How to Apply Regional Minimum Wage Rates for Companies with Multiple Branches?

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Regarding Ms. Thuy's question, the Editorial Board of THU KY LUAT would like to respond as follows:

On November 29, 2019, the Government of Vietnam issued Decree 90/2019/ND-CP stipulating the regional minimum wage for employees working under labor contracts. From January 1, 2020, the regional minimum wage applied to employees working at enterprises is as follows:

- VND 4,420,000 per month, applied to enterprises operating in Region I;

- VND 3,920,000 per month, applied to enterprises operating in Region II;

- VND 3,430,000 per month, applied to enterprises operating in Region III;

- VND 3,070,000 per month, applied to enterprises operating in Region IV.

See the complete List of geographic areas applying the minimum wage for Region I, Region II, Region III, and Region IV HERE.

Article 4 of Decree 90 stipulates the regional minimum wage by territory to be applied based on the following principles:

- Enterprises operating in a particular area shall apply the regional minimum wage stipulated for that area. In cases where enterprises have units or branches operating in different areas with different regional minimum wages, the units or branches shall apply the regional minimum wage stipulated for the respective area.

- Enterprises operating in industrial zones or export processing zones located in areas with different regional minimum wages shall apply the highest regional minimum wage of those areas.

- Enterprises operating in areas with name changes or separations shall temporarily apply the regional minimum wage stipulated for the area before any changes until the Government of Vietnam issues new regulations.

- Enterprises operating in newly established areas formed from one or more areas with different regional minimum wages shall apply the highest regional minimum wage among those areas. In cases where enterprises operate in cities under provincial management newly established from one or more areas of Region IV, they shall apply the regional minimum wage stipulated for the remaining city area under provincial management as listed in Section 3 of the Appendix issued with Decree 90.

Thus, according to the above regulation, in cases where enterprises have multiple branches operating in areas with different regional minimum wages, the branches shall apply the regional minimum wage stipulated for the respective area.

Note, the aforementioned regional minimum wage is the lowest level serving as the basis for enterprises and employees to negotiate and pay wages. The wage paid to employees working under normal working conditions, ensuring the prescribed working hours in a month, and completing the labor quota or agreed-upon work, must ensure:

- Not lower than the regional minimum wage for employees doing the simplest jobs;

- At least 7% higher than the regional minimum wage for employees doing jobs requiring vocational training.

Nguyen Trinh

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