From July 1, 2024, what is the regulation on regional minimum wage? How much will the regional minimum wage increase?
From July 1, 2024, how are regional minimum wages regulated? Will regional minimum wages increase by 6% from July 1, 2024?
On the morning of December 20, the National Wage Council held its second session of 2023, to discuss and negotiate the plan to adjust the regional minimum wage for 2024.
In concluding the session, after listening to the opinions of relevant parties, Mr. Le Van Thanh, Deputy Minister of Labor, Invalids and Social Affairs, Chairman of the National Wage Council, stated that all members present at the session voted to finalize the regional minimum wage increase for 2024 at 6%, effective from July 1, 2024.
Mr. Ngo Duy Hieu, Vice President of the Vietnam General Confederation of Labor, Vice Chairman of the National Wage Council, assessed: The 6% increase is suitable under the context where employees share the difficulties faced by enterprises.
From July 1, 2024: The new regional minimum wage will be applied, increasing by 6% compared to the current regional minimum wage.
Thus, when the regional minimum wage is increased by 6%, the expected minimum wage in the four regions will be as follows:
| Region | Monthly Minimum Wage
(Unit: VND/month) || --- | --- || Region 1 | 4,960,800 || Region 2 | 4,409,600 || Region 3 | 3,858,400 || Region 4 | 3,445,000 |
The average wage in the enterprise sector after increasing the regional minimum wage by 6% will be around 4.1 million VND.
The current regional minimum wage application until June 30, 2024, continues to follow Decree 38/2022/ND-CP unless there are no changes, with the specific amounts as follows:
| Region | Monthly Minimum Wage
(Unit: VND/month) || --- | --- || Region 1 | 4,680,000 || Region 2 | 4,160,000 || Region 3 | 3,640,000 || Region 4 | 3,250,000 |
From July 1, 2024, how are regional minimum wages regulated? How much will regional minimum wages increase?
What is the minimum wage?
According to the provisions of Article 91 Labor Code 2019, Decree 38/2022/ND-CP, the minimum wage is the lowest wage paid to employees doing the simplest jobs under normal working conditions to ensure the minimum living standards for them and their families, suitable to socio-economic development conditions.
The minimum wage is established by region and determined monthly or hourly.
The minimum wage is adjusted based on the minimum living standards of employees and their families; the correlation between the minimum wage and the market wage; consumer price index, economic growth rate; labor supply and demand; employment and unemployment; labor productivity; and the paying ability of enterprises.
How will businesses be penalized if they pay wages below the regional minimum wage?
Based on the provisions of Article 17 Decree 12/2022/ND-CP which stipulate penalties for violations related to wages as follows:
Violations concerning wages
...
3. Fines imposed on employers who pay employees less than the minimum wage prescribed by the Government of Vietnam are as follows:
a) From 20,000,000 VND to 30,000,000 VND for violations involving 1 to 10 employees;
b) From 30,000,000 VND to 50,000,000 VND for violations involving 11 to 50 employees;
c) From 50,000,000 VND to 75,000,000 VND for violations involving 51 or more employees.
...
5. Remedies
a) Employers are required to pay the full amount of unpaid or underpaid wages plus interest calculated at the highest non-term deposit interest rate of state commercial banks at the time of the penalty, for violations stipulated in Clauses 2 and 3 of this Article;
b) Employers are required to pay an amount equivalent to the mandatory social insurance, health insurance, and unemployment insurance contributions plus interest calculated at the highest non-term deposit interest rate of state commercial banks at the time of the penalty for violations stipulated in Clause 4 of this Article.
According to the aforementioned provisions, if an individual employer pays employees less than the regional minimum wage, they may be fined from 20 million VND to 75 million VND, depending on the number of employees paid less than the regional minimum wage.
The aforementioned fine applies to individual employers. For organizational employers, the fine is doubled according to Clause 1, Article 6 of Decree 12/2022/ND-CP.
In addition to the fine, employers are also required to pay the full amount of unpaid or underpaid wages plus interest. The interest rate will be calculated based on the highest non-term deposit interest rate of state commercial banks at the time the business is penalized.
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