Is it permissible to deduct salary of employees in Vietnam?

Is it permissible to deduct salary of employees in Vietnam?

Pursuant to Article 102 of the Labor Code in 2019 stipulating salary deductions:

Salary deductions

1. An employer shall have the right to deduct from an employee’s salary only for the compensation for the damage to the employer’s equipment and assets in accordance with Article 129 of this Labor Code.

2. The employee has the right to be aware of the reasons for the deduction.

3. Any monthly deduction shall not exceed 30% of the net monthly salary of the employee, after the payment of compulsory social insurance, health insurance, unemployment insurance premiums and personal income tax.

As regulated above, an employer shall have the right to deduct from an employee’s salary only for the compensation for the damage to the employer’s equipment and assets in accordance with current regulations.

Note: Any monthly deduction shall not exceed 30% of the net monthly salary of the employee, after the payment of compulsory social insurance, health insurance, unemployment insurance premiums and personal income tax.

Is it permissible to deduct salary of employees in Vietnam? - image from internet

What are the fines for deducting from employees’ salaries in breach of law in Vietnam?

Pursuant to Article 17 of the Decree 12/2022/ND-CP stipulating violations against regulations on salaries:

Violations against regulations on salaries

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2. The following fines shall be imposed upon an employer for commission of one of the following violations: Failing to pay salaries on schedule as prescribed by law; failing to pay or insufficiently paying salaries to employees as agreed in their employment contracts; failing to make or insufficiently making overtime pay; failing to make or insufficiently making nightshift pay; failing to pay or insufficiently paying work suspension allowances as prescribed by law; restricting or interfering employees’ spending of their salaries; forcing employees to spend their salaries on goods or services of the employer or any particular providers decided by the employer; deducting from employees’ salaries in breach of law; failing to pay or insufficiently paying salaries to employees how are reassigned to perform works which are not specified in their employment contracts or during a strike; failing to make or insufficiently making payments to employees who, due to employment termination or job loss, have not taken or not entirely taken up their annual leave in compensation for their untaken leave days; failing to make or insufficiently making advance payments to employees who temporarily leave their works in accordance with regulations of law; failing to pay full salaries to employees who are not disciplined for their work suspension period:

a) A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the violation involves 01 - 10 employees;

b) A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed if the violation involves 11 - 50 employees;

c) A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 51 - 100 employees;

d) A fine ranging from VND 30.000.000 to VND 40.000.000 shall be imposed if the violation involves 101 - 300 employees;

dd) A fine ranging from VND 40.000.000 to VND 50.000.000 shall be imposed if the violation involves 301 employees or more.

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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.

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As regulated above, depending on the violation, a fine ranging from VND 5.000.000 to VND 50.000.000 shall be imposed on an employer for deducting employees’ salaries in breach of law in Vietnam.

In addition, the employer that commits the violation 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 fine for violations of above regulations is the same for individuals. The fine for organizations is twice the fine for individuals (according to Clause 1 Article 6 of Decree 12/2022/ND-CP).

In which cases shall an employee who loses the employer’s equipment or assets not be required to pay a compensation for damage in Vietnam?

Pursuant to Article 129 of the Labor Code in 2019 stipulating compensation for damage:

Compensation for damage

1. An employee who causes damage to equipment or otherwise damages the employer’s assets shall have to pay compensation in accordance with labor laws or the employer’s internal labor regulations.

In case the damage caused by an employee is not serious, not deliberate and is worth less than 10 months’ region-based minimum wage announced by the Government, the employee shall have to pay a compensation of not more than his/her 03 months’ salary, which shall be monthly deducted from his/her salary in accordance with Clause 3 Article 102 of this Code.

2. An employee who loses the employer’s equipment or assets, or consumes the materials beyond the set limits shall pay a compensation for damage in full or in part at the market price or as stipulated in the internal labor regulations or the responsibility contract (if any). In case this is caused by a natural disaster, fire, war, major epidemic, calamity, or another force majeure event which is unforeseeable and insurmountable, and all necessary measures and possibilities for avoidance have been taken, the compensation shall not required.

As regulated above, an employee who loses the employer’s equipment or assets are not required to pay a compensation for damage if the damage is caused by a natural disaster, fire, war, major epidemic, calamity, or another force majeure event which is unforeseeable and all necessary measures and possibilities for avoidance have been taken.

Best regards!