New regulations on regional minimum wage in 2024

On 30th June 2024, the government issued Decree 74/2024/ND-CP, which establishes the regional minimum wage levels for employees based on the new labor regulations. This decree replaces Decree No. 38/2022/ND-CP and will be effective from 1st July 2024. The new decree includes several key changes related to the Vietnam regional minimum wage levels. 

1. Increase regional minimum wage

The Decree 74/2024/ND-CP stipulates the minimum wage levels for employees working for employers on a monthly and hourly basis, specifically as follows: 

1.1. Minimum monthly wage

• Region I: increases by 280,000 VND/month, from 4,680,000 VND/month up to 4,960,000 VND/month;
• Region II: increases by 250,000 VND/month, from 4,160,000 VND/month up to 4,410,000 VND/month;
• Region III: increases by 220,000 VND/month, from 3,640,000 VND/month up to 3,860 VND/month;
• Region IV: increases by 200,000 VND/month, from 3,250,000 VND/month up to 3,450,000 VND/month.

1.2. Minimum hourly wage

• Region I: increases by 1,300 VND/hour, from 22,500 VND/hour to 23,800 VND/hour;​ 
• Region II: increases by 1,200 VND/hour, from 20,000 VND/hour to 21,200 VND/hour; 
• Region III: increases by 1,100 VND/hour, from 17,500 VND/hour to 18,600 VND/hour; 
• Region IV: increases by 1,000 VND/hour, from 15,600 VND/hour to 16,600 VND/hour. 

2. Update the list of regions

The government updated and changed the list of regions applying for minimum wage for region I, region II, region III and region IV. The Appendix of Decree 74/2024/ND-CP provides specific details of these changes.

3. The regions are determined based on the location of the employer’s operations:

(i) If an employer operates in a region, they must apply the minimum wage level specified for that region. 

(ii) If an employer has offices or branches operating in different regions with varying minimum wages, each office or branch must apply the minimum wage level specified for the region it operates in. 

(iii) If an employer operates in industrial zones or export processing zones that span multiple regions with different minimum wages, the employees must apply the highest minimum wage level among those regions. 

(iv) If an employer operates in the region that undergoes a name change or administrative division, the employer temporarily applies the minimum wage of the area before the change until the government issues new regulations.

(v) If an employer operates in a newly established region formed from one or more regions with different minimum wages, the employer must apply the highest minimum wage of those original regions. 

(vi) If an employer operates in a newly established city under provincial jurisdiction, which has been created from one or more regions within region IV, the minimum wage level applicable will be that specified for the remaining provincial cities listed in Clause 3 of the Appendix attached to Decree 74/2024/ND-CP. 

4. Application of minimum wage

Decree 74/2024/ND-CP provides guidance on determining minimum wages through the following methods: 

4.1. Minimum monthly wage

Vietnam’s minimum wage serves as the base for negotiating and paying monthly wages to employees. It ensures that the wage for a job or position, when an employee works the full-time hours in a month and completes the agreed workload or tasks earn at least the minimum monthly wage. 

4.2. Minimum hourly wage

Vietnam’s minimum wage serves as the base for negotiating and paying hourly wages to employees. In fact, it guarantees that employees receive at least the minimum hourly wage for work completed.

4.3. Weekly, daily, product-based, or contract-based wages

For these forms of payment, converting wages to monthly or hourly rates must not result in amount lower than the minimum monthly or hourly wage. The conversion of wages to monthly or hourly rates is based on the normal working hours chosen by the employer according to labor law as follows: 

• (i) The monthly wage conversion is calculated by multiplying the weekly wage by 52 weeks and dividing by 12 months; or by multiplying the daily wage by the number of normal working days in a month; or by converting the product or contract wage completed during normal working hours in a month. 
• (ii) The hourly wage conversion is calculated by dividing the weekly or daily wage by the number of normal working hours in a week or a day; or by dividing the product or contract wage by the number of hours worked during normal working hours to produce the product or complete the contracted task. 

Decree 74/2024/ND-CP, effective from 1st July 2024, introduces timely adjustments to regional minimum wages for employees. This decree increases the minimum wage both monthly and hourly pay. Additionally, it updates the list of regions, and provides specific guidance on determining the appliance minimum wage based on the employer’s location and operational region. 

Conclusion

Moreover, these changes in regional minimum wage regulations aim to ensure employees wages align with the economic conditions and living costs in each region. Indeed, it reflects the government’s commitment to protect employees rights and promote sustainable labor market development in Vietnam, as outlined in the new Vietnam minimum wage framework. The new Vietnam minimum wage increase is both a challenge and an opportunity for businesses. While it requires salary structure adjustments, it can also boost productivity and attract top talent.

Businesses seeking expert advice on Vietnam’s minimum wage regulations and labor compliance? Schedule a Free Initial 30-Minutes Consultation with our lawyers today to discuss your specific needs and challenges.

Time of writing: 12th July 2024