Foreign Currency Salaries 2024

On 13 August 2024, the Ministry of Labor and Social Welfare (“MLSW”) issued Notice No. 2721/MLSW (“MLSW Notice”) to further detail its role as delegated by Article 2 (2.9) of Prime Minister Order No. 10/PM dated 14 July 2023 (“PM Order”) on Foreign Currency Management.

Article 2 (2.9) states that the MLSW is responsible for managing, monitoring, and inspecting all sectors in relation to tagging, announcing, or advertising, paying and receiving payments, mainly salaries, in LAK in the Lao PDR. It also states that entities that need to employee foreign personnel or experts can determine, agree to and pay their salaries in foreign currency in the Lao PDR.

The MLSW Notice, on the other hand, seems to be addressing something different. It states that entities that determine and agree to salaries and other benefits for their employees in foreign currency, but pay in LAK, must use an exchange rate that is not less than the rate issued by a relevant commercial bank within previous three working days before the LAK salary and benefit amounts are calculated.

Thus, the MLSW Notice provides general guidelines for all employees whose salaries and benefits have been determined in foreign currency, but does not specify that foreign employees’ salaries can be paid in foreign currency, as was set out in the PM Order.

Pursuant to Article 4 of the Law on Making Legislation No. 19 /NA dated 12 July 2012, the hierarchy of legislation in the Lao PDR is as follows:

1. Constitution
2. Laws
3. Resolutions of the National Assembly
4. Resolutions of the Committee of the National Assembly
5. Edicts of the President
6. Decrees of the Government
7. Resolutions of the Government
8. Orders and decisions of the Prime Minister
9. Orders, decisions, and instructions of ministers and heads of governmental authorities
10. Orders, decisions, and instructions of provincial governors and mayors
11. Orders, decisions, and instructions of district administrators and heads of municipalities
12. Village rules

Thus, if there are conflicts between the PM Order and the MLSW Notice, the PM Order will prevail, so although the MLSW Notice does not address the issue of foreign employees being allowed to be paid in foreign currency, it does not negate it, since the PM Order allows it.