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Payrolls pegged to a foreign currency with a foreign base currency

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This article is for Owners and admins who use Humanised

Overview

  • Automatically calculate and add exchange gain allowances to payrolls
  • Foreign currency pegged payrolls with based salaries maintained in foreign currency

Step 1 – Switch on Foreign Currency pegged payrolls

Select the preferred base currency as LKR and select the foreign currency you are working with from the list (USD, AUD, Euro and Pounds)

Please make sure that pay details in master data and uploaded via CSV are in the foreign currency you work with.

(This means you maintain your salaries in a foreign currency like USD. Your basic salaries, allowances etc. which belong in the basic pay package are maintained in USD. If you use system data to run payrolls, your system data therefore will be in USD values)

Foreign currency settings FC
Figure 1 - Foreign currency settings

Step 2 – Create payrun

When you create a payrun, you’ll be asked for the current exchange rate (Foreign currency to LKR). The system will convert the pay details which were in a foreign currency to LKR based on the exchange rate you entered. This will automatically peg the salaries to the fluctuations of the currency.

Sri Lankan government does not allow EPF, ETF and APIT to be calculated on foreign currency. This is why Humanised will calculate these values on the LKR salaries that we freshly converted. This way EPF, ETF and APIT will be paid in LKR and records will be kept in LKR values

(If you are wondering why they are particular about this, it’s mostly to do with the error margin when working with two currencies of vastly different valuations. If you calculate EPF 8% on 10 USD, converted to LKR after calculations and the LKR equivalent of the same calculated post conversion, there is change you will get slightly different values)

Create new foreign currency pegged payroll
Figure 2 - create payrun pegged to a foreign currency

Step 3 – Payslip

Payslip of the employee will denote the exchange rate for the month too.

What's next?:

Add budgetary relief allowance to payroll

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