In three installments, I will share three Employment Contract Terms that benefit Payroll and HR, and Finance as well.
Tip 3: Pay everyone on a payroll in the same currency
Generic High Tech Inc, a hypothetical company, is opening operations in Kuwait to serve the needs of businesses operating in Kuwait and throughout the Middle East. The employees are being hired from the local labor force. Expectations are that this will be a simple payroll to administer. Sophie, the global payroll director, nevertheless wants to be sure that no complications are introduced. She speaks to Ahmed, the Regional HR Lead, to be sure that there are no contractual exceptions or promises to payment in other than Kuwaiti Dinar.
Sophie tells Ahmed: Please pay in Kuwaiti Dinar and do not agree to pay any employee in any other currency.
Based in the United States, it is a temptation for Generic High Tech to think that paying employees outside of the United States in USD could be a good idea. If the entire population of a payroll in Kuwait were to agree to USD, then this might be a possibility. However, in most cases employees want to be paid in the local currency, to meet everyday costs. The best policy is to pay local employees in the local currency, and to be consistent.