Circular 04: Implementation Wage Fund for Employees and the Executive Board

Actual Wage Fund of Employees and Executive Board (Illustration)

Circular 04/2020/TT-BLDTBXH stipulates that the company determines and excludes objective factors (if any) that directly affect labor productivity and profit in 2020 compared to the actual labor productivity and profit of the 2018 - 2019 period before calculating the actual wage fund for 2020 according to the principle: the impact of objective factors on labor productivity and profit must be specifically quantified; reducing the part of the objective factors that increase and adding the part of the objective factors that decrease into the actual labor productivity and profit in 2020.

The actual wage fund for 2020 of the company is determined by the wage fund per unit price according to formula (2) and adjusted according to average labor productivity and profit (pre-tax) for each case as follows:

- In case the percentage increase in average wage in 2020 is lower than the percentage increase in average labor productivity and actual profit of 2020 compared to the average performance of 2018 - 2019, then the actual wage fund of 2020 equals the wage fund per unit price; if the percentage increase in the average wage in 2020 equals or exceeds the percentage increase in average labor productivity, the actual wage fund must be adjusted to ensure the increase in average wage is lower than the increase in average labor productivity.

- In case the actual profit in 2020 is lower or higher than the average profit of the 2018 - 2019 period, after adjusting the actual wage fund according to point a of this Clause, the company adjusts according to the profit as follows:

+ For companies that have a higher actual profit than the average profit of the 2018 - 2019 period, supplement the actual wage fund according to the principle: for every 1% of profit exceeded, supplement a maximum of 2% of the actual wage fund, but not exceeding 20% of the excess profit and not exceeding 2 months of the average actual salary of the total number of employees actually used on average throughout the year.

+ For companies that have a lower actual profit than the average profit of the 2018 - 2019 period, the company must reduce the actual wage fund in one of two ways: either reduce by the percentage (%) equal to the percentage decrease between the actual profit and the average profit of the 2018 - 2019 period, or reduce by the absolute value equal to the difference between the actual profit of 2020 and the average profit of the 2018 - 2019 period. The maximum reduction of both methods should not exceed 2 months of average actual salary of the total number of employees actually used on average in 2020 and ensure the actual wage fund is not lower than the wage fund calculated according to the average salary in the labor contract.

The average salary, average labor productivity, and average actual profit are determined according to the Appendix issued together with this Circular.

More details can be found in: Circular 04/2020/TT-BLDTBXH effective from July 10, 2020.

Thu Ba

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