New contents when applying the regional minimum wage from July 1, 2022

According to this Decree, enterprises and employees should note the following points:

1. Apply the minimum hourly wage

The minimum hourly wage is the lowest wage as the basis for agreement and payment to employees applying the hourly payment method, ensuring that the wage according to the job or title of the employee working in an hour and completing the agreed labor norms or work must not be lower than the minimum hourly wage.

Specifically, Decree 38 stipulates the minimum hourly rate according to 4 regions as follows: region I is VND 22,500/hour, region II is VND 20,000/hour, region III is VND 17,500/hour, region IV is VND 15,600/hour.

2. Apply the weekly or daily payment method or according to the product or salary

For employees who apply the weekly or daily payment method or by product or wage, the wage of these forms of payment if converted monthly or hourly shall not be lower than the minimum monthly wage or the minimum hourly wage. The monthly or hourly wage on the basis of the normal working time selected by the employer in accordance with the labor law is as follows:

- The monthly wage is equivalent to 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 wage according to the products, wage made during normal working hours in the month.

- The hourly wage is equivalent to the weekly wage divided by the normal working hours of the week or day; or the wage divided by the number of working hours during normal working hours to produce products and perform tasks.

3. Repeal the provision that "Wages of employees who have undergone vocational training must be at least 7% higher than the regional minimum wage"

Decree 38/2022/ND-CP stipulates that "The minimum monthly wage is the lowest wage as a basis for agreement and payment to employees applying the form of monthly payment, ensuring that the wage according to the job or title of the employee working full time normally in the month and completing the labor norms or the agreed work must not be lower than the minimum monthly wage".

The current regulation, Decree 90/2019/ND-CP of Vietnam states that "the wages of employees must be at least 7% higher than the regional minimum wage for employees who do jobs that require workers who have been trained or trained."

Thus, from July 1, 2022, it is no longer stipulated that "the wage of employees who have been trained must be at least 7% higher than the regional minimum wage".

4. Other contents

When applying the new regional minimum wage from July 1, 2022, enterprises should:

- It is possible to increase the monthly social insurance, health insurance, unemployment insurance contribution for employees

According to Decision 595/QD-BHXH, employers will have to pay social insurance, health insurance, unemployment insurance at certain rates depending on the employee's wage fund.

In fact, many enterprises are paying these amounts according to the regional minimum wage, therefore, when increasing the regional minimum wage, social insurance, health insurance will also increase.

If the enterprise has previously paid social insurance, health insurance, unemployment insurance for employees at a wage higher than the regional minimum wage, the enterprise does not need to increase the contribution.

- It is possible to increase the contribution of trade union funds

According to Decree 191/2013/ND-CP of Vietnam, the level of trade union budget contribution of enterprises is determined as follows:

Contribution = 2% x Wage fund as basis for social insurance contribution for employees

In particular, the wage fund as the basis for paying social insurance for employees is the total salary of employees subject to social insurance.

Therefore, the increase in the wage as a basis for paying social insurance for employees will lead to an increase in the payment of trade union fees of the enterprise.

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