What is the base salary in Vietnam? How is the base salary calculated? What is the current minimum base salary?
What is the base salary in Vietnam?
Currently, Vietnamese law does not have any regulations on the definition of "base salary".
However, based on fact, it can be understood that base salary is the lowest or minimum salary that an employee can receive while working and excludes bonuses, allowances, and other additional income. Base salary is the salary stated in the employment contract based on the agreed agreement between the employee and the employer.
At the same time, it is also the salary used as a basis for calculating the payment of social insurance, health insurance and unemployment insurance for employees.
The base salary does not include allowances, bonuses, benefits and other additional income. Therefore, in many cases, the base salary is not the actual salary received by the employees.
What is the base salary in Vietnam? How is the base salary calculated? What is the current minimum base salary?
How is the base salary calculated? What is the minimum base salary?
Base salary can be understood as the minimum salary that employees receive, so the base salary for enterprises and the State sector also has a difference.
Therefore, the current base salary will be divided into 2 groups of subjects as follows:
(1) For employees working under employment contracts for enterprises and individuals:
The base salary of employees working in an enterprise is determined by agreement between the employee and the employer, but must not be lower than the region-based statutory minimum wage prescribed by the Government.
Region-based statutory minimum wage is the lowest wage that an employer must pay to an employee in order to ensure the minimum standard of living of the employee and his/her family in the area where they live and work.
On the other hand, the base salary is the salary in the employment contract and agreed upon by the parties. Therefore, the base salary will be at least equal to the region-based statutory minimum wage.
The current region-based statutory minimum wage is specified in Article 3 of Decree No. 38/2022/ND-CP as follows:
+ Region 1: The statutory minimum wages per month is 4,680,000 VND/month, the statutory minimum wages per hour is 22,500 VND/hour.
+ Region 2: The statutory minimum wages per month is 4,160,000 VND/month, the statutory minimum wages per hour is 20,000 VND/hour.
+ Region 3: The statutory minimum wages per month is 3,640,000 VND/month, the statutory minimum wages per hour is 17,500 VND/hour.
+ Region 4: The statutory minimum wages per month is 3,250,000 VND/month, the statutory minimum wages per hour is 15,600 VND/hour.
(2) For cadres, civil servants and public employees receiving salaries from the State budget:
The base salary of cadres, civil servants and public employees is calculated based on the base salary and salary coefficient according to the following formula:
Base salary = Statutory pay rate x Salary coefficient
Currently, the base salary is 1.8 million VND/month x salary coefficient.
What is the penalty for paying the base salary lower than the region-based statutory minimum wage?
According to the provisions of Clause 3, Article 17 of Decree No. 12/2022/ND-CP stipulating as follows:
Violations against regulations on salaries
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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) A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 01 - 10 employees;
b) A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed if the violation involves 11 - 50 employees;
c) A fine ranging from VND 50.000.000 to VND 75.000.000 shall be imposed if the violation involves 51 employees or more.
…
5. Remedial measures
a) 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.
b) 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.
Thus, 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.
At the same time, the employer 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.
Note: The above fines are imposed on individuals; the fines incurred by an organization are twice as much as that incurred by an individual for the same administrative violation.
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