Summary of Wage Policies Effective from August 1, 2016

1. Increase in Pensions and Allowances for Workers

Decree 55/2016/ND-CP guides certain aspects of pensions and allowances for officials, workers, public employees, and laborers; soldiers, people's police officers, and people working in cryptographic fields; and commune-level officials who are enjoying pensions and monthly allowances.

The adjustment in pensions and monthly allowances for the aforementioned individuals are as follows:

- Increase the pensions and monthly allowances by 8% for workers who started receiving pensions and monthly allowances from January 01, 2015 to before May 01, 2016.- In cases where the 8% increase has already been adjusted, the current rate remains unchanged.- From May 01, 2016, maintain the current rate for individuals who had the 8% increase previously adjusted.- Workers who qualify for social insurance payment time when retiring from May 01, 2016 onwards will have their pensions calculated on the new statutory pay rate of 1,210,000 VND/month.

Decree 55 also stipulates the increase in pensions, loss of working capacity allowances, and monthly allowances when the aforementioned individuals have a rate lower than 2,000,000 VND/month.

1. Guidance on Calculating Salary and Allowance Based on the New Statutory Pay Rate

From May 01, 2016, the calculation of salary and allowance will be based on the new statutory pay rate of 1,210,000 VND/month. The method for calculating salary and allowance based on the new wage level is as follows:

- The salary received will be the statutory pay rate of 1,210,000 VND/month multiplied by the current salary coefficient.- The allowance received:- The allowance calculated based on the statutory pay rate will be the statutory pay rate of 1,210,000 VND/month multiplied by the allowance coefficient.- The allowance calculated as a percentage of the current salary, plus the leadership position allowance and seniority allowance exceeding the framework, will be the total of the salary received, the leadership position allowance, and the seniority allowance (implemented from May 01, 2016) multiplied by the percentage rate of the allowance received.- Allowances stipulated as a specific monetary amount will remain unchanged from current regulations.

Circular 05/2016/TT-BNV replaces Circular 07/2013/TT-BNV.

1. Salaries and Bonuses for Managers of Single-Member Limited Liability Company 100% State-Owned

According to Decree 52/2016/ND-CP, the payment of salaries, remuneration, and bonuses for managers of Single-Member Limited Liability Companies wholly owned by the State is as follows:

- The salary for full-time company managers is determined and paid based on production and business efficiency, management, operation, or control outcomes, with a maximum rate limitation.- Furthermore, the salary must maintain a reasonable correlation with the salary of company workers. This is a new point added by Decree 52 compared to previous regulations.- For cases where the Chairman of the company concurrently holds the position of General Director or Director, they will only receive the salary of the highest-ranking position.- The salaries, bonuses, and remuneration of the Head of the Supervisory Board, Supervisors, will be deducted from the amount payable into a shared fund before deductions for social insurance, health insurance, and other legal stipulations.

The regimes stipulated in Decree 52 come into effect from January 01, 2016.

Decree 52/2016/ND-CP replaces Decree 51/2013/ND-CP.

1. The Chairman of the Company is Not Allowed to Increase Salary When Recruiting Beyond Plan

Decree 51/2016/ND-CP on labor management, salaries, and bonuses for workers in Single-Member Limited Liability Companies wholly owned by the State.

In cases of recruiting beyond the plan or not according to the plan, leading to workers not having work, and having to terminate labor contracts, the Members' Council or the Chairman of the company will not receive bonuses, be allowed to increase salaries, delay salary increments, or reduce the salary level.

1. New Regulations on Salaries in Companies with Over 50% State Capital

According to Decree 53/2016/ND-CP on labor, salaries, remuneration, and bonuses for companies with controlling state capital contributions, the average planned salary level is determined based on the salary level in the contract.

The average salary level determination follows the production and business results of the preceding year, in association with the planned production and business indicators of the company, as stipulated in Decree 53.

1. Circular 103/2016/TT-BTC guiding the identification of needs, sources, and methods of payment for the implementation of statutory pay rate adjustments according to Decree 47/2016/ND-CP, adjusting monthly allowances for commune-level officials who have retired as per Decree 55/2016/ND-CP.

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