Understanding non-local currency payments vs. linked salary payments

Navigating salary payment options can be complex, especially when dealing with multiple currencies. This article explains the key differences between non-local currency payments and linked salary payments, so you understand how each option works and what it means for your team members.

Linked salaries

Linked salaries refer to a setup where an employee’s contract salary is agreed in a foreign currency (such as USD or EUR), but the salary is paid out in the local currency. In this setup, the amount received in the local currency will vary month to month based on the exchange rate.

This option is typically used in countries with unstable domestic currencies (for example, Egypt or Pakistan). Linked salaries are only available in selected countries and are subject to legal and tax conditions.

See also: How linked salaries work for EOR team members

Salaries in non-local currency

Salaries in non-local currency refer to a payroll setup where both the employee’s contract and the payout are in a foreign currency (USD or EUR). However, the payslip and statutory obligations are still calculated, reported and paid in the local currency using a government-mandated exchange rate.

This setup is often used in countries with highly volatile currencies (such as Argentina). It helps people receiving stable compensation in a stronger currency while remaining compliant with local labor laws.

See also: All about non-local currency salary payments

How FX conversion and rates are applied?

FX rate for payroll:

In many countries, Remote must use a government-mandated FX rate to convert the contract currency into the local currency for payslips and tax calculations. This rate is typically published daily by the local central bank. If no mandated rate applies, Remote uses a mid-market FX rate to ensure accuracy and compliance.

FX rate for billing:

When the contract and billing currencies match, Remote uses the same FX rate applied during payroll to calculate the invoice. This ensures alignment between contract and invoice values, although FX conversion may still apply depending on the payout currency.

If the billing currency and payslip currency match, there is no FX conversion.

If the contract currency differs from the billing currency (and the billing and payslip currencies don't match), Remote applies a Remote FX rate to account for currency volatility and transaction costs.

See also: Remote FX rate

Why might Remote apply FX conversion even when contract and invoice currencies match?

In most cases, when the contract and billing currencies are the same, Remote applies the same FX rate used in payroll calculations to ensure consistency, this avoids discrepancies between the contract amount and what appears on the invoice.

However, FX conversion may still apply in certain cases due to operational or regulatory requirements. For example:

• Payslips and tax reporting must reflect amounts in the local currency, so Remote first converts the contract amount into local currency using the payroll FX rate (mandated or mid-market).
• Remote has to operate local entities in local currencies, all around the world, even if local employees are paid in a different currency such as USD. Taxes and statutory payments are always in local currency
• Even when billing is in the contract currency, this local currency value may be reconverted using the same payroll FX rate (but only when that alignment is possible).
• If this alignment isn’t possible (for example, in linked salary setups or when provider FX is required), the Remote FX rate is applicable.

This ensures compliance with local regulations while reducing FX mismatches whenever feasible.

Important notes

• FX rules depend on local labor laws and currency regulations. Remote follows the required rates in each country.
• Linked and non-local currency setups are available only in supported countries.
• FX differences may still apply in some scenarios due to regulatory or operational requirements.

See also:

• How linked salaries work for EOR team members
• Remote FX rate