I can’t count the number of emails or questions that I receive regarding Salaries and Contracts, and although I can answer most questions, I can’t tell you if your salary is good enough, or that you will save enough money.
There are many types of Expats that travel to PNG, the Diplomats, the Aid Workers, the Volunteers, the Missonaries, the FIFO workers, the Singles, the Couples, the Families. And they all come from a variety of places, NZ, Australian, Phillipines, India, USA, Malaysia, China, Fiji to name but a few. Some of them are on Salaries the same as back “home”, others are on significantly higher, some are lower, some are even on tax-free dollars getting allowances for being in a hardship area.
If you are like me and work(ed) for a normal corporate organisation, then you may not get the “perks” that some people get, but you will find that you don’t have so many restrictions on you. I know of single men working for government agencies living in 3 bedroom apartments that cost over PGK7000 per week, with all expenses paid, they leave the Air Con going even when they aren’t there. I know of Pinoy’s who are living in shared accomodation where they have a communual kitchen (some people may call that a perk!). There are those workers that only fly up the front, and those that get one economy class trip home per year, in the cheapest seat possible. Some people even have paid for “sanity” breaks that they must take, and so off they hop to Cairns for a long weekend or more on the company. There are expats with good disposable income, so they buy a boat and spend their weekends out on the water, and others that barely make it up to Koitaki with a tent in tow. Some expats have full schooling paid for on top of normal renumeration, others that have it as included in renumeration, and others that don’t get it at all. Some people are dictated to about where to live, others may or may not have a company car. Some companies have drivers that you have to book, others have security escorts available at any time day or night. Some companies will provide membership to a Club of your choice, others won’t. Some expats can’t drive to Sunset Lodge – others have no restrictions…
The things you SHOULD get put into your contract I believe are as follows:
1. A salary! PNG Central Bank now dictates that all expat salaries are to be paid in PGK locally. So your salary needs to be paid locally, then you can remit funds back to your country of origin if you want. This is a significant change, as some companies used to remit your money back to place of employment for you or if they had an offshore account, would just pay you from there. Ideally, you will have an AUD or USD based salary, but lots of salaries are now in PGK as a PGK salary. If you are working on an overseas Salary Base, then you need to ensure they work on your FX at the same rate as you moving the money out of the country, otherwise you lost lots of money.
How much salary is entirely up to you, however it is worth factoring in that PNG is 30% more expensive to live than baseline, and that you will be living with significant security issues. This also means that you will actually save quite a bit too – as you won’t want to go out, and material things are so expensive that you just won’t buy anything anymore.
You will also need to consider all the tax implications of PNG. Salaries are taxed up to 42% on a gradual basis, then you will also have a nominal tax if you have a company provided vehicle, and you will also be significantly taxed on your accomodation. You will then incur a further 10% tax on all goods and services (GST).
You can however salary package some items, and you should make sure your employer will allow you to do this, the items to consider salary packaging would be: Superannuation; up to 15% of salary can be contributed pretax. (Refer Nambawan Super & Nasfund).
Travel to place of recruitment; If you have Economy Class included in your package, you can Salary Sacrifice the difference between Economy Class and Business. To get quotes call Patrick at Travel Services in Port Moresby.
Novated Leases; Rather than a Company Car, check to see if your company will do a Novated Lease. A number of financial institutions will do this for you, but I would recommend talking to Kina www.kina.com.pg as they have dedicated specialists and are the market leaders.
Medical insurance; these can be salary sacrificed – however should really be apart of your normal employment package.
School Fees; If you don’t have school fee’s included in your contract, then you can Salary Sacrifice for them for your children (Primary and Secondary only).
2. Bonuses! Some companies have them, some don’t. If you don’t ask – then you will never know….
3. Annual Leave: Most expat contracts will come with either 4, 5 or 6 weeks Annual Leave. Some may come with 3 weeks which is what PNG Employment Law stipulates for Papua New Guineans. I’d suggest that 5 weeks is the perfect medium as you will most likely have less public holidays in PNG than where you are from and most other inbound countries will be on 4 weeks. You may find though, that even 4 weeks is too much leave….
4. Sick Leave: You need at least 9 days per annum – you can get some very serious bugs in PNG and you need to be covered for them. Some organisations will also provide Carer’s Leave.
5. Long Service Leave: There is a lot of confusion on LSL, however you will have it either included or not. LSL only comes available after 3 years service, so a normal 3 year contract will mean that you won’t qualify for LSL. As a rule, LSL is in the Employment Act so if the company wants to exclude it from your contract they need to specifically exclude it.
6. Moving to PNG, and repatriation afterwards. Repatriation is actually a law as governed by the Non-Citizen Employment Act of 2007* and your company is responsible for it. You will want a couple of things though, a reasonable amount of goods shifted to PNG and then repatriated (a 20ft Container is TOPS!) “or” an allowance to purchase necessities in PNG (sheets, pots, pans etc) in lieu of a Container. This can be far cheaper for the company, and it means that you come to PNG unhindered by all your possessions that really – you don’t need ;). If you get a 20 footer, throw a boat in there if you are into boating…
Some companies will restrict the size of your goods in/out – this can be a good thing :). I do know of people that have brought their car with them, but if it isn’t a 4×4 then don’t bother…
7. Accomodation: You want safe, secure accomodation. You will need a pool! Ideally, don’t sign a lease until you have been here and scoped the place out and talked to others. Then when you find a place, make sure you ask around what people think of it. The more your place costs, the more you will be taxed, in the K3000 to K6000 range you will find a great variety of good compounds – check out http://www.hausples.com.pg. I can assure you, Port Moresby looks small, but it’s actually quite big, and hilly. Places like Boroko don’t get the sea breeze!
8. Utilities: Maybe classified as a fringe benefit for tax purposes, so beware…. Some companies give you an allowance, others don’t. Be mindful that power is expensive, and so is Internet.
9. Vehicle: As I have mentioned, car, car allowance, novated lease, driver shared – just make sure you have wheels. Port Moresby is not a place for you to be catching a cab or jumping on a bus – unless you are my father, who jumps on a PMV (or me, who went on a tiki tour one day)
10. Medical Insurance, for you and any dependants. Must include Medivac, will generally be a pay as you go with a claim back where they will re-imburse 90%. If you are an Aussie, see if you can still get Medicare coverage, I think there is some rules around it.
11. Club Memberships: At least 1. Even though there are lots of eateries etc around POM (less in Lae) you still will want to have a go to joint where it is safe and secure and that you can do some extra-curricula. In POM, you have the Yacht Club, Aviat, Golf Club, Pap Club (men only), Kotaki Country Club (although that is really cheap and easily paid for), Car Club.
12. Life Insurance: Yes, some companies will pay for this, some won’t. Get it defined, and if they won’t pay for it – then you need to check your own policy to see that it covers PNG.
13. Annual Pay Rises in line with inflation at the minimum. CPI is around +5% per year over the past 6 years, that’s a lot of backwards if you aren’t getting any pay rises to compensate. Or negotiate up front knowing that generally CPI is 5%pa
14. Leave Fares: Companies can provide you and your family (1) economy class return airfare for you and dependants as part of your package (and they should). Any others may be subject to Tax as a fringe benefit (unless of course you are tax free)…
15. Company Mobile: A must in PNG – it’s a really big security concern if you don’t have a mobile
16. Unpacking day – you should negotiate an unpacking day, you’ll need it as you will need to supervise
17. When you arrive in country, having a few weeks in a Hotel helps with being able to look for housing.
18. School Fees, check out http://www.elamurray.com for school fees, if you have kids – you need this included. Unfortunately companies generally don’t cover buses, uniforms etc, so make sure you have enough in the kitty to cover this.
19. Company giving you 3 months notice or pay in lieu of. 3 months resignation notice for you to the company is normal
20. You will have clawback penalties if you decide to leave – so make sure you really want that job and want to go to PNG before committing!
OK – so that’s what I would call an appropriate minimum. Of course, there are lots of other things that can go into your contract, some companies even pay for Haus Meri’s (your housekeeper), Electricity, Gas, Internet, Extra Car, Security Responders, Security Escorts etc, others don’t give you a Club Membership….
If you have any questions – happy to help. But please note – I am not an accountant, please contact your tax advisor for any questions or clarifications on tax – I have tried to simplifying things, but tax in PNG can be very complicated. Also note, I am not a Financial Advisor, please talk to the correct people for clarification. Eg Superannuation etc etc
Note: There are organisations that will give you a NET Salary, if you can get to that point – and you are happy with it, then that is great, they take the liability on anything else that happens, but you might lose out on FX gain etc.
Oh – and above all – do some research on PNG, maybe see if you can fly over for a few days (look/see) and really research your company. There are a lot of companies out there with a track record of overhauling expat’s, and you don’t want to work for companies like that.