Vietnam: Is it illegal for an enterprise to deduct employees' wages?

However, to ensure the interests of enterprises when employees damage the enterprise's tools and equipment, enterprises are allowed to deduct employees' wages according to the specific conditions and forms prescribed by the Labor Code 2012 of Vietnam.

Specifically, according to Article 101 of the Labor Code 2012 of Vietnam:

“1. An employer may only make deductions from the wage of an employee for compensation for damage of tools and equipment of the employer in accordance with Article 130 of this Code.

2. An employee is entitled to know the reasons for his/her wage deductions.

3. Monthly deductions must not exceed 30% of the monthly wage of an employee after having paid compulsory social insurance, health insurance and unemployment insurance premiums and income tax.”

Article 130 of the Labor Code 2012 also stipulates that an employee who causes damage to tools and equipment or the assets of the employer shall pay compensation and have his/her wage deducted monthly.

Conditions for deductions from wages: In case due to negligence an employee causes a minor damage valued at no more than 10 months’ regional minimum wage announced by the Government and applied at the employee’s workplace, the employee shall pay compensation of no more than 3 months’ wage which shall be deducted monthly from his/her wage in accordance with this Code.

Employees whose wages are deducted must know the reason for the deduction from their wages. According to Clause 3 Article 13 of Decree No. 95/2013/NĐ-CP of Vietnam’s Government, in case an enterprise deducts wages of workers in contravention of Article 101 of the Labor Code 2012, a fine ranging from VND 5,000,000 to VND 50,000,000 shall be imposed, depending on the number of employees who are violated.

On the other hand, currently, Vietnam’s law only allows enterprises to use three forms of handling violations of labor discipline, including: reprimand; prolongation of the wage rise period for no more than 6 months; removal from office; dismissal, specified in Article 125 of the Labor Code 2012 of Vietnam. In addition to the three forms of discipline mentioned above, enterprises are not allowed to apply any other forms of discipline to employees who violate labor discipline.

Thus, enterprises as employers are not allowed to deduct employees' wages when legal conditions have not been met.

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