HRSINGAPORE Community Discussions
Salary Adjustment According to Purchasing Power Parities
we have a colleague who is leaving Singapore to go back to China. However, she will continue to work for our company while based in China. Since the cost of living in China is lower than in Singapore and her scope of work will be reduced. Does anyone know how we should calculate the salary and adjust downwards accordingly?
You should draft a new employment agreement between her and the China entity. The terms and conditions should follow China practices.
There are various things you need to take into account, higher income tax, social security, and market practices.
If you colleague is transferring to same group of your Company even though the scope and cost of living in China is lower, you are not allowed to adjust your colleague salary in downwards. What you can do is the revamp a new contract for his or her due to transfer.
Work out a new offer as if for a new hire of the same job level and competency in China.
You may want to support the relocation by paying the air fare and freight cost up to a define amount.
In order not to demotivate your staff, it is ideal not to make your staff worse off. The staff is used to a certain way of life probably due to the salary been given. Even though, the staff will now be living in China, there may be financial obligations that the staff may be performing in Singapore or any other country with a high cost of living. Therefore to aid the staff give off his/her best to increase efficiency and revenue and also avoid reputation risks, the company should not adjust an employees salary downwards in this instance.