TRADE ARTICLES

Synthesis Of Vietnamese Regulations On Wages

Paying wages to employees is one of the most basic obligations of the employer. However in principle, forms of wage payment as well as payroll calculation methods in several cases still often confuse enterprises.

Based on the provisions of the Labor Code, a wage is monetary compensation which is paid by an employer to an employee in exchange for doing a job as agreed by the two parties, including a wage amount based on the work or title, wage allowance(s) and other additional payments as stated in the labor contract.

With years of experience in the field of labor consultation, PLF hereby presents to enterprises the synthesis of regulations related to wages, specifically as follows:

Wage payment principles

1. An employee’s wage must not be lower than the minimum wage set by the Government.

2. A wage must be paid to an employee based on labor productivity and quality of the work performed.

3. An employer shall pay equal wages without gender-based discrimination to employees doing a job of equal value.

4. Emplo ge on time to an employee, the employer may not postpone the payment for more than 1 month and shall pay the employee with an additional amount at least equal to the deposit interest rate announced by the State Bank of Vietnam at the time of wage payment. An employee may unilaterally terminate the labor contract prior to its expiry if he/she is not paid in full or on time as agreed in the labor contract.

5. An employer is prohibited from applying a fine or wage reduction instead of a disciplinary measure, except the case in which An employer makes deductions from the wage of an employee for compensation for damage of tools and equipment of the employer as prescribed.

Forms of wage payment

Wage can be paid by cash or via the employee’s personal bank account. An employer may select the form of wage payment based on working time, products or piecework, which must be maintained for a certain period of time. Any change in the form of payment must be informed by the employer to the employee at least 10 days in advance.

1. Employees enjoying monthly wages must be paid once a month or once every half of the month. In case where employees enjoy hourly, daily or weekly wages, 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 wages are paid in a lump sum at least every 15 days.

2. Employees enjoying wages based on products or piecework must be paid as agreed by the two parties. If the work is to be performed in a number of months, the employee must be given an advance wage according to the volume of work completed in the month for each month.

Wage calculation methods in certain cases

1. Probation wage:

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

2. Wage for overtime work:

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

a. On normal days, at least equal to 150%;

b. On weekends, at least equal to 200%;

c. On public holidays and paid leave days, at least equal to 300%, excluding the wage for public holidays and paid leave days of employees receiving daily wages.

3. Wage for night work (calculated from 22:00 until 06:00 of the next day):

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

4. Wage 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 wage calculated according to the wage unit or the wage for a job performed during daytime.

5. Wage in case of work suspension:

a. In case an employee has to suspend working due to the fault of the employer, the employee is entitled to payment of the full wage;

b. If due to the employee’s fault, he/she is not entitled to payment of wage; other employees in the same unit who also have to suspend the work are entitled to the wages as agreed upon by the two parties, provided that those wages are not lower than the regional minimum wage stipulated by the Government;

c. If due to power or water incidents rather than the fault of the employer, employees or for other objective reasons such as natural calamity, fire, dangerous epidemic, etc., or for economic reasons, the wage for work suspension must be agreed by the two parties but must not be lower than the regional minimum wage stipulated by the Government.

6. Wage during temporary job assignment:

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

7. Wage during the temporary suspension of work

During the progress of verifying the violation of an employee to consider disciplining, an employer may suspend an employee from working. During the period of work suspension, the employee is entitled to 50% of the wage he/she receives prior to the suspension. In case the employee is disciplined, he/she is not required to reimburse the wage advanced to him/her. In case the employee is not disciplined, the employer shall pay the full wage for the period of work suspension.

8. Wage for apprenticeship and on-the-job training:

During the period of apprenticeship or on-the-job training, if the apprentice or the on-the-job trainee directly makes or participates in the making of qualified products, he/she must be paid by the employer with a wage at a level agreed by the two parties.

9. Wage for case where employee is absent from work and covered by social insurance:

When an employee is absent from work and covered by social insurance, the employer is not required to pay wages 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 to the employee a wage 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.

PLF Law Firm 

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