Some Notes on Building Salary Scales and Payroll Tables in 2017 in Vietnam

Clause 10, Article 1 of Decree 88/2015/ND-CP stipulates administrative penalties for violations in the construction of salary scales, payrolls in Vietnam as follows:

1. Warning or a fine ranging from 500,000 VND to 1,000,000 VND for employers who fail to send salary scales, payrolls, and labor norms to the district-level State labor management agency as prescribed.

2. A fine ranging from 2,000,000 VND to 5,000,000 VND for employers committing one of the following acts:

a) Failing to construct salary scales, payrolls, and labor norms or constructing salary scales, payrolls, and labor norms that are not conformable to the law;

b) Using salary scales, payrolls, and labor norms that are not conformable after receiving amendments and supplements from the district-level State labor management agency;

c) Failing to publicly announce salary scales, payrolls, labor norms, and bonus regulations at the workplace;

d) Not notifying employees of the wage payment method at least 10 days before implementation....

To avoid the above penalties, employers should comply with the regulations regarding the construction, submission, and declaration of salary scales and payrolls.

Enterprises themselves construct their salary scales and payrolls to submit to the Department of Labor, Invalids, and Social Affairs. The dossier for constructing salary scales and payrolls includes:

• The system of salary scales and payrolls;
• Official Dispatch registering the system of salary scales and payrolls;
• Decision to promulgate the system of salary scales and payrolls;
• Minutes of approval of the system of salary scales and payrolls;
• Regulations on standards and conditions for job positions;
• Regulations on wage, allowances, and bonuses.

In constructing salary scales and payrolls, enterprises need to refer to Decree 49/2013/ND-CP and Decree 153/2016/ND-CP to construct salary scales and payrolls for 2017, focusing on the following indicators:

- Salary grades: Enterprises can construct as many grades as they wish, generally, most enterprises build 10 grades. When an employee starts working, they are at grade 1, and according to the enterprise’s salary increase policy, with each salary increase, they will move up by one grade; special cases can exceed grade limits. To be specific:

• Grade 1 should not be lower than the regional minimum wage. Within a grade, there can be multiple groups, tiers corresponding to job positions like Director - Deputy Director - Manager, etc.
  Employees who have undergone training should receive at least 7% higher than the regional minimum wage;
  Employees working in heavy, hazardous, or dangerous conditions should be paid at least 5% more than the wages for standard working conditions.
• Grade  2  should  be  at  least  5%  higher  than  grade  1,  and  similarly  thereafter.  The  gap  between  adjacent  salary  grades  must  ensure  it  encourages  employees  to  improve  their  professional,  technical  skills,  accumulate  experience,  and  develop  their  talents  but  at  least  5%.
  

- Job title, work position group: Based on actual job titles and positions at the enterprise, group them into the same salary level.

- Minimum wage: Enterprises will base the minimum wage according to the provisions of Decree 153/2016/ND-CP for application (depending on each region).

Example: Company X is located in Region I, so it applies the minimum wage of 3,750,000 VND. A is a janitor without training, hence receiving the minimum wage of 3,750,000 VND. B is a trained sales employee, thus applying a minimum wage of 3,750,000 + (3,750,000 x 7%) = 4,012,500 VND.

Note that the salary scales and payrolls must be periodically reviewed to amend and supplement to suit the actual conditions and development situation of the company, enterprise, and ensure compliance with labor law provisions.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE