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Salary paid in Rupiah - law?!?

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  • Salary paid in Rupiah - law?!?

    Hi all,

    Just a quick question - is it law that you must be paid in rupiah, or can it be in $/Sing.$ etc?

    I was told that this is the case today - a discussion with my boss about currency fluctuations etc (I'm earning $500 less now than 2012 per month) - but, I smell something fishy...

    Any ideas or links would be great!

    Thanks!

  • #2
    I don't suppose you took your extra rupiah earned in 2012 and bought dollars.

    Comment


    • #3
      Originally posted by waarmstrong View Post
      I don't suppose you took your extra rupiah earned in 2012 and bought dollars.
      I didn't consider it extra, as it was my salary. But, relatively, I now earn less than I did in 2012, with the same company, although I have had pay rises every year.

      Comment


      • #4
        Originally posted by gerrardtorres View Post
        I didn't consider it extra, as it was my salary. But, relatively, I now earn less than I did in 2012, with the same company, although I have had pay rises every year.
        Hmm all expats I know got wages in Euro, $ or £ it depends from the company contract and the place (some are placed in Uk some in Europe, the rest in other parts of the world (in $)). None of them are being paid in rp.
        PS. All of them are also DELEGATED to work here so this could be why.

        Comment


        • #5
          Originally posted by gerrardtorres View Post
          I didn't consider it extra, as it was my salary. But, relatively, I now earn less than I did in 2012, with the same company, although I have had pay rises every year.
          Well, do you actually buy things that are priced in dollars? Or are you just talking what-ifs and maybes.

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          • #6
            I've worked primarily in USD on all the contracts I have had in Indonesia, that used to be the case globally but over the last few years the Euro seems to be becoming quite dominant as a payment currency - wonder when Indonesian banks will start offering Euro accounts.

            However that said I would work for rupiah as long as it was tied to the Dollar/Euro exchange rate at an agreed rate so as not to take the hit if the arse fell out of the rupiah.

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            • #7
              Originally posted by gerrardtorres View Post
              Hi all,

              Just a quick question - is it law that you must be paid in rupiah, or can it be in $/Sing.$ etc?

              I was told that this is the case today - a discussion with my boss about currency fluctuations etc (I'm earning $500 less now than 2012 per month) - but, I smell something fishy...

              Any ideas or links would be great!

              Thanks!
              I highly doubt there is a law that specify in what currency you have to be paid. There is a law saying (if I am not mistaken) how much is the minumum salary is for an expat?

              It is a company policy however in what currency they will pay to their employees and it should be stated in your contract. If the company is an international company or they do export/import more likely they will pay in $.

              Check your employment contract. Is the salary in rp or $ if it is rp you need to renegotiate the whole employment contract and the employer may not want it as maybe his business model (selling for locals) is based in rp.
              If you have been employed all the time in Indonesia and paid in rp (in this company) then it is less likely an employer will switch to $ now only because you are loosing on currency exchange. However give it a try.

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              • #8
                I'm paid in USD. So when I convert my salary to IDR I now earn about 6-7jt more than when I arrived here in July 2013. However, the IDR/USD course is now probably on its highest point and at some point the IDR should become stronger again against the USD. At some point the effect will be reversed and I will start earning less when I convert to IDR. So now it actually makes sense to be paid in IDR, because when the IDR becomes stronger again, you'll start getting much more USD in return. And for businesses it makes more sense now to pay your employees in USD.
                So asking your boss now to be paid in USD at the current exchange rate, would not be a wise thing to do.

                Comment


                • #9
                  Originally posted by SXL24 View Post
                  I'm paid in USD. So when I convert my salary to IDR I now earn about 6-7jt more than when I arrived here in July 2013. However, the IDR/USD course is now probably on its highest point and at some point the IDR should become stronger again against the USD. At some point the effect will be reversed and I will start earning less when I convert to IDR. So now it actually makes sense to be paid in IDR, because when the IDR becomes stronger again, you'll start getting much more USD in return. And for businesses it makes more sense now to pay your employees in USD.
                  So asking your boss now to be paid in USD at the current exchange rate, would not be a wise thing to do.
                  Why you cannot simply open rp account in the bank and sell $ into rp???

                  Comment


                  • #10
                    Originally posted by waarmstrong View Post
                    Well, do you actually buy things that are priced in dollars? Or are you just talking what-ifs and maybes.
                    No, I live in Indonesia, ergo, I pay in Rupiah, but I send money back to my home country every month, which is not in Rupiah.

                    I understand there are market fluctuations - 35-40% is quite extreme in my opinion, but, I get it. My point is whether it is law or not - I don't like BS.

                    Comment


                    • #11
                      Originally posted by SXL24 View Post
                      I'm paid in USD. So when I convert my salary to IDR I now earn about 6-7jt more than when I arrived here in July 2013. However, the IDR/USD course is now probably on its highest point and at some point the IDR should become stronger again against the USD. At some point the effect will be reversed and I will start earning less when I convert to IDR. So now it actually makes sense to be paid in IDR, because when the IDR becomes stronger again, you'll start getting much more USD in return. And for businesses it makes more sense now to pay your employees in USD.
                      So asking your boss now to be paid in USD at the current exchange rate, would not be a wise thing to do.
                      Yes, I understand that, but I may have been able to get the rate back-dated to a more favourable - for both parties - level.

                      Comment


                      • #12
                        Originally posted by gerrardtorres View Post
                        Hi all,

                        Just a quick question - is it law that you must be paid in rupiah, or can it be in $/Sing.$ etc?

                        I was told that this is the case today - a discussion with my boss about currency fluctuations etc (I'm earning $500 less now than 2012 per month) - but, I smell something fishy...

                        Any ideas or links would be great!

                        Thanks!
                        UU No. 7 2011 requires all payment transactions, obligation settlements that uses money and other financial transactions within Indonesia to be carried out in Rupiah.

                        http://blog.ssek.com/index.php/2011/...al-currency-2/

                        Naturally, as with every other law in Indonesia, enforcement is spotty, its full of grey areas and ambiguity. Also I'm not sure if salary payments are included in this law, but "financial transaction" is a rather broad definition.

                        Comment


                        • #13
                          seems to me you are asking the wrong questions here. Whether you have to be physically paid in rupiah is one issue. What your contractual salary is would be a different issue.

                          If you signed a contract setting your salary in rupiah, then that is the agreement you have - anything else is pure negotiation to change it - whether you are paid in $$ or rupiah going forward. If on the other hand your original contract is in $$, then even if paid physically in rupiah the amount of rupiah you get should fluctuate with the exchange rate each month.

                          From your OP I assume you fall into the the former case - contract with comp set in rupiah. In that case all you can do it try to renegotiate your contract going forward, whether that means switching to a dollar based contract or increasing the amount of rupiah. In such case I do not think you have a legal leg to stand on in terms of retroactive adjustments since you have been paid what you agreed to (again, unless your contract states dollar comp).

                          Comment


                          • #14
                            Originally posted by BAJakarta View Post
                            seems to me you are asking the wrong questions here. Whether you have to be physically paid in rupiah is one issue. What your contractual salary is would be a different issue.

                            If you signed a contract setting your salary in rupiah, then that is the agreement you have - anything else is pure negotiation to change it - whether you are paid in $$ or rupiah going forward. If on the other hand your original contract is in $$, then even if paid physically in rupiah the amount of rupiah you get should fluctuate with the exchange rate each month.

                            From your OP I assume you fall into the the former case - contract with comp set in rupiah. In that case all you can do it try to renegotiate your contract going forward, whether that means switching to a dollar based contract or increasing the amount of rupiah. In such case I do not think you have a legal leg to stand on in terms of retroactive adjustments since you have been paid what you agreed to (again, unless your contract states dollar comp).
                            Hi. Thanks for the imputation everyone.

                            My contract says rupiah so I understand that. The problem is members of my team are thinking of leaving because they are expats too, and relatively, that do not believe the yearly increase represents the actual changes. Staff are earning less now, in dollars, then when they first joined. We all understand that we signed an agreement, but my staff are going to leave. They are great staff and don't want to lose them. Thus, my enquiries.

                            Thanks all again.

                            Comment


                            • #15
                              So then it is just an issue of renegotiating new package and the rupiah argument is (in my view) just a red herring. I do not know whether there is technically a legal requirement to be paid in rupiah (but I do know in practice many are paid in dollars), but even if there is (or if you don't want to argue that point with your boss or allow him to use that excuse) you could still probably state in contract something like "rupaih equivalent of $xxxx"

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