Make Time for Timekeeping
Minutes Now Save Hours Later
About the Webinar
This webinar delves into the intricacies of time tracking regulations across the globe. Our panelists will provide an overview of what timekeeping entails, who it applies to, common procedures and policies, and the legal ramifications of reporting errors for a business.
- Key HR and Payroll Considerations when Operating Overseas
- Overview: Global Timekeeping
- Need-to-Know Regulations
- Country Spotlight: Germany, France, Spain, Mexico
- Maintaining Global Compliance
- Time Keeping Systems
- …and your questions!
Chief Executive Officer
Ragu is an experienced financial executive, award-winning entrepreneur, and leader. He helps Clients successfully navigate some of world’s trickiest business environments. In his previous roles, Ragu has served as CFO at ActivIdentity (NASDAQ:ACTI) and held leadership positions in several companies including Deloitte and NetIQ (NASDAQ: NTIQ), where he helped the company grow from $20 million to over $300 million in revenue.
Director, Client Services
Adriana is a global compliance expert who manages Client accounts for Global Upside’s PEO brand Global PEO Services. She has years of experience creating employment contracts, facilitating employee onboarding processes, and partnering with Clients across the world to communicate policies, procedures, recruitment, and standards of operation.
Director, Client Services
Suraj is an experienced HR professional who specializes in employment contracts, benefits implementation, immigration, and mergers and acquisitions. He has spent several years assisting multinational companies in various cross functional capacities. Suraj currently supports Global Upside Clients with their HR needs in over 40 countries worldwide.
Welcome to the Webinar
Hello everyone, I am Tallin with Mihi. Welcome to today’s webinar – Make time for timekeeping, Minutes Now Save Hours Later. Please enter your questions via the Q&A window at any time. We will address them in the order they are received at the end of the webinar. If we are not able to address all questions during our session, we will respond to you individually via email with the answers to your questions.
First up, I would like to introduce our CEO Ragu Bhargava. Ragu is an experienced financial executive, award-winning entrepreneur, and leader. He helps clients successfully navigate some of the world’s trickiest business environments. In his previous roles, Ragu has served as CFO at ActivIdentity and held leadership positions in several companies including Deloitte and NetIQ, where he helped the company grow from $20 million to over $300 million in revenue.
Next, I would like to introduce Adriana Vergara, our Director of Client Services for Human Resources. Adriana is a global compliance expert who has extensive experience creating employment contracts, facilitating employee onboarding processes, and partnering with Clients across the world to communicate policies, procedures, recruitment and standards of operation.
Lastly, I would like to introduce our final panelist, Suraj Sharma, our Director of Client Services for Human Resources. Suraj is an experienced HR professional who specializes in employment contracts, benefits implementation, immigration, and mergers and acquisitions. He has spent several years assisting multinational companies in various cross functional capacities. Suraj currently supports Mihi clients with their HR anywhere around the world.
Now before we dive into the main part of the webinar, we are going to give a brief overview of the agenda for today. So first we are going to start off with key global HR considerations followed by a timekeeping overview and need-to-know regulations. Then we are going to jump into country specific spotlights where we will be talking about Germany, France, Spain, and Mexico and then we will finish off the webinar by looking at preparing for Global Compliance and Time Keeping Systems.
Now it’s my pleasure to pass the time over to Ragu.
Setup and Strategy
Thank you Tallin. So, before we get into a little bit more detail on the issues surrounding Time Keeping, what it means and why you have to worry about it. Let’s just talk a little bit about setting up and a strategy of going overseas because a lot of the rules we are going to talk about today around Time Keeping or around global overseas operations. And when you talk about going overseas the first question always comes to mind is where to, where do you want to go. There are 200 countries on the planet, which country makes the most sense and that’s a business decision.
Why you are going? Do you see a market opportunity or you are going for manufacturing, for cheaper labor or resources or you are going to set up an R&D center, there is a lot of talent available? So, depending on what the reason is, you have to pick the right jurisdiction. A little bit of how you set up in that jurisdiction depends on the activity. If you are just exploring a particular country from a sales perspective then maybe a rep office or branch might make sense but if you are going to go set up a manufacturing or R&D facility then you have to think about a subsidiary and everything that comes because now you have a full-fledged presence.
For example, you need to have a full accounting system set up, not just because of payroll but because you are going to have other bills that you are going to have to worry about paying and stuff. You are going to have to think about the tax considerations of your operations. What does it mean locally? Do you have any kind of a credit come through because you are employing a lot of people there and you have negotiated something with the government of that country and also in your very early stages, in particular you may have to focus a lot on payroll funding?
The reason payroll funding is an issue in most countries because with the evolution of all of the terrorism and money laundering, the banks have tightened the rules significantly and it takes, it can take 3 to 6 months to open a bank account in a foreign jurisdiction. So, you may have already hired a person, you may have incorporated, set up everything but you can’t get a bank account opened. How do you pay those people because obviously not paying somebody for 6 months is really not an option.
Now with the setup of a hiring of people overseas comes the issue of permanent establishment and income taxation. How do you deal with this and part 2 of that depending on the nature of operations, you may face challenges around intellectual property? So, you may build an R&D team in Romania who owns the product of their research, is it the US company, is it the Romanian company. Is it the employees because you didn’t sign the right assignment clauses with your employees? So those are all things you have to worry about just in terms of very basic set up in getting the right contracts, the right templates to figure out and put in place from the first hire.
Obviously if you are going to have bigger operations in any particular geography then you have to think about maybe regional centers like in Ireland, Netherlands, Switzerland which also offer, used to offer tax advantages with the change in the tax law in the US. Some of those obviously advantages have become not as valuable but the reason for setting up shared service centers still exist because you may still have many many people in many many countries and how do you service that wide spread population in so many countries because you can’t really for a group of 5 to 10 people in a particular country.
You could not really hire an HR person, and an accountant, and a tax advisor, and a payroll person, all of that because the overhead would be way too much so you those build those shared service centers and you service that regionally. So, like an Irish center for your EMEA operations, or a Singapore center for your APAC operations, possibly Australia, things like that.
But now without spending too much time on the set up assuming you already have operations there, the real question comes about is employment. How do you employ people and how do you, what all do you have to worry about from that perspective? So, the first thing that you have to put on the side and forget is employment at will.
So, in the US, all of us are employed at will. You can quit any time; you can be fired any time without much consequences even though there are legal protections in place in the US. In most countries, outside the US, employment is a matter of contract and because there are contracts, there are more test periods and things like that.
They are enforceable, not allowing an employee to leave just because he resigned or not allowing a company to not pay somebody just because they asked them to leave for possibly extended periods of time. Most part of Western Europe, most part of the world is a very socialist type of country. So, you have a lot of rules protecting the employee and their termination.
So, there are severance requirements, garden leave requirements, things like that. And in a country like France, severance can be based on your age, your marital status, number of kids, so on and so forth. How long you work for the company. So, you kind of have to think about that upfront. And on top of all of this is collective bargaining agreements or in some countries they are known as works councils which are basically, a works council is made up of employees of the company that address the grievances and take care of the employee base.
But in countries like Sweden, you are better off having a collective bargaining agreement because otherwise you are negotiating all your benefits, everything that the employee gets from the company, one at a time, the 500 employees you have. If you have a CBA then you are only negotiating with the union and then everybody is governed by that agreement. So, it does make life much easier.
Working time regulations are basically written so that employees don’t work too many hours and employers don’t take advantage of those employees. you will get into a lot more of the working time regulations as Suraj and Adriana talk about time keeping requirements and how they apply from country to country but the basic rules are that once you tell the employee what the work requirements are and you sign the contract then the government wants to make sure that you stick to that side of your bargain and not make the employees work evenings, weekends, that kind of stuff because it is important from a work-life balance to have that free time on the evenings and the weekends.
The next item talks about the hiring and exiting and termination protection. I mentioned this a little bit and so for example in UK what happens is when you terminate somebody and you don’t want them to go work for your competitor there is a concept of garden leave where literally you are paying them to sit at home and not work but because you cannot stop somebody from making a living you are actually having to pay them for that timeframe but that does allow your competition the inability to hire somebody, have them start next day and benefit from the knowledge, possibly the intellectual property that they have gained, it is in their head from walking out the door tomorrow morning.
And like I said, in most of the world the employment is by contract so there is obviously consequences of reaching those somebody just walks out and goes starting somewhere else you are actually going to force him to stay at home and not work because that would be a breach of the contract that he has with the company assuming that the contract is well drafted, both from an employee and employer perspective. Also, in the US, as an example, there are, before Affordable Care Act came about there were no real requirements to offer any benefits to the employees.
Today we are required to offer health benefits but there is no requirement to offer any time off and for 401(k), any other benefits like short-term, long-term, disability or what have you. Just because we are a little bit of a different type of economy. When you go into Europe what you will see is that there are two types of benefits that are very very common. One the statutory requirements which is actually governed by law and that is not optional that every employer has to provide to every employee. In some countries, those might just be nominal. So, for example, in UK you have to provide a pension plan. There is no requirement to match anything.
Now most employers are doing that matching. So, what that does is puts pressure on the new employers to offer a matching and to make it worthwhile for somebody to leave another company and come work for you. So, that’s where the supplemental benefits kick in. So, you may want to offer higher level of say life insurance. You may want to offer private doctor visits as an added benefit over and above their basic health benefit.
Or maybe you offer a matching to the pension plan as an example and those are all considered supplemental benefits and that is governed by sort of management philosophy of how they want to behave be in the 90th percentile as an employee-friendly employer or be in the 50th percentile and just offer the basic minimums. So those are things that as you are starting to hire and stuff that you have to keep in mind how do you get those benefits put in place and how do you procure them and things like that.
Obviously, we have talked a lot about the employees and how that relationship is and how they come to work and all that stuff but what we haven’t talked about is staffing which is how do you find these people in a foreign country. Yes you may find your first hire through somebody you know just because they are in the same industry, they might be a friend of somebody but how do you build a team of 500 engineers in someplace and build it in a timely manner so you are not spending 3 years just through a word of mouth. So, it is important to hire a good staffing firm that has that local expertise to be able to help you hire.
If it is engineers you are looking for or if it is sales people you are looking for, make sure you that they have that expertise and are able to support you properly.
Expect the Unexpected
Now that you have people and have operations, one of the things that happen in a business from time to time is that you acquire companies or are sold to buyer then whether it is a strategic acquisition or what have you the question comes about what happens to the employees in these change of control situations. When you have an acquisition, make sure that you understand the employment laws of those countries that you are acquiring people in. Not knowing the laws or being ignorant is no excuse because these employees know their rights.
They are very very savvy employees almost all of the time and they will know when they are not being treated properly. So, if their prior employer offers a certain set of benefits you can’t just acquire that team and say ’Oh, we think life insurance of a million dollars is too much. We don’t know what we will offer. We will offer only half a million. The employees know that under the laws of that country just cannot reduce their benefits. You have to treat them the same way as they were treated by their prior employer.
So understanding the benefits that they are being offered today, understanding how many people you will have and understanding what you can provide them and what you cannot provide, not because of intent but if you are buying a division of a large multinational, you may not have enough headcount to be able to say, ‘Yes, we can provide the same level of benefits to these 50 people because nobody might be able to, might be willing to sell that benefit to you.
So, then you have to think about how to compensate the team for that benefit you are taking away. Now beyond that is the issue of managing. I talked about shared services centers earlier but then how do you manage these people. Do you build some local management within the country or a regional basis like head of EMEA or just head of each country France, Germany or UK or do you control them from a central location say in the US where ever the headquarters might be?
The reason this is important is because to manage these people, make sure they understand the work culture and the work ethic of the company. Make sure they follow through on that and they feel like they are assimilated into a larger organization vs. every location thinking they are on their own and they are separate from the mothership.
And then what you have is people not working together and you don’t get the benefits, the results that you are looking for. Obviously, we all know that EU is one economic unit. So, a lot of the rules are dictated by the EU but the enforcement of those rules and some additional rules that maybe present in the local country does cause some commonality but also some differences from country to country. And we all know about Brexit. What does that mean to the future of the Europeans living in the UK or the UK nationals living in Europe, all of that.
How do you cross the border? Even though there has been a border control point entering, leaving UK all this time, that may have to change, that may require additional procedures what have you. So, you have to think about the commonalities which are obviously to your advantage because once you know the rule you know how to apply it across various countries but you need to understand the differences of Germany vs. France vs. UK. Just for that you do not get into trouble because that common law may not apply the same way in a particular country.
May 20th of last year 2018, the European Union came out with a new GDPR rules and now before GDPR only, the data privacy rules only applied to people within the European Union but now they are applicable to any company that does business with a European company. They are much broader, much deeper, the penalties are much more severe. They can be as much as 4 percent of your global revenues of the consolidated entity. So, it can have very severe consequences.
Some of it we have seen, companies like Facebook and Google being assessed some fines but be careful, be mindful that you just cannot take the information of some employee in UK and move it anywhere in the world. You could not even bring it to the headquarter in the US and you have to build the walls around that and part 2 of this is to get the consent of employees before you can move that data. So be very careful about that because the employees are very familiar again with their rights and obligations of the employer and sometimes employers, in particular American companies aren’t treating that confidential information with same level of respect that they deserve and can cause problems.
Obviously remember that headquarter support has to be there at all times. No matter what kind of approach you take in terms of managing your local operations whether it is local regional or centralized and I always advocate for the executives to travel to these offices. Shake the hands, talk about culture, talk about ethics because these are things that eventually do bring companies together. These are things and ethical violations, FCPA violations can bring a company down. There have been many cases of companies like Morgan Stanley getting fined in China, Walmart getting in trouble in Mexico for FCPA violations even though those might have been regular business practices in those countries, they are illegal under US law.
So, you have to be mindful of the US law. You have to be mindful about teaching people what matters and doesn’t matter to you as a US headquartered company, also for that matter headquartered anywhere else because UK has its own set of bribery laws, anti-bribery laws. So you have got to be mindful of all of this and provide the right support, provide the right guidance, leadership and by showing up you are connecting with these people and they get to better know you so if there is any issue they are facing, they are willing to raise it to management and get your input and get to a better solution.
With this I am going to turn it over to Suraj.
Thank you, Ragu. So, I think it will be important to start with just a general overview of customer requirements around the world. So, one of the common considerations for employers to understand is how shift length plays in time keeping. So, shift length really refers to the maximum number of hours an employee can work and this varies by country and in some cases by region. In many countries, any time worked over 8 hours per day is considered overtime and must be compensated at the rates required by law.
Additionally, rest time plays an important factor in all countries as well. Most countries require at least 12 hours between working shift and the start and the end time between shifts should be captured in employee’s timesheet. Similarly, overtime varies by country. It also varies by time of work, number of hours worked and whether or not the work is performed on a weekend and a holiday. Employers are responsible for tracking these hours effectively and must compensate employees according to the number of overtime hours worked and by the rates required by law.
One of the main reasons why this is still important is in the event of a termination. So, at the end of an employee’s life cycle with their employer, it is very important for employers to make sure that they have adequate company records in the event of the employee raising a claim against the employer. Depending on specific countries, employees have multiple years following their termination in which they can file their claim against their employer for a variety of reasons.
In our experience, one of the most common reasons is due to unpaid overtime or the lack of tracking overtime hours effectively. Without proper timekeeping backups of timesheet, many employers have been unable to defend themselves against such claims and also required to pay additional compensation to employees upon termination.
Additionally, lack of rest time can also result in employer being assessed penalties or fine and timesheet should show the time the employee starts and ends their workday on a day to today basis. As you can see timekeeping requirements vary by country. I am going to pass it over to Adriana who will give some more specifics about some other countries.
Thank you Suraj. If you need to know regulations, just to give you an overview in Latin America, most countries mandate either a 13-month or 14-month pay in the calendar year. In China, employees take public holidays 3 times the standard hourly pay. In the UK, employers do not have to pay workers for any overtime. And more specifically in Brazil, employees have 30 mandated days off plus public holidays which is most for any other country.
Another country that we may want to do a deeper dive in is Germany as well. Now Germany is a unique country in which the timekeeping requirements by law only mandate that employer’s records, time worked over the maximum working hours per day which in Germany is 8 hours. This regulation applies to all employees including trust-based working hours but it is recommended to keep track of all working hours to ensure employees are compensated accurately and fairly for their time worked. In terms of overtime a lot of depends on the job role of the employee. So, overtime rules in Germany are fairly flexible and they are not closely regulated by law.
They are generally regulated by employment agreements, collective bargaining agreements and works councils’ agreements. In employment agreements overtime can generally be captured in the employee’s monthly remuneration depending on the location of the employee and the amount of remuneration. Remuneration caps are set based on West Germany vs East Germany standard and are dependent on the monthly remuneration the employee earns. Similarly, for overtime any hours worked over the maximum allocated working hours per week will be compensated as paid time off rather than premium pay.
Another country that I think is interesting to go over is France. Now France is a much more complex country than Germany than many of the much more complex countries in the EU to manage time. It is important to know that it is mandatory in France due to the complexities of managing employee work hours to keep records of time worked for all positions. These timesheets are subject to audit by the French authorities upon request and that also includes backups on vacations applied for by the employee, vacations approved by the employer and vacations rejected by the employer as well as the business rationale behind the vacation being rejected.
It is also important to know that the maximum legal working hours in France is less than in most countries around the world. The maximum legal working hours in France is capped at 35 hours per week for all employees except those have special working conditions such as sales, executives, limited liability company managers, caretakers and residential buildings and domestic staff. Collective bargaining agreements also play a big role in France in determining the employees working time as well as whether or not employees can take advantage of the RTT, reduction of working time regulation.
Well other considerations from employers to make note of in France is the right to disconnect. The right to disconnect is not necessarily a uniquely a French law but it does play a very large role in France. The French labor law grants employees the right to disconnect from work which prevents employers from contacting employees outside of working hours. This includes emails and phone calls. In fact, many companies also have to shut off their email systems for employees once they leave the office. Time spent responding to emails or phone calls outside of working hours may constitute the need to compensate employees for additional overtime as this can be considered work outside of their normal working hours.
One example in how these French regulations and complexities impact the employers is in the event of termination. As an example if an employer did not adequately track time for their employees in France at the time of termination, the employee has the right to raise the claim that they were not compensated for overtime hours due to having to work over 35 hours per week and on weekends in order to respond to emails or calls from a US based manager for example. In this scenario, as the employer could not prove that the employee did not work overtime or did not have adequate time keeping records, they will be required to pay the employee back pay for overtime hours earned over the course of their employment.
This can in fact go beyond 3 years of employment resulting in a significantly higher payout at the time of termination in addition to additional fines levied by the French authorities on the employer for not keeping adequate records. In our experience this in conjunction with the employee’s statutory severance can result in a pay out of well over one hundred thousand euros. So, with that understanding it is very important that the employers are aware of and abide by the regulations in France for timekeeping. And now back to Adriana to share some more facts on couple other countries.
Now let’s dive into Spain. Timekeeping in Spain – Companies are required to track hours and attendance for all employees regardless of their role and whether they are hourly or salaried employees. This includes senior managers; they are not exempt from this requirement. The shift length is 40 hours per week with a maximum number of 9 hours per day. As it relates to rest breaks, if the employee’s workday exceeds 6 hours, a minimum 15 minutes rest period is required for that individual.
As it relates to overtime, overtime will be the employee’s normal salary per hour and may have an over charge anywhere from 175% to 200% in case overtime is performed on a Sunday and/or a bank holiday. Overtime pay may also be factored into their annual compensation and explicitly defined in the employee’s agreement. Employees may be limited to the number of overtime hours that they can work on an annual basis. Employers on the other hand also have the option of providing comp time off in lieu of overtime payment.
As it relates to terminations in Spain, depending on the type of dismissal, payment obligations will differ. For a dismissal related to economic or business-related separation, payment may be anywhere from 20 days of gross salary for a year of service. Unfair dismissal on the other hand will be 33 days of gross salary per year of continuous service unless the employee retired prior to February 12th 2012. Their entitlement increases to 45 days of gross salary for a year of service.
Timekeeping requirements in Mexico are similar to those explained for Spain. Companies once again are required to track their hours and attendance for all employees regardless of their role, regardless of whether or not they are hourly or salaried employees including senior managers. Let’s say for example senior managers may be exempt from overtime payments. That includes employee is working from home as well. However, time tracking requirements are recommended for both types of roles primarily for employees working from home.
By maintaining timekeeping requirements this will help support the company in providing factual information to support the actual time served by the individual during their service in the event of a future claim. For shift length, the maximum workweek is 48 hours for 6 days per week which can range anywhere from 6 to 8 hours per day, not to exceed 8 hours per day. Employees are guaranteed one full day’s rest which is generally Sunday.
As for overtime, the workday under extraordinary circumstances never exceeds 3 hours per day or 3 times per week. Overtime must be authorized in writing prior to its occurrence. As it relates to overtime payments employees will earn twice their regular hourly pay for the first 9 hours in a week and 3 times their hourly pay for any overtime hours thereafter. In Mexico for post termination claims, terminations will cost the employee will be entitled to all wages earned and benefits accrued that is all unused accrued time off plus any Christmas bonuses or known as “Aguinaldo” locally.
For terminations without cause, they are entitled for 3 months’ salary, 20 days of pay for every year of service, seniority premium which is equal to 12 days per week for every year of service, all wages and benefits earned and once again their Christmas bonus they are entitled to on an annual basis.
Preparing for Compliance
Thanks Adriana. So, what we have talked about up till now both Adriana and Suraj, a lot of timekeeping requirements. You have seen some very good examples for various countries. What is required to comply with these requirements. You heard the requirements but now you are concerned is how do I comply with this. So you have to worry about timekeeping as a basic concept, how do you track that and you need to have a system and a process because if you are not capturing it on a daily basis, the government comes to do an audit you cannot say ‘We will create it now,’ because that’s not a defense.
You have to have contemporaneous documentation and you have to have something that you can prove to the government that yes, if it is a clock in, clock out system or a self-reporting system that yes, on a daily basis, the team came in, everybody clocked in or everybody put in their start time and they put in their end time depending on their job and what not. In that timekeeping then resulted in a compliance with overtime policy. So, in particular if you have hourly employees, for example blue collar workers or manufacturing workers, you need to make sure that they are paid overtime right away with a regular payroll cycles.
Timekeeping also has consequences not just of overtime but also for leaves and allowances like that. So for that first most countries have many types of leaves – parental leave, maternity leave, sick leave, annual vacation, national holidays, and many many more depending on the country but if you are not keeping track of time then you don’t know who took time off or did not take time off. So, you heard the many times about the French being gone in the month of August because everybody takes time. If you did not track that how do you prove to somebody that somebody, an employee took time off or not.
So, and then depending on the type of vacation or leave accrual, the accrual period can vary between different types and the usage expiration may vary based on type. So, you need to be able to monitor all of that. So that’s why you need a good timekeeping system. Now what all the things you want to worry about the system is that it has to have that integration so that it supports not just your policies because instead of giving say 25 days off which is statutory, a better employee wants to get 30 days off, great not a problem. But that’s your policy. Now how do you make sure that employees are complying with it.
Not that you are pushing everybody necessarily to take 30 days off or not take off but how do you make sure that if somebody applies, it actually gets approved. If it gets approved, they actually go on vacation and take the time off. So, you need a system that can track it and record it and report on it. So, at the end of the year, end of 2 years, the government authorities come to you and say ‘Hey, we want to see your records of all your employees. What vacations do you offer, when did they apply for it, when did you approve it? Does it take you too long as a manager to approve it?’
So, the approval means little less because you are pushing them to the last minute or stuff. Can you run a report, can you show it, can you prove it with a date and timestamp to say, ‘Yes, the application was done on Monday, Tuesday morning it was approved and a month later they went on vacation and then came back,’ whatever 2 weeks later or something like that.
In that compilation of the data that can be done from a system, so you want a system that can generate that. Also, the rules are changing from time to time across the world. So, in the US for example, there is about five thousand sales tax jurisdictions. They are changing the sales tax rate on a different cycle. Now if you take that one concept and you apply it to some other concept of a country, obviously Germany can change their vacation laws irrespective of what is happening in France.
So, the question becomes how do you make sure that you stay on top of those. So, if you have a good system, the system keeps you in compliance because the system will tell you the changes and then you just automatically are starting to comply with new requirements. And that’s why an integrated system that supports your policies as well as whatever is coming from the government will tend to it that assures compliance and ability to report.
Considerations: Choosing a Timekeeping Solution
So, when you are picking all these time keeping solutions and a little bit of this depends on the type of people you have. So obviously if you have manufacturing warehouse type workers you need some kind of a biometric type access system so they can just scan their thumb. Obviously want to hire security system, scans iris to record their entry into the building, into the manufacturing facility and similarly at the end of departure or their shift, it records and that system can then feed into your payroll system. Now if you don’t have blue collar workers then you are fine with having some kind of a scanning cards or scanning systems something like that because the timekeeping requirements are not as onerous as if you were being paid by the hour obviously.
These biometric clocks then need to feed into your time tracking system which needs to feed into your payroll system. It also needs to feed into your HCM, Human Capital Management System. The reason being then you need to be able to run reports and see which of your team hasn’t taken a vacation say in the last quarter or in the last 6 months, in the last year and why not. So then you have that ability to track that data, analyze it and talk to those people as to why are they not taking time off, why are they just working through it because you do want employees to take time off, if nothing else, for sanity sake, for work-life balance and getting recharged to come back with more energy to do what is required of that job.
Compatibility of the system is important. Like I said I can’t emphasize this enough is to be able to talk to other systems payroll systems, HCM systems are the two most critical for timekeeping to talk to because and the information has to flow both ways so that if a new employee is hired the HCM system tells the system, ‘Oh we hired a new employee, please grant them access or the timekeeping system is telling ‘Oh this person has not come to work today, so what do we need to do about it. Do we need somebody to call them to get a sick time off request or whatever do we need to make sure somebody fills in for their shift,’ things like that.
Now if you only have one country operation, yes a local system is great but if you have operations in multiple countries then does your system actually comply with the differences by country of all the requirements that you are relying on the system to cover from timekeeping to compliance to all of that stuff. So please make sure that you ask that question even though today you may be in a single country if you have even a small vision of going into other country then you need to think about that so that you don’t get into trouble and have to switch systems as soon as you pick up country number 2.
Now most timekeeping systems can track time. Obviously they are built for that, for that sole purpose in mind but you as an employer, you as a company, as a business may have additional requirements and you want to make sure that timesheet, the timekeeping system can either be customized to address those needs or possibly has out of box functionality to address your needs.
So, for example, in our business we not only have to track time but we have to make sure that we can run by time, by project, by type of work and things like that by client so that we can at the end of the month we can run reports to say what do we need to bill to these clients because that’s how we make money and does your system allow you to do that as an example. Obviously in a warehouse situation all you care about is somebody walked in, they showed up to their shift and they are working on the assembly line so it’s a little less relevant because they are not doing different things for different clients quite possibly, maybe they are and they need that functionality.
So, at this point I am just going to talk a little bit about Mihi, our home-grown system which is a cloud-based SaaS system that was built to address the needs of time and attendance, leave management and benefits administration across 40 countries when it was launched. Today obviously we can do this in 150 countries in 15 different languages. It not only automates a lot of that time tracking once it is input but also communicates with the payroll data, it digitizes the record keeping, so everything is in the cloud up and running 100% of the time. So, you can run reports and stuff like that no matter where you are based.
It has the wage and hour and benefits regulation built into it for each country that you are buying it for using it for. So, you don’t have to worry about those and like I said earlier, we update the system so you don’t have to worry about all the laws changing in Germany, what do I need to do. It is a very user-friendly system designed for both employees and managers to manage their daily tasks. As an employee you can apply for vacation, you can see what the status is. If you actually for some reason end up canceling the vacation at the last minute, you can go into the system you can say, ‘I am not going on vacation, so can you please not reduce my pay or my accrued vacation for that, things like that.’
And again, it talks to the HR, other HRIS, HCM systems. It is localized in 150 plus countries. It is GDPR compliant and it is ISO 27001 Certified. So it is a great system, works across the world, has basic functionalities built into it and has the right reporting built into it so if you need to prove it to a government authority during an audit as to whatever their questions might be, you can run reports and prove to them.
With that I am going to turn it over to Tallin. Thanks, Tallin.
I would like to thank our panelists for their time and great insights today. So, it looks like we have run out of time and won’t be able to answer all of the questions that have come in during the session. We will respond to all of the questions individually by email. If you have follow-up questions for our panelists you can reach out to them directly. Their emails are displayed here on the screen. Lastly, we will be sure to email the copy of the webinar recording and slide deck to you. We would like to thank everyone for attending our webinar today. Have a great day.
How do you keep track of OT in Mexico and what employees are eligible?
In Mexico, all employees are eligible for overtime. The threshold for overtime is dependent on the time of day in which overtime is earned.
The maximum hours that can be worked in one day for employees during the day shift (regular shift) (6 am to 8 pm) is 8 hours per day for a maximum of 48 hours per week.
Suggestions on tracking time spent working out of the country for U.S. residents?
This will depend on the country in which the employee is being paid in. If U.S. residents are working and being paid in a foreign country they are subject to the overtime laws of that country. In the event they are being paid in the U.S., U.S. overtime laws would apply.
General timekeeping insights, specifically in Latin America in Guatemala and El Salvador?
Similar to Mexico, Latin America as a whole has employee-centric labour laws. As such, time worked over the daily or weekly maximum (44 hours per week in Guatemala and El Salvador) is compensated at an enhanced rate (generally 1.5-2x the employee’s daily wages).
It is crucial in these countries to have employees submit daily timesheets so that employers can properly track an employee’s working hours and ensure that they are properly compensated for overtime hours.
How to keep things as consistent and fair across global locations?
At this time, it is complex to implement a one-size fits all solution. The timekeeping requirements, overtime regulations, working hour maximums, and vacation requirements differ drastically from country-to-country. In response to this challenge, Mihi has been developed as a Global HCM solution in 150+ countries. To learn more about Mihi click here.