The Labor Code 2019 officially took effect from January 1, 2021. From 2021, the principles for constructing salary scales and payrolls of enterprises will have changes compared to the Labor Code 2012.
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Significant changes in the construction of salary scales and payroll tables from 2021 enterprises need to note (Illustrative image)
To be specific, according to the provisions of Article 93 2019 Labor Code, the principles for constructing salary scales, payroll tables, and labor norms of enterprises are as follows:
- Employers must establish salary scales, payroll tables, and labor norms as a basis for recruitment, employment, wage agreement according to the job or position noted in the labor contract, and salary payment to employees;- Labor standards must be the average level that ensures most employees can achieve without extending regular working hours and must be tested before official promulgation;- Employers must consult with the representative organization of employees at the workplace if there is such an organization when constructing salary scales, payroll tables, and labor norms;- Salary scales, payroll tables, and labor norms must be publicly announced at the workplace before implementation.
Previously, Article 93 of the 2012 Labor Code guided by Chapter 3 of Decree 49/2013/ND-CP stipulated the principles for constructing salary scales, payroll tables, and labor norms as follows:
- Based on the principles for constructing salary scales, payroll tables, and labor norms set by the Government of Vietnam, employers are responsible for constructing salary scales, payroll tables, and labor norms as a basis for recruitment, employment, wage agreement noted in the labor contract, and salary payment to employees;- When constructing salary scales, payroll tables, and labor norms, employers must consult with the representative organization of employees at the workplace, publicly announce these at the workplace before implementation, and send them to the labor management authority at the district level where the employer’s production and business establishments are located;- When constructing salary scales and payroll tables, the difference between two consecutive salary grades must ensure to encourage improvement in professional skills, technical and operational skills, accumulated experience, and talent development but must be at least 5%.
Thus, according to the above regulations, from 2021, the principles for constructing salary scales and payroll tables of enterprises have changes compared to before. To be specific:
Firstly: Enterprises, when constructing salary scales and payroll tables, will no longer base them on the principles for constructing salary scales and payroll tables and labor norms set by the Government of Vietnam.
The 2019 Labor Code has abolished the regulation that the difference between two consecutive salary grades must be 5%, enterprises will construct salary scales and payroll tables depending on the complexity of management, job grades, or required positions.
Previously, the law stipulated that the difference between two consecutive salary grades must be at least 5%, this principle affected the policies on salary, salary scales, and payroll tables of enterprises. Most enterprises constructed salary scales and payroll tables based on seniority, the longer the seniority, the higher the salary, leading to enterprises not wanting to employ long-tenured employees due to high pay, thus finding ways to dismiss them to hire new employees.
It can be seen with this change, enterprises can increase their autonomy in constructing salary scales and payroll tables, and the number of grades will be decided by enterprises, and the difference between two salary grades will be based on management complexity, job grades, or required positions. At the same time, the difference must ensure to encourage employees to improve professional skills, technical and operational skills, and accumulate experience.
Secondly: Enterprises will not send salary scales and payroll tables to the Department of Labor, Invalids, and Social Affairs where the production and business establishments are located.
According to new regulations, when constructing salary scales and payroll tables, enterprises do not need to build based on the principles for constructing salary scales, payroll tables, and labor norms set by the Government of Vietnam. Therefore, the 2019 Labor Code also abolishes the regulation of sending salary scales and payroll tables to the district-level labor authority (Department of Labor, Invalids, and Social Affairs) where enterprises have production and business establishments.
To be specific, recently, on March 17, 2021, the Ministry of Labor - Invalids and Social Affairs issued Decision 338/QD-LDTBXH announcing the newly issued, revised, supplemented, and abolished administrative procedures in the field of labor and wages under the state management function of the Ministry of Labor - Invalids and Social Affairs, whereby two administrative procedures are abolished:
(1) The procedure of sending collective labor agreement at enterprise level to the provincial Department of Labor – Invalids and Social Affairs;
(2) The procedure of sending salary scales, payroll tables, and labor norms of enterprises to the district-level Department of Labor – Invalids and Social Affairs.
Thirdly: Labor norms must be tested before official promulgation.
Labor norms must be the average level ensuring that most employees can achieve without extending regular working hours and must be tested before official promulgation. This means that when constructing labor norms, enterprises must test them before official promulgation, and they must be suitable for the majority of employees.
The above are changes in the construction of salary scales and payroll tables of enterprises from 2021 compared to previous regulations. Hopefully, this information will help our esteemed customers and members understand more about the principles for constructing salary scales and payroll tables from 2021.
