

Relevant income x 5%

More than $25,000



CAPPING RULE: • Employee Mandatory contributions are subject to minimum capping of HKD 6,500 and maximum capping of HKD 25,000. Employer mandatory contributions are not subject to minimum capping though. • Voluntary contributions capping is at the sole discretion of the employee/employer. CONTRIBUTION HOLIDAY RULE (CONTRIBUTION/PERMITTED PERIOD) • The 60-day permitted period and 30-day contribution period rule for CASUAL employees in the construction and catering industries does not apply. Contribution starts on first day of employment. • The employer is exempt from making the MPF contribution if the employee terminates within the first 60-day permitted period. “Ignorantia legis neminem excusat or Ignorance of the law excuses no one” which means anyone who is oblivious of the law may not escape the consequences for violating that law for reason he/she is unaware of it. It is in this premise that it is important for each company to be adept with the labour laws.

Accolade OCTOBER 2013


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