Is the 13th month salary considered a Tet bonus in Vietnam?

Is the 13th month salary considered a Tet bonus in Vietnam?

Article 104 of the 2019 Labor Code stipulates bonuses as follows:

1. A bonus means an amount of money, a piece of property or item that is provided by an employer for his/her employees on the basis of the business performance or the employees’ performance.

2. A bonus regulation shall be decided and publicly announced at the workplace by the employer after consultation with the representative organization of employees (if any).

Currently, the law still has no specific regulations on the 13th month salary, the 13th month salary is just word of mouth between people. The 13th month salary will usually be agreed upon and paid by the employer at the end of the year in Vietnam.

Because there are no specific regulations on the 13th month salary, the 13th month salary cannot be considered a Tet bonus in Vietnam. If the content of the contract has an agreement that the 13th month salary is a Tet bonus and is recorded in the labor agreement, the employer must pay that amount to the employee.

How much is fine for company for not paying the Tet bonus as stated in the contract agreement in Vietnam?

According to Clause 2 and Point a, Clause 5, Article 17 of Decree 12/2022/ND-CP, regulations on violations of salary regulations are as follows:

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.

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.

Pursuant to Clause 1, Article 6 of Decree 12/2022/ND-CP regulating fine levels:

1. The fines for administrative violations prescribed in Chapter II, Chapter III and Chapter IV of this Decree shall be imposed upon violating individuals, except the fines in Clauses 1, 2, 3, 5 Article 7, Clauses 3, 4, 6 Article 13, Clause 2 Article 25, Clause 1 Article 26, Clauses 1, 5, 6, 7 Article 27, Clause 8 Article 39, Clause 5 Article 41, Clauses 1 through 12 Article 42, Clauses 1 through 8 Article 43, Clauses 1 through 6 Article 45, Clause 3 Article 46 of this Decree. The fine imposed upon an organization is twice as much as that imposed upon an individual for committing the same administrative violation.

Therefore, according to the above regulations in Vietnam, a company that does not pay Tet bonuses to employees as stated in the labor contract agreement will be fined from 10,000,000 VND to 100,000,000 VND (depending on the number of employees).

In addition, the company must be forced to pay the full Tet bonus with interest on the late payment bonus to employees calculated according to the highest interest rate on demand deposits announced by state-owned commercial banks announced at the time of sanction in Vietnam.

Are Tet bonuses subject to personal income tax in Vietnam?

At Point a, Clause 2, Article 2, Circular 111/2013/TT-BTC stipulates income from salaries and wages as follows:

2. Incomes from wages and remunerations.

Incomes from wages and remunerations (hereinafter referred to as wages) are incomes paid to employees from employers, including:

a) Wages, remunerations, and the other amounts paid as wages or remunerations in cash or not in cash.

Thus, according to the above regulations in Vietnam, Tet bonuses are also personal taxable income.

Best regards!