Vietnam: What are statutory minimum wages? 05 things to keep in mind

1. What are statutory minimum wages?

According to Article 91 of the Labor Code 2019, statutory minimum wages are minimum wages of workers who do the simplest jobs in normal working conditions that are sufficient to support themselves and their families, and appropriate for socio-economic development.

Statutory minimum wages per month or per hour vary according to regions.

Statutory minimum wages shall be adjusted according to minimum living standards of workers and their families; the relation between statutory minimum wages and usual salaries; consumer price index, economy growth rate; labor supply and demand, productivity and financial capacity of enterprises.

Vietnam: What are statutory minimum wages? 05 things to keep in mind (Internet image)

2. Subjects of application of statutory minimum wages in Vietnam

Article 2 of Decree 38/2022/ND-CP stipulates that the subjects to apply the statutory minimum wages include:

- Employees who work under employment contracts as prescribed in the Labor Code.

- Employers as defined in the Labor Code, including:

+ Enterprises as defined in the Law on Enterprises.

+ Regulatory authorities, organizations, cooperatives, family households, and individuals that employ other people under agreements.

- Other regulatory authorities, organizations and individuals involved in the application of the statutory minimum wages as prescribed in Decree 38/2022/ND-CP.

3. Current regional minimum wage

From July 1, 2022, the region-based statutory minimum wages specified in Article 3 of Decree 38/2022/ND-CP shall apply. Specifically, the region-based statutory minimum wages per month and per hour paid to employees are provided for as follows:

- Regarding the statutory minimum wages per month

+ Region I: 4,680,000 VND/month.

+ Region II: 4,160,000 VND/month.

+ Region III: 3,640,000 VND/month.

+ Region IV: 3,250,000 VND/month.

- Regarding the statutory minimum wages per hour:

+ Region I: 22,500 VND/hour;

+ Region II: 20,000 VND/hour;

+ Region III: 17,500 VND/hour;

+ Region IV: 15,600 VND/hour.

4. Guidelines for the application of statutory minimum wages in Vietnam

- The statutory minimum wage per month is the minimum wage used as the basis for any agreement between employers and employees on monthly salary and payment thereof.

The job- or position-based salary of an employee who ensures the monthly normal working hours and has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per month.

- The statutory minimum wage per hour is the minimum wage used as the basis for any agreement between employers and employees on hourly salary and payment thereof.

The job- or position-based salary paid for every working hour to an employee who has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per hour.

- In case an employee receives a weekly or daily salary, a piece-rate pay or a fixed pay, the wages paid to the employee, when converted into monthly or hourly salary, shall not be lower than the statutory minimum wage per month or per hour.

The normal working hours-based converted monthly or hourly salary shall be subjected to the employer’s decision in accordance with regulations of law. To be specific:

+ The converted monthly salary shall equal the product of the weekly salary and 52 weeks divided by 12 months; or the daily salary multiplied by total normal working days in a month; or the piece-rate pay or fixed pay for the works performed during normal working hours in a month.

+ The converted hourly salary shall equal the weekly or daily salary divided by the normal working hours in a week or a day respectively; or the piece-rate pay or fixed pay divided by the working hours, considered as normal working hours, spent for producing a predetermined quantity of products or performing assigned works.

(Article 4 of Decree 38/2022/ND-CP)

5. What are the penalties for paying employees salaries lower than the statutory minimum wages in Vietnam?

According to Clause 3, Article 17 of Decree 12/2022/ND-CP, the following fines shall be imposed upon an employer for paying their employees salaries which are lower than the statutory minimum wages announced by the Government:

- A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 01 - 10 employees;

- A fine ranging from VND 30.000.000 to VND 50.000.000 shall be imposed if the violation involves 11 - 50 employees;

- A fine ranging from VND 50.000.000 to VND 75.000.000 shall be imposed if the violation involves 51 employees or more.

Note: The fine imposed upon an organization is twice as much as that imposed upon an individual for committing the same administrative violation (Clause 1, Article 6 of Decree 12/2022/ND-CP).

Như Mai

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