Split expats’ salary to cover forex risks: Experts

According to HR consultancy major Manpower, currency fluctuations and exchange rates are key issues that can have a tremendous impact on the cost of living allowance provided by companies to their expat employees.

“If entire salary is paid in host country currency, the spendable income part of the salary is protected by the cost of living adjustment, but the remaining part is exposed to currency fluctuations,” a Manpower India official said.

At the same time, if the entire remuneration is paid in the home currency, only the non-spendable part — such as savings and expenses other than day-to-day living, is safe from inflation and forex fluctuation risks, he added.

Terming the split-pay approach as the most logical option, Manpower India said that the expenses abroad could be paid in the host currency and the non-spendable income part in the currency of the expat’s home country.

Leading domestic conglomerate Essar group’s Chief Learning Officer Sujaya Banerjee said: “split-pay is a good concept to be adopted by any organisation as it brings in purchasing power parity and employee can save accordingly.”