What are cases where employer has the right to deduct from an employee’s salary in Vietnam?

What are cases where employer has the right to deduct from an employee’s salary in Vietnam? (Internet image)

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

1. What are cases where employer has the right to deduct from an employee’s salary in Vietnam?

According to Article 102 of the Labor Code 2019, employer has the right to deduct from an employee’s salary in the following cases:

- An employer shall have the right to deduct from an employee’s salary only for the compensation for the damage to the employer’s equipment and assets as follows:

+ An employee who causes damage to equipment or otherwise damages the employer’s assets shall have to pay compensation in accordance with labor laws or the employer’s internal labor regulations.

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 the Labor Code 2019.

+ An employee who loses the employer’s equipment or assets, or consumes the materials beyond the set limits shall pay a compensation for damage in full or in part at the market price or as stipulated in the internal labor regulations or the responsibility contract (if any).

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.

- The employee has the right to be aware of the reasons for the deduction.

Note: Any monthly deduction shall not exceed 30% of the net monthly salary of the employee, after the payment of compulsory social insurance, health insurance, unemployment insurance premiums and personal income tax.

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

Article 124 of the Labor Code 2019 stipulates 04 forms of disciplinary measures in Vietnam including:

- Reprimand.

- Deferment of pay rise for up to 6 months.

- Demotion.

- Dismissal.

Thus, salary deduction is not considered one of the forms of disciplinary measures against employees.

3. What are the penalties for employers that illegally deduct employee's wages in Vietnam?

Clause 2, Article 17 of Decree 12/2022/ND-CP stipulates that employers who illegally deduct employees' wages will be imposed a fine as follows:

- A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the violation involves 01 - 10 employees;

- A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed if the violation involves 11 - 50 employees;

- A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 51 - 100 employees;

- A fine ranging from VND 30.000.000 to VND 40.000.000 shall be imposed if the violation involves 101 - 300 employees;

- A fine ranging from VND 40.000.000 to VND 50.000.000 shall be imposed if the violation involves 301 employees or more.

The employer is also compelled to pay full salaries plus interests on late payments or insufficient payments of salary, which are calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees.

Note: the above fines only apply to individuals. The fine for organizations is 2 times the fine for individuals. (Pursuant to Clause 1, Article 6 of Decree 12/2022/ND-CP).

Nguyen Ngoc Que Anh

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