The Labour Code in its flexinovela allowed employers and employees to agree on the payment of wages or part of them in foreign currency (§143, Labour Code). However, it is not possible to pay wages in foreign currency to any employee who wishes to do so, for example because of an upcoming holiday.
The basic conditions that must be met are:
- Relationship of the employee to the foreign state - The employee must have an objective relationship with the foreign state.
This could be, for example:
- employees working abroad;
- an employee of a foreigner who lives abroad permanently or pays his/her living expenses or
family members; - Consent of the employee or agreement between the employer and the employee on the payment of wages in foreign currency. The Labour Code does not provide for a written form, but it is always better to make the consent or agreement in writing.
- To the agreed foreign currency the exchange rate is announced by the Czech National Bank the foreign exchange market.
The rate of conversion shall be the rate announced by the CNB for the first day of the calendar month following the month in which the right to wages or salary arose, unless the employee and the employer have agreed on a different working day.
The conversion is always made from net pay.
Nugget is prepared for such a case and we will now present the correct procedure:
1) Establishment of the organisation's bank account, that will be used for payouts in a specific foreign currency.
If you will be paying wages in multiple foreign currencies, you will set up a new bank account for each currency
organization. You will enter the new organization account in M-2-4-4, here do not forget to add the three-digit
currency code (e.g. EUR, USD, GBP).
2) Employee card - for the employee to leave with their wages converted into a foreign currency,
it is necessary to allocate the correct bank account of the organisation in the deductions to the employee's account,
which is reserved for a specific currency.
3) Setting the exchange rate for a given accounting period - use the function to enter the current rate
„Currency coefficient update“, which can be found in the user program (M-12-5), this function also includes
can be accessed from the payment order summary (M-11-2) using the button with the icon €.
4) Generating a payment file for the bank - to create a file for payroll payment in foreign currency, select
one of the following formats SEPA TXT, SEPA XML or Multicash for foreign payments.
You won't find a comprehensive guide on the support site under the password: Employee: payment of wages in foreign currency.
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