Must the company increase annually wages for employees in Vietnam?
In what cases must an employer have to raise salary for employees in Vietnam?
There are two reasons that companies must raise salary for employees under the current law, including:
* After finishing the probationary period
After finishing the probation period, the company will propose to sign a formal contract with the employee if the employee is suitable for the company. In the process of proposing to sign a formal contract, the company must raise salary for employees under the provisions of Article 26 of the Law on Labor Code 2019 as follows:
Article 26. Probationary salary
The probationary salary shall be negotiated by both parties and shall not be lower than 85% of the offered salary.
* The region-based minimum wages increase in accordance with the law
According to the provisions of Article 90 of the Law on Labor Code 2019 on salaries as follows:
Article 90. Salaries
1. A salary is an amount the employer pays the employee under an agreement for a work performed by the latter. Salary equals (=) base salary plus (+) allowances and other additional amounts.
2. The base salary must not fall below the statutory minimum wages.
3. Employers shall pay salaries fairly without discrimination against genders of employees who perform equal works.
According to the provisions of Clause 1, Article 5 of Decree No. 90/2019/ND-CP on the region-based minimum wages for employees working under labor contracts as follows:
Article 5. Application of region-based minimum wages
1. The region-based minimum wages referred to in Article 3 hereof are the lowest rates used as the basis for any arrangement between enterprises and employees on salary and salary payment. The wage paid to an employee who works under normal working conditions, ensures the required monthly working hours and has fulfilled the predetermined labour productivity norm or agreed-upon duties shall:
a) not be lower than the region-based minimum wage paid to an unskilled worker who performs simplest duties; and
b) be at least 7% higher than the region-based minimum wage paid to a skilled worker as prescribed in Clause 2 of this Article.
Thus, the minimum wages is applicable for employees. The company will base on this the minimum wages to deal and pay wages for employees. The company must not pay higher than region-based minimum wages and must be at least 7% higher than the region-based minimum wages for employees who do jobs that require employees to have vocational training
What is duration of raising salaries for employee in Vietnam?
According to the provisions at Point e, Clause 5, Article 21 of the Law on Labor Code 2019:
Article 21. Contents of employment contracts
1. An employment contract shall have the following major contents:
...
e) Regimes for promotion and pay rise;
According to Clause 6, Article 3 of Circular 10/2020/TT-BLDTBXH elaborating and guiding certain articles of the Labor Code concerning employment contracts, collective bargaining council and jobs with hazards to reproductive function and children raising promulgated by the Ministry of Labor, War Invalids and Social Affairs as follows:
Article 3. Major contents of an employment contract
Major contents of an employment contract as prescribed in clause 1 Article 21 of the Labor Code:
...
6. Advancement in pay step, pay raise: as agreed by the contracting parties concerning conditions, time, pay rate after advancement in pay step, pay raise, or as regulated in the collective bargaining agreement, or as stipulated by the employer.
Thus, based on the above provisions, the company will raise the salary by the contracting parties concerning conditions, time, pay rate after advancement in pay step, pay raise concerns or as regulated in the collective bargaining agreement, or as planned by the employer.
What are the penalties for employers non-compliance with the Law on salaries in Vietnam?
Pursuant to the provisions of Article 17 of Decree 12/2022/ND-CP on penalties for administrative violations against regulations on labor, social insurance, and Vietnamese guest workers, the penalties for employers non-compliance with the Law on salaries are:
1. A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed upon an employer for commission of one of the following violations:
- Failing to publicly post the pay scale, payroll, labour productivity norms and bonus regulations at the workplace;
- Failing to establish pay scale, payroll, or labour productivity norms; failing to experiment labour productivity norms before they are officially introduced;
- Failing to consult with the internal representative organization of employees (if any) during the establishment of the pay scale, payroll, labour productivity norms and bonus regulations;
- Failing to provide salary notes to employees or providing salary notes to employees in breach of law;
- Failing to pay salaries fairly or discriminating against genders of employees who perform equal works.
2. The following fines shall be imposed upon an employer for commission of one of the following violations: Failing to pay salaries on schedule as prescribed by law; failing to pay or insufficiently paying salaries to employees as agreed in their employment contracts; failing to make or insufficiently making overtime pay; failing to make or insufficiently making nightshift pay; failing to pay or insufficiently paying work suspension allowances as prescribed by law; restricting or interfering employees’ spending of their salaries; forcing employees to spend their salaries on goods or services of the employer or any particular providers decided by the employer; deducting from employees’ salaries in breach of law; failing to pay or insufficiently paying salaries to employees how are reassigned to perform works which are not specified in their employment contracts or during a strike; failing to make or insufficiently making payments to employees who, due to employment termination or job loss, have not taken or not entirely taken up their annual leave in compensation for their untaken leave days; failing to make or insufficiently making advance payments to employees who temporarily leave their works in accordance with regulations of law; failing to pay full salaries to employees who are not disciplined for their work suspension period:
- A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the violation involves 01 - 10 employees;
- A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed if the violation involves 11 - 50 employees;
- A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 51 - 100 employees;
- A fine ranging from VND 30.000.000 to VND 40.000.000 shall be imposed if the violation involves 101 - 300 employees;
dd) A fine ranging from VND 40.000.000 to VND 50.000.000 shall be imposed if the violation involves 301 employees or more.
3. The following fines shall be imposed upon an employer for paying their employees salaries which are lower than the statutory minimum wages announced by the Government:
- A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 01 - 10 employees;
- A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed if the violation involves 11 - 50 employees;
- A fine ranging from VND 50.000.000 to VND 75.000.000 shall be imposed if the violation involves 51 employees or more.
4. The following fines shall be imposed upon an employer for failing to pay or insufficiently paying employees, who are not covered by compulsory social insurance, health insurance or unemployment insurance as prescribed by law, in addition to and at the same time with salary payment, amounts of money equal to total sums of compulsory social insurance, compulsory health insurance, and unemployment insurance premiums payable by the employer:
- A fine ranging from VND 3.000.000 to VND 5.000.000 shall be imposed if the violation involves 01 - 10 employees;
- A fine ranging from VND 5.000.000 to VND 8.000.000 shall be imposed if the violation involves 11 - 50 employees;
- A fine ranging from VND 8.000.000 to VND 12.000.000 shall be imposed if the violation involves 51 - 100 employees;
- A fine ranging from VND 12.000.000 to VND 15.000.000 shall be imposed if the violation involves 101 - 300 employees;
- A fine ranging from VND 15.000.000 to VND 20.000.000 shall be imposed if the violation involves 301 employees or more.
5. Remedial measures
- The employer that commits the violation specified in Clause 2 or Clause 3 of this Article is compelled to pay full salaries plus interests on late payments or insufficient payments of salary, which are calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees.
- The employer that commits the violation specified in Clause 4 of this Article is compelled to pay full amounts of money equal to total sums of compulsory social insurance, compulsory health insurance, and unemployment insurance premiums payable plus interests on such amounts, which are calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees.
Note: the above fine is for individuals. The fine for organizations is twice the fine for individuals.
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