Payroll Perspectives: Integrating Crypto into Payroll and Benefits ??

Welcome to the latest edition of “Payroll Perspectives”, where Natalie Lloyd and I dig deeper into how blockchain and cryptocurrencies could change the way we "do" payroll.

JGA Recruitment Group has proudly been at the forefront payroll recruitment for 15 years, which means staying ahead of the curve when it comes to new industry trends and ensuring we know what really matters to employees when it comes to attraction, engagement and retention. A critical aspect of any attraction and retention strategy is always going to be remuneration - or should I say, payroll, compensation and benefits.

In our last "Payroll Perspectives" newsletter, we looked at how using cryptocurrency and blockchain in your payroll function can attract top talent and optimise your payroll processes for the future.

This week, we’ll be exploring cryptocurrency payment service providers and working out exactly how they work!

As blockchain technology matures and regulatory frameworks evolve, the adoption of Bitcoin and other cryptocurrencies for payroll will likely increase.

We've already seen how the results of the 2024 US Elections have indeed had a notable impact on cryptocurrency and blockchain. Following Donald Trump’s victory, there was a significant surge in the crypto market, with many investors optimistic about his pro-crypto stance. Trump has expressed intentions to make the U.S. a leader in cryptocurrency, advocating for policies that could benefit the industry.

The election highlighted the growing interest in cryptocurrencies among US voters, with many indicating that they preferred to support candidates who understood and supported the crypto industry.

So, it looks as though Trump’s administration is expected to create a more favourable regulatory framework for cryptocurrencies, which could encourage innovation and investment in the sector.

Plus, the outcome is likely to reverberate through the UK job market, affecting everything from trade policies to hiring trends.

The ongoing trend of remote work means that businesses in the UK may face increased competition for skilled talent from US companies, especially when EORs make it easier to work from anywhere. This could necessitate more attractive employment packages and flexible hiring strategies in the UK to retain top talent.

One key benefit that’s becoming increasingly attractive to the workforce is being paid in cryptocurrencies.

So whether you’re interested in getting paid in Bitcoin, or want to introduce cryptocurrency into your payroll function, we’re here to explain how…

If you read our last edition, you may be thinking that it’s time to integrate crypto into your payroll function. (and if you missed it, check it out here before reading on!)???

This new edition will explain how companies can pay employees quickly and reliably, from regular compensation to bonuses and even replacing traditional pension plans. The best part is that integration is seamless, requiring hardly any crypto knowledge and can enhance existing payroll systems.

So firstly, Is it Legal?!

As we know, the value of #cryptocurrencies can fluctuate significantly, which may affect the actual amount employees receive.?This can complicate compliance with minimum wage laws and pension contributions.

The legality of crypto in payroll varies between countries (and sometimes even states), with even more change likely to come in post-election, so it’s important to check before you integrate crypto into your payroll services.

Even in countries where #Bitcoin is legal, it may not be legal to pay employees in Bitcoin—at least directly.

Currently, for the US and Canada, wage payments need to be made in fiat currency to comply with labour standards, so many companies use crypto exchange services like Coinbase, which provide streamlined payroll solutions and convert local currency into the employee’s crypto of choice using crypto accounting software.

In the UK, paying salaries in cryptocurrency must comply with UK employment laws and tax regulations.?Employers need to ensure that the payment meets the National Minimum Wage requirements, which are typically calculated in GBP.

There are also tax implications. Cryptocurrency is considered a “readily convertible asset” by HM Revenue & Customs , meaning that employers must report its value in GBP for?PAYE tax purposes. This includes income tax and National Insurance contributions.?Employees will also be taxed based on the cryptocurrency’s value at the time they receive it.

Employers must report payments to HMRC, similar to traditional salary payments, which means if the cryptocurrency is not considered readily convertible, different reporting rules may apply.

Given these complexities, it’s advisable for businesses to seek legal and financial advice before implementing cryptocurrency salary payments.

Be sure to always check local laws regarding paying employees in cryptocurrencies.

I’m interested in integrating crypto payroll and benefits into my organisation… but how?!

Establishing a crypto payroll may seem daunting, but with flexible solutions, it’s accessible for any business.

Getting started paying employees in crypto is quick and painless and doesn’t take very long at all. How you approach it is up to you and depends on how familiar you already are with crypto.

If you’re already comfortable with cryptocurrency, you can choose to run all transactions through a proprietary digital wallet. This “hands-on” approach is best suited for those with extensive crypto experience since you’ll be managing and making all crypto payments yourself. In addition to holding cryptocurrency and managing payments, you’ll need to stay compliant with all local cryptocurrency regulations, which can be a challenge in itself (see above!)

For most of us, the easiest and most efficient method to pay employees in crypto would be to partner with a reputable, trusted global payments platform. With this “hands-off” approach, you just need to fund an account with fiat currency, and the platform does the rest. They handle the crypto conversion and securely send payments to employees’ wallets. Using this method, businesses don’t have to buy or hold the crypto. A good processor will also ensure your company remains compliant with all up-to-date regulations and rules and ?verify the identity of all payees anywhere in the world.

I had a look into how cryptocurrency payment service providers work.

They help businesses integrate cryptocurrency into their workflows, transforming key processes through the power of crypto and blockchain.

As someone who isn’t as clued up in the crypto world as I could be, it seems easy to get started. Employers fund their BitPay account with fiat currency, configure payout details, and invite recipients via email. Employees can then allocate a portion of their earnings to their preferred cryptocurrency.

Sounds simple!

Employees can also keep a percentage of their pay in fiat currency for everyday purchases while switching some to cryptocurrencies for investment.

Overall, partnering with a crypto payment processor gives you the most secure and efficient way to pay your employees with Bitcoin and other cryptocurrencies.

As blockchain technology matures and regulatory frameworks evolve, the adoption of blockchain-based payroll solutions is likely to keep increasing. The potential benefits of security, efficiency, and transparency make blockchain a promising avenue for businesses looking to modernise payroll processes.

Whether you're looking to introduce Bitcoin payments as an option for your employees and need someone with the know-how to lead the transformation, or want to keep up to date with industry news and updates, follow JGA Recruitment Group !

In conclusion, integrating blockchain and cryptocurrency into payroll systems is not just a futuristic concept but a growing reality.

As more companies and individuals recognise the benefits of enhanced security, reduced costs, and faster transactions, the adoption of crypto payroll is set to rise.

However, to fully leverage the potential of this innovative payment method, it’s important to look into the challenges, including regulatory compliance, tax implications, and market volatility. You can brush up on the pros and cons in our previous edition—here !

And of course, I want to remind you that if you need expert help to find the best person to join your payroll or HR teams, or are looking to progress in your career, contact us at JGA Recruitment Group today and let our passionate, knowledgeable, and award-winning team assist you in building a top-performing team.

Meanwhile, stay tuned for our next issue! If you’ve been keeping up to date on Payroll Perspectives and have a topic you’d love to see covered, let me know!

[email protected] | 01727 800 377

Until next time!

Natalie and Nick ??