Vietnam: From July 1, 2022, shall the expenses of enterprises increase in case the proposal to increase 6% of the region-based minimum wages is approved?
- What is the region-based minimum wage in Vietnam?
- What are the regulations on the minimum wages paid by the enterprises in case the proposal to increase 6% of the region-based minimum wage is approved?
- The increase of the region-based minimum wages leads to the increase of expenses for the enterprises in Vietnam
- What are the regulations on the social insurance premiums paid by the employer when increasing 6% of the region-based minimum wages in Vietnam?
What is the region-based minimum wage in Vietnam?
According to Article 91 of the Labor Code 2019, the minimum wages are minimum wages of workers who do the simplest jobs in normal working conditions that are sufficient to support themselves and their families, and for socio-economic development. Status minimum wages per month or per hour varies according to regions.
According to Article 2 of Decree 90/2019/ND-CP, the region-based minimum wage applies to employees working under labor contracts at enterprises, specifically as follows:
- Employees who work under terms and provisions of labour contracts as prescribed in the Labour Code.
- Enterprises duly established, organized and operating under the Law on enterprises.
- Cooperatives, cooperative unions, artels, farms, households, other organizations and individuals in Vietnam that hire employees on the basis of labour contracts.
- Foreign authorities, foreign organizations, international organizations and foreigners that live/operate in the territory of Vietnam and hire employees under labour contracts (unless otherwise stipulated in international agreements to which the Socialist Republic of Vietnam is signatory).
The current region-based minimum wage is specified in Article 3 of Decree 90/2019/ND-CP as follows:
- For enterprises located in region I: VND 4,420,000/month.
- For enterprises located in region II: VND 3,920,000/month.
- For enterprises located in region III: VND 3,430,000/month.
- For enterprises located in region IV: VND 3,070,000/month.
In case employees are considered skilled workers as specified in Clause 2, Article 5 of Decree 90/2019, they will receive a salary at least 7% higher than the region-based minimum wage.
What are the regulations on the minimum wages paid by the enterprises in case the proposal to increase 6% of the region-based minimum wage is approved?
- For ordinary employees:
According to the new region-based minimum wages announced by the National Wage Council after increasing 6% and the region-based minimum wage specified in Article 3 of Decree 90/2019/ND-CP, the region-based minimum wage for employees working at the enterprise will change as follows:
- For enterprises located in region I: VND 4,690,000/month.
- For enterprises located in region II: VND 4,160,000/month.
- For enterprises located in region III: VND 3,640,000/month.
- For enterprises located in region IV: VND 3,250,000/month.
- In case employees are considered skilled workers:
If employees considered skilled workers continue to receive at least 7% more than the region-based minimum wage as specified in Article 5 of Decree 90/2019/ND-CP, the region-based minimum wage for employees working at the enterprise in the case are:
- For enterprises located in region I: VND 5,020,000/month.
- For enterprises located in region II: VND 4,450,000/month.
- For enterprises located in region III: VND 3,900,000/month.
- For enterprises located in region IV: VND 3,480,000/month.
Thus, according to the new region-based minimum wage announced by the National Wage Council after increasing 6%, the mentioned wages shall be the minimum wages paid by the enterprises under the labor contract.
The increase of the region-based minimum wages leads to the increase of expenses for the enterprises in Vietnam
Except for directly affecting the income of employees, increasing 6% of the region-based minimum wage also directly affects enterprises. During the 2 years affected by the Covid-19, many enterprises must face difficult situations, even on the verge of bankruptcy. It is a knotty problem when the increase the region-based minimum wage also leads to the increase of expenses for the enterprises in the recovery period after the Covid-19. However, if the proposal to increase the region-based minimum wage is appproved, it will support for improving productivity and working efficiency. Accordingly, the enterprises have better recovey.
What are the regulations on the social insurance premiums paid by the employer when increasing 6% of the region-based minimum wages in Vietnam?
In case the proposal to increase 6% of the region-based minimum wage is approved, the social insurance premium paid by the employer are:
(1) For Vietnamese employees:
According to Clause 1, Article 86 of the Law on Social Insurance 2014, the social insurance premium paid by the employer for the employee is:
Article 86. Levels and methods of payment by employers
1. Employers shall make monthly payments calculated based on the salary funds on which social insurance premiums are based for employees defined at Points a, b, c, d, dd and h, Clause 1, Article 2 of this Law as follows:
a/ 3% to the sickness and maternity fund;
b/ 1% to the labor accident and occupational disease fund;
c/ 14% to the retirement and survivorship allowance fund.
According to the provisions of Clause 1, Article 57 of the 2013 Law on Employment and Article 14 of Decision 595/QD-BHXH 2017 on the level of and responsibility to pay unemployment insurance premiums: Employers shall pay unemployment insurance premiums equal to 1% of the monthly wage fund of the workers currently participating in unemployment insurance;
According to the provisions of Article 13 of the Law on Health Insurance amended and supplemented in 2014 and Clause 1, Article 18 of Decision 595/QD-BHXH 2017 on the lavel of and responsibility for paying health insurance premiums: The employer pays 3% of the monthly salary of employees participating in health insurance.
Since the application date of the proposal to increase the region-based minimum wage is July 1, 2022, the provisions of Resolution 68/NQ-CP dated July 1, 2021 will not apply on enterprises eligible for payment of 0%. salary as the basis for paying social insurance premiums to the Insurance Fund for occupational accidents and diseases for 12 months (from July 1, 2021 to the end of June 30, 2022) for employees eligible for insurance benefits on labor accidents and occupational diseases.
Therefore, a total contribution for the employers is 21.5%.
Accordingly,
- In case the employer determines that the base salary to pay employees is the region-based minimum wage, the social insurance premium will change as follows:
- For enterprises located in region I: VND 4,690,000/month (pay VND 1,010,000/month)
- For enterprises located in region II: VND 4,160,000/month (pay VND 890,000/month)
- For enterprises located in region III: VND 3,640,000/month (pay VND 780,000/month)
- For enterprises located in region IV: VND 3,250,000/month (pay VND 700,000/month)
- In case the employee determines that the base salary is the region-based minimum wages to pay and is entity to Point b, Clause 1, Article 5 of Decree No. 90/2019/ND-CP, the premium will change. as follows:
- For enterprises located in region I: VND 5.020.000/month (pay VND 1.080.000/month)
- For enterprises located in region II: VND 4.450.000/month (pay VND 960.000/month)
- For enterprises located in region III: VND 3.900.000/month (pay VND 840.000/month)
- For enterprises located in region IV: VND 3.480.000/month (pay VND 750.000/month)
(2) For foreign employees:
According to Clause 1, Article 2 of Decree 143/2018/ND-CP, foreign employees working in Vietnam must participate in the following insurance benefits: sickness; maternity, occupational accident, disease, retirement and death.
According to Clause 1, Article 13 of Decision 595/QD-BHXH 2017, the employer must pay social insurance premiums for employees, specifically as follows: 3% to the sickness and maternity fund, 14% to the retirement and death fund from January 1, 2022,
At the same time, the employer must pay 3% of the monthly salary for health insurance according to Article 18 of Decision 595/QD-BHXH.
Since the application date of the proposal to increase the region-based minimum wage is July 1, 2022, the provisions of Resolution 68/NQ-CP dated July 1, 2021 will not apply on enterprises eligible for payment of 0%. salary as the basis for paying social insurance premiums to the Insurance Fund for occupational accidents and diseases for 12 months (from July 1, 2021 to the end of June 30, 2022) for employees eligible for insurance on labor accidents and occupational diseases.
Therefore, a total contribution that employers must pay for foreign workers working in Vietnam is 20.5%.
Accordingly,
- In case the employer determines that the region-based minimum salary is the salary of social insurance, the insurance premium will be changed as follows:
- For enterprises located in region I: VND 4.690.000/month (pay VND 960.000/month)
- For enterprises located in region II: VND 4.160.000/month (pay VND 850.000/month)
- For enterprises located in region III: VND 3.640.000/month (pay VND 750.000/month)
- For enterprises located in region IV: VND 3.250.000/month (pay VND 670.000/month)
- In case the employer determines that the region-based minimum salary is the salary of social insurance and under Point b, Clause 1, Article 5 of Decree No. 90/2019/ND-CP, the insurance premium rate will change as follows:
- For enterprises located in region I: VND 5.020.000/month (pay VND 1.030.000/month)
- For enterprises located in region II: VND 4.450.000/month (pay VND 910.000/month)
- For enterprises located in region III: VND 3.900.000/month (pay VND 800.000/month)
- For enterprises located in region IV: VND 3.480.000/month (pay VND 710.000/month)
Thus, if the region-based minimum wages is increased to 6%, the enterprise must pay at least the above-mentioned premium for employees.
Therefore, the increase of the region-based minimum wage has only a positive effect on employees, but it must also carefully be considered in the benefits of enterprises.
Thư Viện Pháp Luật
