Wages in Employment Relationships

Aug 26, 2024

HR & Payroll

Wages in Employment Relationships

Contents

Definition

Wages are the money an employer pays an employee for completing their job duties. The law or the employment contract defines these duties.

Clause 1, Article 90 of the 2019 Labor Code stipulates: “Wages are a monetary amount paid by an employer to a worker under an agreement to perform work, including remuneration that is based on the work or position as well as wage allowances and additional payments.”

Wages in the labor sector are subject to a state-imposed minimum level. Employers and employees can negotiate wages. However, the agreed-upon wage cannot be lower than the minimum wage set by the government. “Remuneration based on the work or position shall not be lower than the minimum wage.” (Clause 2, Article 90 of the 2019 Labor Code).

Article 95 of the 2019 Labor Code provides

Employers shall make wage payments to workers based on the agreed wages, labor productivity, and quality of work performance.
Wages shall be stated in the employment contract and paid to workers in Vietnamese Dong; a foreign currency may be used in cases where workers are foreigners working in Viet Nam.

Employers and employees can negotiate wages in Vietnamese Dong or foreign currency. This is agreed upon in the labor contract.

Clause 14, Article 4 of Circular 32/2013/TT-NHNN allows foreign exchange in Vietnam in the following case:

“Residents and non-residents being organizations are allowed to make agreements and pay salaries, bonuses and allowances in labor contracts in foreign currency by transfer or cash to non-residents and residents who are foreigners working in such organizations.”

Minimum Wage

Clause 1, Article 91 of the 2019 Labor Code stipulates: “The minimum wage is the minimum amount of remuneration to be paid to a worker performing the simplest work in normal working conditions in order to ensure the minimum living standard of the worker and their family, in accordance with the socio-economic development conditions.”

Employers pay employees at least the minimum wage. It applies to the simplest job with the least work effort under normal conditions. This amount ensures the minimum necessary consumption needs for the reproduction of the employee’s labor power.

The subjects to whom the minimum wage applies

(Article 2 of Decree 74/2024/NĐ-CP)

Employees who work under employment contracts as prescribed in the Labour Code.
Employers as defined in the Labour Code, including:
- Enterprises as defined in the Law on Enterprises.
- Regulatory authorities, organizations, cooperatives, family households, and individuals that employ other people under agreements. If employers are individuals, they shall be required to be fully capable of civil acts.
Other regulatory authorities, organizations, and individuals involved in the application of the statutory minimum wages as prescribed in this Decree.

Minimum Wages

Starting July 1, 2024, the minimum wage (Article 3 of Decree 74/2024/NĐ-CP) is as follows:

Region	Monthly Minimum Wage (VND/month)	Hourly Minimum Wage (VND/hour)
Region I	4,960,000	23,800
Region II	4,410,000	21,200
Region III	3,860,000	18,600
Region IV	3,450,000	16,600

Decree 74/2024/NĐ-CP lists the localities in Regions I, II, III, and IV in its Appendix.

Wage Scale and Salary Table System for Employees in Enterprises

Learn how to Construct Wage Scales and Wage Tables here.

Agreements between employees and employers determine employee wages in enterprises. The government regulates the wages of civil servants separately. Two main factors influence wage levels in enterprises: the complexity of the job and the amount of labor needed.

The enterprise’s wage scale and salary table system include

Wage scale system

The wage scale system depends on the industry or group of industries. Occupations must have clear technical levels. Each wage scale has wage groups based on working conditions. The highest pay in each group reflects the job’s complexity. The number of pay grades and the pay scale factor reflect job complexity based on technical standards.

Salary table:

Direct production workers: Used when job levels are unclear or if the company assigns workers by position. Each job title has a specific qualification level.
Specialists and artisans: Used for jobs with higher technical standards than those on the wage scale.
Enterprise management: Only for the Director, Deputy Director, and Chief Accountant. Based on company size.

Article 93 of the 2019 Labor Code stipulates:

“Employers must develop wage scales, wage tables, and work norms as a basis for the recruitment and employment of workers, for the negotiation of work-based or position-based wages to be specified in the employment contract, and for wage payments to workers.”

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Legal Disclaimer: The information provided is for general informational purposes only and does not constitute legal advice. For specific legal advice on compliance in Vietnam, schedule a consultation with NetViet or consult legal counsel.

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