Salary paid in Pounds but based in Spain...
Apr 23rd 2009, 8:13 am
#1
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Joined: Apr 2009
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Salary paid in Pounds but based in Spain...
I have been working in Spain for 8 years where I am tax resident. I still have a UK employment contract and my employer pays me in Pounds, which means value of salary received has now dropped with Exchange Rate. My employer wants to know (as would I) if any employer has sought to work to make good the shortfall to such an employee and if so how. Does anyone have any experience in this regard?
Apr 23rd 2009, 9:13 am
#2
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Re: Salary paid in Pounds but based in Spain...
Bcnblue
Many employers have employment contracts tied to a cost-of-living index, typically to the Consumer Price Index (CPI). A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index including changes in exchange rates etc. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves.
Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index. These negotiated increases in pay are colloquially referred to as cost-of-living adjustments or cost-of-living increases because of their similarity to increases tied to externally-determined indexes. Most economists and compensation analysts would consider the idea of predetermined future "cost of living increases" to be misleading for two reasons: (1) For most recent periods in the industrialized world, average wages have actually increased faster than most calculated cost-of-living indexes, reflecting the influence of rising productivity and worker bargaining power rather than simply living costs, and (2) most cost-of-living indexes (see above) are not forward-looking, but instead compare current or historical data.
Hope this makes sense.
Mark
Director - HiFX
Many employers have employment contracts tied to a cost-of-living index, typically to the Consumer Price Index (CPI). A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index including changes in exchange rates etc. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves.
Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index. These negotiated increases in pay are colloquially referred to as cost-of-living adjustments or cost-of-living increases because of their similarity to increases tied to externally-determined indexes. Most economists and compensation analysts would consider the idea of predetermined future "cost of living increases" to be misleading for two reasons: (1) For most recent periods in the industrialized world, average wages have actually increased faster than most calculated cost-of-living indexes, reflecting the influence of rising productivity and worker bargaining power rather than simply living costs, and (2) most cost-of-living indexes (see above) are not forward-looking, but instead compare current or historical data.
Hope this makes sense.
Mark
Director - HiFX
Apr 23rd 2009, 10:22 am
#3
Joined: Apr 2005
Posts: 9,606
Re: Salary paid in Pounds but based in Spain...
I have been working in Spain for 8 years where I am tax resident. I still have a UK employment contract and my employer pays me in Pounds, which means value of salary received has now dropped with Exchange Rate. My employer wants to know (as would I) if any employer has sought to work to make good the shortfall to such an employee and if so how. Does anyone have any experience in this regard?
Apr 23rd 2009, 11:02 am
#4
Just Joined
Thread Starter
Joined: Apr 2009
Posts: 2
Re: Salary paid in Pounds but based in Spain...
Bcnblue
Many employers have employment contracts tied to a cost-of-living index, typically to the Consumer Price Index (CPI). A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index including changes in exchange rates etc. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves.
Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index. These negotiated increases in pay are colloquially referred to as cost-of-living adjustments or cost-of-living increases because of their similarity to increases tied to externally-determined indexes. Most economists and compensation analysts would consider the idea of predetermined future "cost of living increases" to be misleading for two reasons: (1) For most recent periods in the industrialized world, average wages have actually increased faster than most calculated cost-of-living indexes, reflecting the influence of rising productivity and worker bargaining power rather than simply living costs, and (2) most cost-of-living indexes (see above) are not forward-looking, but instead compare current or historical data.
Hope this makes sense.
Mark
Director - HiFX
Many employers have employment contracts tied to a cost-of-living index, typically to the Consumer Price Index (CPI). A cost-of-living allowance (COLA) adjusts salaries based on changes in a cost-of-living index including changes in exchange rates etc. Salaries are typically adjusted annually. They may also be tied to a cost-of-living index that varies by geographic location if the employee moves.
Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index. These negotiated increases in pay are colloquially referred to as cost-of-living adjustments or cost-of-living increases because of their similarity to increases tied to externally-determined indexes. Most economists and compensation analysts would consider the idea of predetermined future "cost of living increases" to be misleading for two reasons: (1) For most recent periods in the industrialized world, average wages have actually increased faster than most calculated cost-of-living indexes, reflecting the influence of rising productivity and worker bargaining power rather than simply living costs, and (2) most cost-of-living indexes (see above) are not forward-looking, but instead compare current or historical data.
Hope this makes sense.
Mark
Director - HiFX
Can you cite any companies who, to your knowledge, actually utilise changes in exchange rates (such as to adjust salaries to maintain 'original' or 'set' value of sterling salary figures)?
Apr 28th 2009, 9:56 am
#5
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Joined: Dec 2004
Posts: 524
Re: Salary paid in Pounds but based in Spain...
Pretty much all of the FTSE 250 will have tsome sort of arrangement in place.
Good luck
Mark Bodega
Good luck
Mark Bodega
