4 key regulations on salary payment under Vietnamese Labor Law

Paying salary to employees is inherently the most basic obligation of the employer. However, its principles, forms of salary payment as well as payroll calculation methods in several cases still often confuse enterprises.

According to the Labor Code, salary is an amount the employer pays the employee under an agreement for work performed by the latter. Salary includes job/title salary, allowances, and other additional amounts. As mentioned above, paying salary to employees is a basic obligation of the employer, however, to ensure compliance with legal regulations when performing the said obligation, some of the following matters need to be noted:

1. Salary payment principles

• Salary according to job or title must not be lower than the minimum salary prescribed by the Government.
• Salaries paid to employees are based on the agreement between the parties, labor productivity, and quality of work performance.
• Employers must ensure equal pay, regardless of gender, for employees doing work of equal value.
• Employers must pay salaries directly, fully, and on time to employees. In case the employee cannot receive salary directly, the employer can pay salary to the legally authorized representative of the employee.
• Employers may not restrict or interfere with employees’ right to decide on salary spending;
  Employees must not be forced to spend their salary on purchasing goods or using services from the employer or another supplier designated by the employer.
• Employers are not allowed to impose fines or salary cuts in lieu of disciplinary action, except in cases where the employer deducts the employee’s salary to compensate for damage caused by damage to tools, equipment, and assets of the employer according to the laws or internal labor regulations.

2. Forms of salary payment

Salary can be paid by cash or via the employee’s personal bank account. In case of bank transfer, the employer shall pay the costs of account opening and transfer.

The employer and employee shall reach an agreement on whether the salary is time-based, product-based or piecework. In which, salary piecework-based are paid to employees based on the amount of work, the quality of work and the time he/she takes to complete the work.

3. Salary payment time

Depending on the form of salary payment agreed between the employee and the employer, the corresponding period in which the employer must pay the employee’s salary also differs:

• Employees enjoying monthly salary must be paid once a month or once every half of the month. The payment time shall be periodic and agreed upon by both parties.
• In case where employees enjoy hourly, daily or weekly salaries, they must be paid after the working hour, day or week or paid in a lump sum as agreed by the two parties, provided that salaries are paid in a lump sum at least every 15 days.
• Employees enjoying salary based on products or piecework must be paid as agreed by the two parties. If the work is to be performed in several months, the employee must be given an advance salary according to the volume of work completed in the month.

In case of a force majeure event in which the employer is unable to pay the employee on schedule after all remedial measures have been implemented, the salary shall be paid within 30 days.

In case a salary is paid at least 15 days behind schedule, the employer shall pay the employee compensation that is worth at least the interest on the amount paid behind schedule at the latest 1-month interest rate quoted by the bank at which the employee’s salary account is opened.

The employee has the right to unilaterally terminate the labor contract in advance if he/she is not paid in full or on time as agreed in the labor contract.

4. Salary calculation methods in certain cases

4.1 Probation salary

The salary for an employee during the probation period is required to be agreed upon by the two parties, but must be at least 85% of the salary for the job.

4.2 Salary for overtime work

An employee’s salary for overtime work is calculated according to the salary unit or salary for his/her current job as follows:

• Employees enjoying monthly salary must be paid once a month or once every half of the month. The payment time shall be periodic and agreed upon by both parties
• In case where employees enjoy hourly, daily or weekly salaries, they must be paid after the working hour, day or week or paid in a lump sum as agreed by the two parties, provided that salaries are paid in a lump sum at least every 15 days.
• Employees enjoying salary based on products or piecework must be paid as agreed by the two parties. If the work is to be performed in several months, the employee must be given an advance salary according to the volume of work completed in the month.

4.3 Salary for night work (calculated from 22:00 until 06:00 of the next day)

An employee who performs night work must be paid an additional amount at least equal to 30% of the salary calculated according to the salary unit or the salary for a job performed during normal workdays.

4.4 Salary for overtime work at night

An employee performing overtime work at night must be paid under the regulations on overtime and nighttime work. Aside from that, he/she must also be paid with an additional amount equal to 20% of the salary calculated according to the salary unit or the salary of a normal day, weekend or public holiday.

4.5 Salary in case of stop working

In case of stop working, the employee shall receive a pay as follows:

• In case an employee has to stop working due to the fault of the employer, the employee is entitled to payment of the full salary according to the labor contract;
• If due to the employee’s fault, he/she is not entitled to payment of salary; other employees in the same unit who also have to stop the work are entitled to the salary as agreed upon by the two parties, provided that this salary is not lower than the regional minimum salary stipulated by the Government;
• In case the stop working is caused by an electricity or water supply issue that is not at the employer’s fault, or by a natural disaster, fire, major epidemic, hostility, relocation requested by a competent authority, or for economic reasons, both parties shall negotiate the salary as follows:
• In case an employee has to stop working due to the fault of the employer, the employee is entitled to payment of the full salary according to the labor contract;
  • If the stop does not exceed 14 working days, the salary shall not fall below the minimum salary;
  • If the stop is longer than 14 working days, the salary shall be negotiated by both parties and the salary for the first 14 days must not fall below the minimum salary.

4.6 Salary during the reassignment of an employee against the labor contract

In some cases stipulated by law, the employer may temporarily assign an employee to perform a job that is not stated in the labor contract, provided that the assignment does not exceed 60 accumulated workdays within one year, unless otherwise agreed in writing by the employee.

The employee is entitled to a salary for the new job; if the salary for the new job is lower than the previous salary, he/she is entitled to the previous salary for 30 working days. The salary for the new job must be at least 85% of the previous salary, but not lower than the regional minimum salary stipulated by the Government.

4.7 Salary during the temporary suspension of work

During the temporary suspension of work according to the laws, the employee shall receive an advance of 50% of his/her salary entitled before the suspension. In case the employee is disciplined, he/she is not required to reimburse the salary advanced. In case the employee is not disciplined, the employer shall pay the full salary for the period of work suspension.

4.8 Salary for trainees and apprenticeship

During the period of apprenticeship or training, if the apprentice or trainee directly performs or participates in the performance of the work, he/she shall be paid by the employer with a salary at a level agreed by the parties.

4.9 Salary for cases where the employee is on leave and receiving social insurance benefits

During the period when an employee is on leave and receiving social insurance benefits, the employer is not required to pay salary to the employee.

For an employee who is not covered by compulsory social insurance, compulsory health insurance and unemployment insurance, the employer shall simultaneously pay the employee a salary and an amount equivalent to the level of contribution to compulsory social insurance, compulsory health insurance and unemployment insurance, and annual leave payments as stipulated by law.

Above are some legal regulations related to the implementation of employers’ salary obligations that employers in general and companies in particular need to pay attention to. To learn more about the topic of labor, readers can refer to other articles on our website.