Fine of up to VND 40 million for deducting the employee’s salary wage instead of disciplinary measures in Vietnam

Hello, Lawnet would like to answer the following:

1. Forms labor disciplinary measures in Vietnam

According to Article 124 of the Labor Code 2019, when an employee violates a labor discipline, the employer can choose the following forms of disciplinary measures:

- Reprimand.

- Deferment of pay rise for up to 6 months.

- Demotion.

- Dismissal.

Thus, depending on the extent and consequences of the behavior, the employer may consider applying different forms. However, the disciplinary  measures needs to ensure compliance with the provisions of Clause 1, Article 122 of the Labor Code 2019, specifically:

Article 122. Principles and procedures for taking disciplinary measures at work

Disciplinary measures against an employee shall be taken in accordance with the following regulations:

a) The employer is able to prove the employee’s fault;

b) The process is participated in by the representative organization of employees to which the employee is a member;

c) The employee is physically present and has the right to defend him/herself, request a lawyer or the representative organization of employees to defend him/her; if the employee is under 15 years of age, his/her parent or a legal representative must be present;

d) The disciplinary process is recorded in writing.

Thus, when handling labor discipline, the employer is obliged to prove the fault of the employee. In addition, there must be the participation of the representative organization of workers at the establishment of which the employee being disciplined is a member. The handling of labor discipline must be done in the presence of the employee, who has the right to defend himself, ask a lawyer or a representative organization of the employee to defend. For employees under 15 years old, when being disciplined for labor, there must be the participation of a legal representative. The handling of labor discipline must be recorded in writing.

2. Is it illegal to impose monetary fines or deduct the employee’s salary wage instead of disciplinary measures in Vietnam?

According to Article 127 of Vietnam's Labor Code 2019, regulations on forbidden actions when imposing disciplinary measures in the workplace are as follows

- Harming the employee's health, life, honor or dignity.

- Applying monetary fines or deducting the employee’s salary wage.

- Imposing a disciplinary measure against an employee for a violation which is not stipulated in the internal labor regulations or employment contract or labor laws.

Thus, the company is prohibited by law from imposing fines on employees for being late, working separately during working hours, etc., instead of handling labor discipline.

3. The level of sanction for applying monetary fines or deducting the employee’s salary wage in Vietnam

According to Point b, Clause 3, Article 19 of Decree 12/2022/ND-CP, which stipulates the level of sanction when the company requests a fine when the employee violates, as follows:

Article 19. Violations against regulations on labour discipline and material responsibility

A fine ranging from VND 20.000.000 to VND 40.000.000 shall be imposed upon an employer for commission of one of the following violations:

...

b) Applying monetary fines or deducting the employee’s salary wage instead of disciplinary measures;

Thus, when the employers use the form of applying monetary fines or deducting the employee’s salary wage instead of disciplinary measures, they will be administratively sanctioned from 20,000,000 VND to 40,000,000 VND depending on the severity of the violation.

In addition, the employer must take the following remedial measures:

- The employer that commits the violation in Point dd Clause 2 or Point c Clause 3 of Article 19 of Decree 12/2022/ND-CP is compelled to reinstate the employee and pay full salary as agreed in the employment contract to employee for the period during which the employee is dismissed by the employer for disciplinary reasons.

- The employer that commits the violation in Point e or g Clause 2 of Article 19 of Decree 12/2022/ND-CP is compelled to pay full salaries to employees during the period they are suspended from work.

- The employer that commits the violation in Point a Clause 3 of Article 19 of Decree 12/2022/ND-CP is compelled to issue public apology to the employee and fully pay treatment costs and salary to the employee during his/her treatment period if the employee is physically harmed to the extent that he/she must receive treatment at health facilities.

- The employer that commits the violation in Point b Clause 3 of Article 19 of Decree 12/2022/ND-CP is compelled to return collected amounts or pay full salaries to employees.

Best regards!

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