How to Handle Exchange Rate Fluctuations in Expat Employment Contracts?

I need help to prepare a supplementary letter changing a clause in the primary offer for an employment letter that was issued to an expat. The expat now wants to be paid directly in AUD, but the tax laws in Malaysia require the employer to pay tax on the earnings. As such, I need to convert the AUD equivalent to MYR, deduct the tax, and later convert the balance back to AUD. For the first purpose, I will have to convert based on the monthly average exchange rate of the preceding month for AUD as quoted by Bloomberg. For the second purpose, where I have to convert the remaining MYR back to AUD, I would have to apply the prevailing rate of the day I wish to buy the bank draft.

Due to this, I would have to stress that the fluctuations in the exchange rate are to be borne by the employee as he had signed off on his agreement to his primary contract as follows:

"The salary for the duration of the two years will be AUD5,000.00 per month. Your salary will be converted to Malaysian Ringgit based on the monthly average exchange rate of the preceding month for AUD as quoted by Bloomberg."

Appreciate any help or advice I can get.

Thanks

The clause you mentioned doesn't explicitly state that he would have to bear the exchange rate variations—it only talks about the salary being converted to MYR and then to AUD. In all likelihood, the way it is, there could be serious differences later on—unless there's another clause that is very clear about this aspect.

Regarding the Mode of Payment

I'm not sure if a Bank Draft is convenient in the long run. Bank-to-bank transfers are more common nowadays.

Regards,
TS