Vietnam: Prominent Policies on Labor and Wages Effective from October 15

1. Increase in Meal Allowance, Salary Advance for Employees in Vietnam

From October 15, 2016, the management of labor, salaries, and bonuses for employees working in 100% state-owned single-member limited liability companies is regulated by Circular 26/2016/TT-BLDTBXH. Accordingly:

- The meal allowance for employees has been increased to a maximum of 730,000 VND/person/month (previously a maximum of 680,000 VND/person/month).

- Based on the company’s business plan, the salary advance may also be increased to a maximum of 85% of the planned salary fund for monthly payment to employees.

Depending on actual requirements, the determination of the wage unit price may be based on one of the following factors:

- Total revenue;

- Total revenue minus total costs excluding salaries;

- Profit;

- Unit of product;

- Other efficiency indicators suitable for the nature of the activity to manage the company's business operations.

The policies stipulated in Circular 26/2016/TT-BLDTBXH are applicable from January 1, 2016.

2. Principles of Salary Calculation for Managers in State-Owned Single-Member LLCs in Vietnam 

According to Circular 27/2016/TT-BLDTBXH (effective from October 15, 2016) guiding salary, bonus, and remuneration policies for managers of 100% state-owned single-member limited liability companies, the salary of managers is determined according to the following principles:

- The salary of full-time managers is determined and paid based on production, business performance, management results, with a maximum limit, and maintaining a reasonable correlation with employees.

- The salary of part-time managers is calculated based on work and working time but does not exceed 20% of the full-time managers’s salary.

- The salary fund for managers is separate from the employee’s salary fund and is determined annually.

- Monthly, managers are advanced 80% of the estimated monthly salary, the remaining 20% is settled and paid at the end of the year.

- The salary fund for managers is accounted for in the production costs or business expenses and is presented as an item in the company's annual financial report.

3. Guidance on Determining Bonus and Welfare Fund for Employees in Vietnam

This is described in Circular 28/2016/TT-BLDTBXH guiding the implementation of labor, salary, remuneration, and bonus regulations for joint-stock companies with state-controlled capital contributions.

The company determines the bonus and welfare fund (referred to as the Fund) of employees based on the level of completion of the planned profit targets. Specifically:

- Actual profit = Plan → Maximum Fund not exceeding 3 months of average implemented salary of employees;- Actual profit > Plan → Fund = Planned Fund + 20% of the portion of actual profit exceeding the planned profit (maximum not exceeding 3 months of average implemented salary of employees);

- Actual profit < Plan → Maximum Fund not exceeding 3 months of average implemented salary of employees x the percentage of actual profit to planned profit.

The Fund mentioned above is allocated to reward employees and invest in building or repairing welfare facilities, and welfare activities for employees.

Circular 28/2016/TT-BLDTBXH is effective from October 15, 2016.

4. Increase in Monthly Allowances for Discharged and Retired Soldiers

According to Circular 130/2016/TT-BQP (effective from October 25, 2016), soldiers who have been discharged, retired, demobilized; soldiers, and those working in cryptographic positions receiving salaries equivalent to discharged and retired soldiers who are receiving monthly allowance policies, shall have an increase of 150,000 VND/person/month.

The monthly allowance from January 1, 2016 = Allowance received as of December 2015 + 150,000 VND

The specific allowance levels after adjustment based on years of service are as follows:

- From 15 to less than 16 years, allowance is 1,535,000 VND/month.

- From 16 to less than 17 years, allowance is 1,605,000 VND/month.

- From 17 to less than 18 years, allowance is 1,674,000 VND/month.

- From 18 to less than 19 years, allowance is 1,743,000 VND/month.

- From 19 to less than 20 years, allowance is 1,812,000 VND/month.

Adjustments to increase the monthly allowance are effective from January 1, 2016.

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE