Official Regional Minimum Wage Increase from July 1, 2024, according to Decree 74/2024/ND-CP? Regional Minimum Wage Increase Up to VND 280,000 Per Month?
Official Increase in Regional Minimum Wage from July 1, 2024, According to Decree 74/2024/ND-CP: Highest Increase of VND 280,000 per Month
On June 30, the Government of Vietnam promulgated Decree 74/2024/ND-CP, increasing the monthly and hourly minimum wage by 6%, based on the proposal of the Ministry of Labor, Invalids, and Social Affairs.
According to Decree 74/2024/ND-CP, the minimum wage rates for employees working under labor contracts are set for four regions, effective from July 1, 2024, as follows:
According to Decree 74/2024/ND-CP, the minimum wage rates for employees working under labor contracts are as follows:
| Region | Monthly Minimum Wage
(Unit: VND/month) | Hourly Minimum Wage
(Unit: VND/hour) || --- | --- | --- || Region I | 4,960,000 (increase of VND 280,000) | 23,800 || Region II | 4,410,000 (increase of VND 250,000) | 21,200 || Region III | 3,860,000 (increase of VND 220,000) | 18,600 || Region IV | 3,450,000 (increase of VND 200,000) | 16,600 |
The minimum wage applicable from July 1, 2024, increases by VND 200,000 to VND 280,000 compared to the current minimum wage.
Besides increasing the monthly minimum wage by region, there is also an adjustment of the regions to align with wage reform starting July 1, 2024. When the regions are adjusted, the regional monthly minimum wage will also change. Specifically:
- From Region II to Region I: increased from VND 4,160,000 per month to VND 4,960,000 per month, corresponding to an increase of 19.23%.- From Region III to Region II: increased from VND 3,640,000 to VND 4,410,000 per month, an increase of VND 770,000 per month, corresponding to an increase of 21.15%.- From Region IV to Region III: increased from VND 3,250,000 to VND 3,640,000 per month, corresponding to an increase of 18.77%.
Official increase in regional minimum wage from July 1, 2024, according to Decree 74/2024/ND-CP
Which Entities Are Eligible for a 6% Increase in Regional Minimum Wage from July 1, 2024, with Wage Reform 2024?
On June 30, the Government of Vietnam promulgated Decree 74/2024/ND-CP, increasing the monthly and hourly minimum wage by 6%, based on the proposal of the Ministry of Labor, Invalids, and Social Affairs.
The minimum wage is the lowest payment for employees performing the simplest tasks under normal working conditions to ensure the minimum living standard for employees and their families, appropriate to the economic and social conditions (Clause 1 Article 91 of the Labor Code 2019).
Furthermore, Clause 1 Article 2 and Article 3 of Decree 38/2022/ND-CP determine the subjects eligible for regional minimum wage as follows:
Subjects of Application
1. Employees working under labor contracts as specified in the Labor Code.
...
Minimum Wage Rates
1. Specifies the monthly and hourly minimum wage rates for employees working under employers according to their region as follows:
...
Thus, the 6% increase in regional minimum wage from July 1, 2024, applies to employees working under labor contracts.
Is It Allowed to Pay Employees Less Than the Regional Minimum Wage?
Article 90 of the Labor Code 2019 regulates wages as follows:
Wages
1. Wages are amounts paid by employers to employees based on agreed terms to execute work, including job-based or position-based wages, allowances, and other supplementary payments.
2. The job-based or position-based wage must not be lower than the minimum wage.
3. Employers must ensure equal pay without gender discrimination for employees performing work of equal value.
Therefore, employers pay wages to employees to execute work, which includes job-based or position-based wages, allowances, and other supplementary payments; however, the job-based or position-based wages must not be lower than the minimum wage.
Employers paying employees less than the regional minimum wage will be penalized according to Clause 3 and Clause 5 of Article 17 of Decree 12/2022/ND-CP, as follows:
Violations Regarding Wage Regulations
...
3. Fines on employers for actions paying employees less than the minimum wage prescribed by the Government of Vietnam are as follows:
a) From VND 20,000,000 to VND 30,000,000 for violations involving 01 to 10 employees;
b) From VND 30,000,000 to VND 50,000,000 for violations involving 11 to 50 employees;
c) From VND 50,000,000 to VND 75,000,000 for violations involving 51 or more employees.
...
5. Remedial Measures
a) Forcing employers to pay the full due wage plus interest on late or underpaid wages to employees, calculated according to the highest interest rate for demand deposits of state commercial banks at the time of penalty enforcement for violations stated in Clauses 2 and 3 of this Article;
b) Forcing employers to pay an amount equivalent to the required social insurance, health insurance, and unemployment insurance contributions, plus interest on these amounts calculated according to the highest interest rate for demand deposits of state commercial banks at the time of penalty enforcement for violations stated in Clause 4 of this Article.
Therefore, employers paying employees less than the regional minimum wage will be penalized as per the above regulations.
Additionally, employers must pay the full due wage plus interest on late or underpaid wages to employees, calculated according to the highest interest rate for demand deposits of state commercial banks at the time of penalty enforcement for violations stated in Clause 3 of Article 17 of Decree 12/2022/ND-CP.
Note: The penalties mentioned above apply to individuals. For organizations, the penalties are double those for individuals.
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