What is Commissioned Salary?

Contract-based Salary is a form of wage payment based on the volume, quantity, and quality of completed work. This payment method can be by time (hour), per unit of product, or based on revenue, and even gross profit within a month.

According to the Labour Code 2012, the employer has the right to choose the form of wage payment by time, product, or contract. Contract-based wages are paid based on the volume, quality of work, and the deadline for completion. The chosen form of wage payment must be maintained for a certain period; in the case of changing the wage payment form, the employer must notify the employee at least 10 days in advance. Wage payment is carried out according to the agreement between the employee and the employer.

Thus, contract-based wage payment has various methods—it can be based on the volume of products or revenue directly performed by an individual or group, or on the coefficient or position points, for both direct and indirect production departments.

It is essential in contract-based wage payment that the employer determines an appropriate rate or unit price that is encouraging and ensures the employee's income. Furthermore, different levels of job completion should be set, with higher levels having higher rates which may include additional bonuses to maximize capacity and encourage employees to achieve higher performance in their work.

Contract-based salaries are paid based on a job contracting agreement; therefore, it inherently resembles a seasonal contract and does not include social insurance contributions.

Different from contract-based salary, fixed salary (or base wage) is preferred by many businesses. A base wage ensures that employees feel secure and stable in their job and life, allowing them to fully dedicate themselves to work. However, each wage payment form has its own advantages, so it is possible to apply both wage calculations, meaning both a fixed salary part and a contract-based part, to take advantage of the benefits of both methods.

Relevant Documents:

Decree 49/2013/ND-CP guiding the Labour Code on wages

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