Agreement on region-based minimum wage increase for employees upon salary reform in Vietnam from July 1, 2024
Agreement on region-based minimum wage increase for employees upon salary reform in Vietnam from July 1, 2024
In response to Official Dispatch 1167/BLDTBXH-QHLDTL dated March 22, 2024, from the Ministry of Labour - Invalids and Social Affairs regarding comments on the draft Decree of the Government of Vietnam prescribing the region-based minimum wage for employees working under employment contracts, in Document 1943/BNV-TL dated April 10, 2024, the Ministry of Home Affairs has the following opinions:
Unanimously recognizing the necessity to issue the Decree of the Government of Vietnam prescribing the region-based minimum wage for employees working under employment contracts to be implemented from July 1, 2024; at the same time, it is proposed to review the adjustment of the minimum wage to ensure compliance with Clause 3 Article 91 of the Labour Code 2019.
According to the draft Decree prescribing the region-based minimum wage for employees working under employment contracts mentioned here, the minimum wage will increase by 6% compared to the current level to be applied from July 1, 2024, specifically:
Currently, the region-based minimum wage is stipulated in Article 3 and the Appendix issued with Decree 38/2022/ND-CP as follows:
The above-mentioned minimum wage will increase from 200,000 VND to 280,000 VND (equivalent to an average rate of 6%) compared to the current minimum wage. This adjustment reflects a balanced sharing of benefits between employees and enterprises, aiming to improve employees' living standards while ensuring the maintenance, recovery, and development of the enterprises' production and business activities.
Therefore, in the spirit of implementing salary reform from July 1, 2024, the Ministry of Home Affairs agrees on the necessity to issue the Decree of the Government of Vietnam prescribing the region-based minimum wage for employees working under employment contracts to be implemented from July 1, 2024.
Source: Government of Vietnam's E-Portal
Agreement on region-based minimum wage increase for employees upon salary reform in Vietnam from July 1, 2024 (Image from the Internet)
How to apply the minimum wage in Vietnam from July 1, 2024?
According to Article 4 of the draft Decree prescribing the region-based minimum wage for employees working under employment contracts, the application of the minimum wage from July 1, 2024, is stipulated as follows:
- The monthly minimum wage is the lowest wage basis for negotiating and paying wages to employees who are paid monthly, ensuring that the wage for the job or job title of the worker who works the full normal working hours in a month and completes the agreed labor norm or job is not lower than the monthly minimum wage.
- The hourly minimum wage is the lowest wage basis for negotiating and paying wages to employees who are paid hourly, ensuring that the wage for the job or job title of the worker who works one hour and completes the agreed labor norm or job is not lower than the hourly minimum wage.
- For employees paid weekly, daily, per product, or per contract, the wages of these payment methods when converted to a monthly or hourly basis must not be lower than the monthly minimum wage or the hourly minimum wage. The conversion to monthly or hourly wages is based on the normal working hours as chosen by the employer under the labor law regulations as follows:
+ The monthly conversion wage equals the weekly wage multiplied by 52 weeks divided by 12 months; or the daily wage multiplied by the number of normal working days in the month; or the per product, contract wage performed during the normal working hours in the month.
+ The hourly conversion wage equals the weekly, daily wage divided by the normal working hours in the week, day; or the per product, contract wage divided by the working hours within the normal working hours to produce the product, perform the contractual tasks.
Resolution 27: What are the regulations on the implementation of salary reform concerning region-based minimum wages in Vietnam?
Based on the provisions in Section II of Resolution 27-NQ/TW in 2018, the 2024 salary reform for region-based minimum wages is outlined as follows:
- Continuing to improve the policies regarding regional monthly minimum wages;
- Adjusting the region-based minimum wage to ensure the minimum living standard of employees and their families, in relation to labor market factors and socio-economic development (labor supply-demand, economic growth rate, consumer price index, labor productivity, employment, unemployment, enterprises' payment capacity...).
- Strengthening the functions, duties, and organizational structure of the National Wage Council; adding independent experts to participate in the Council.
Furthermore, the management mechanism of wages and income in the private sector is guided as follows:
- Enterprises (including 100% state-owned enterprises) can independently decide on wage policies (including scales, salary scales, labor standards) and pay wages not lower than the minimum wage announced by the State and based on collective labor agreements in line with production organization, labor organization, and the enterprise's capabilities, and openly post them in the workplace.
- The State announces region-based minimum wages by month and hour, average market wages for occupations, and supports the provision of labor market information without direct intervention in enterprise wage policies.
- Enterprises and employees negotiate, agree on wages, sign employment contracts, and pay wages linked to productivity and labor outcomes.
- Enterprises and employees' representative organizations negotiate and agree on wages, bonuses, and other incentive policies in collective labor agreements or enterprise regulations.
- Strengthening the role, capacity of trade unions and the inspection, supervision duties of state management agencies.
If unchanged, the Decree prescribing the region-based minimum wages will come into effect from July 1, 2024.
LawNet