Is the company allowed to deduct the employee's salary in Vietnam?

Is the company allowed to deduct the employee's salary in Vietnam? (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. 03 cases where the company is allowed to deduct the employee's salary in Vietnam

According to the provisions of Articles 102, 129 of the current Labor Code 2019, there are only 03 cases where the employer is allowed to deduct the employee's salary, specifically:

- An employee who causes damage to equipment or otherwise damages the employer’s assets 

In case the damage caused by an employee is not serious, not deliberate and is worth less than 10 months’ region-based minimum wage announced by the Government, the employee shall have to pay a compensation of not more than his/her 03 months’ salary, which shall be monthly deducted from his/her salary in accordance with Clause 3 Article 102 of this Code.

The salary deduction is to make compensation according to the provisions of law or the employer's labor regulations for the property that the employee damages.

-  An employee who loses the employer’s equipment or assets;

-  An employee consumes the materials beyond the set limits

In the above two cases, the employee must compensate for part or all of the damage according to market prices or labor regulations.

In case there is a contract of liability, compensation must be made according to the contract of liability.

In case this is caused by a natural disaster, fire, war, major epidemic, calamity, or another force majeure event which is unforeseeable and insurmountable, and all necessary measures and possibilities for avoidance have been taken, the compensation shall not required.

2. Is it possible to discipline employees by deducting their salary in Vietnam?

Article 124 of the Labor Code 2019 stipulates 04 forms of labor discipline, including:

- Reprimand.

- Deferment of pay rise for up to 6 months.

- Demotion.

- Dismissal.

Thus, deduction of salary is not considered as one of the forms of disciplining employees.

3. What are the penalties for arbitrarily deducting employees' wages in Vietnam?

According to the provisions of Clause 3, Article 19 of Decree 12/2022/ND-CP, except for the cases where it is allowed to deduct the salary mentioned in Section 1, A fine ranging from VND 20.000.000 to VND 40.000.000 shall be imposed upon an employer for applying monetary fines or deducting the employee’s salary wage instead of disciplinary measures;

Note: The fines specified for the above violations are fines for individuals. The fine level for organizations is equal to 02 times the fine level for individuals.

Thus, in case the employer is an enterprise or an organization, the act of intentionally deducting wages instead of handling labor discipline may be subject to a fine of up to VND 80 million.

Clause 4, Article 19 of Decree 12/2022/ND-CP also stipulates that the remedial measure for the act of applying monetary fines or deducting the employee’s salary wage instead of disciplinary measures is: being compelled to return collected amounts or pay full salaries to employees.

4. Regulations on salary advances for employees in Vietnam

Article 101 of the Labor Code 2019 stipulates the salary advance as follows:

- An employee may receive an interest-free salary advance in accordance with conditions agreed on by the two parties.

- The employer must make the advance payment to the employee for the number of days the employee temporarily leaves his/her work in order to perform duties of citizens for a period of 01 week or longer, but the advance shall not exceed 01 month’s salary. The employee must reimburse the advance.

An employee who is conscripted in accordance with the Law on Conscription may not receive salary advance.

- When taking annual leave, an employee shall receive an advance payment of at least salary for the entitled days of leave.

See also: What are cases eligible for salary advances in Vietnam?

Nguyen Nhu Mai

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