Important Considerations when Selecting a Payroll Service Provider in Africa

In my years of experience in the African payroll market, I have come across various companies and individuals who consider themselves to be payroll experts. However, when questioned deeper, and based on the complexities associated with servicing payroll across multiple African countries (each with their own legal, customary and operational nuances), it has become apparent that many have misconstrued their knowledge or are in fact primarily relying on their payroll service providers to deliver compliant solutions.

In 2019, Deloitte conducted a payroll benchmarking survey which collated responses from 750 different organisations operating across 55 countries. 73% of the companies who participated already outsource some components of their payroll and a key finding of the survey was that sourcing remains a critical element of a global payroll strategy.

As the global payroll outsourcing trend continues to increase, I would suggest the following key considerations when selecting a payroll service provider in Africa:

  1. Proven payroll software should be used to compute the payroll. Leading payroll software providers have specialist compliance teams who ensure legislation is understood and correct calculations are implemented in the software. Using Microsoft Excel for payroll processing is prone to human error.
  2. Your preferred service provider should have a skilled and experienced support team that is appropriately resourced. Operational excellence is the lifeblood of a payroll company and your preferred service provider should provide advanced reporting tools and the ability to integrate with your accounting software and leave management.
  3. An in-depth understanding of country-specific legislation is imperative and best-in-class payroll providers will have a proven track record at effectively communicating, managing, facilitating and implementing complex legislative changes across Africa. 
  4. As the majority of countries across Africa require statutory payments to be made physically (with no online portals), the preferred service provider’s operating model should incorporate skilled in-country resources to ensure statutory compliance within the applicable deadlines. 
  5. Multinationals outsourcing their African payroll usually require a full payments service and the preferred service provider should be able to transfer salaries across multiple currencies, with the ability to split salary transfers (which is particularly necessary when paying expatriates).

Ultimately, your preferred provider should be able to advise you on your payroll based on your specific business and reporting requirements. Given its potential impact on employee experience, it is crucial to entrust your African payroll with a service provider that, at the very minimum, satisfies the above criteria.

By Bev Wood, Head of Operations at Africa HR Solutions – the leading provider of employer of record solutions across Africa.