05 principles for the management of labor, wages, remuneration, and bonuses in state-owned enterprises in Vietnam from April 15, 2025

05 principles for the management of labor, wages, remuneration, and bonuses in state-owned enterprises in Vietnam from April 15, 2025​ (Image from the Internet)

On February 28, 2025, the Government of Vietnam issued Decree 44/2025/ND-CP on managing labor, wages, remuneration, and bonuses in state-owned enterprises.

05 principles for the management of labor, wages, remuneration, and bonuses in state-owned enterprises in Vietnam from April 15, 2025

At Article 3 of Decree 44/2025/ND-CP, the principles for the management of labor, wages, remuneration, and bonuses in state-owned enterprises in Vietnam include:

(1) Labor, wages, remuneration, and bonuses in enterprises are determined in conjunction with tasks, labor productivity, and production and business efficiency, suitable to the industry and nature of operations of the enterprise, aiming to ensure a salary level in the market; implement suitable salary mechanisms for the enterprise to attract and encourage high-tech human resources in high-tech fields prioritized by the State for development.

(2) The State manages labor, wages, and bonuses for enterprises in which the State holds 100% charter capital through assigning tasks and responsibilities to the owner’s representative agency and the owner’s direct representative at the enterprise. For enterprises in which the State holds over 50% charter capital or total voting shares, through the owner’s representative agency, tasks and responsibilities are assigned to the representative of the state's capital portion to participate, vote, and decide at the meetings of the Board of Members, Board of Directors, or General Meeting of Shareholders.

(3) Based on the provisions in Decree 44/2025/ND-CP, labor and employment laws, the enterprise's operational charter, and production and business strategies and plans, an enterprise decides on recruitment, labor use, construction of salary scales and tables, labor norms, determination of salary and bonus funds, and payment of wages and bonuses to employees by position or job, ensuring fair payment, with no maximum limit for experts, talented individuals, or those with high professional and technical expertise who contribute significantly to the enterprise.

(4) Distinct separation of salaries and remuneration for Board members and Supervisors from the salaries of the Executive Board, specifically:

- For the Executive Board, salaries are combined with the salary fund of employees. Salaries paid to the Executive Board are linked to the production and business performance and have a maximum cap on the earnings of the General Director and Director compared to the average salary level of employees (except when an Executive Board member is hired under a labor contract, in which case the salary is as agreed in the labor contract);

- For Board members and dedicated Supervisors, salaries are determined based on a basic salary, with additional salary linked to the scale, complexity of management, production, business efficiency, and the efficiency of state capital use. Board members and non-dedicated Supervisors are compensated based on actual working time.

In cases where a Board member also holds an Executive Board position, they receive a salary according to the Executive Board position and remuneration according to the non-dedicated Board member position; a Company President cum General Director or Director receives a salary according to the Company President position; when the Supervisory Board consists of only one Supervisor as prescribed in Article 103 of the Enterprise Law 2020, the Supervisor receives a salary and remuneration equivalent to the Head of the Supervisory Board.

(5) When determining the salaries of employees and the Executive Board, Board members, and Supervisors, if there are objective factors as stipulated in Article 4 of Decree 44/2025/ND-CP directly affecting the increase or decrease in labor productivity, profitability, or the return on owner's equity or investment (hereinafter called the profit margin), the enterprise calculates exclusion, ensuring salaries are linked to actual labor productivity and production and business efficiency.

Labor productivity indicators are determined by the enterprise based on total products, output (including converted products, output) or total revenue or total revenue minus total costs without salary, profits, or other indicators reflecting the characteristics, nature, and labor costs of employees.

The profit indicator for determining salaries and profit margins is pre-corporate income tax profit. If the enterprise is established and operates not for profit, it uses the total revenue minus total costs after excluding the effects of objective factors (if any) in place of profit indicators and to calculate profit margins when determining salaries. For enterprises tasked with market stabilization by the State, the costs incurred to fulfill this task are excluded. Enterprises producing public products and services using budgeted funds ordered or assigned by the State (hereafter called public products, services) correctly and sufficiently account for salary costs consistent with the market levels in the cost, price of public products, services as stipulated by law.

More details can be found in Decree 44/2025/ND-CP, effective from April 15, 2025.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE