Establish corporates’ salary range in Vietnam

Necessity of corporates’ salary range establishment

 

The labour code regulates that corporate needs to establish the salary range and norms. In practice, establishing salary range and norm would help corporates monitoring salary budget and costing. With an up-to-date salary range and norms, business owners would be able to track and analyse the salary movement over period of time and predict the trends for the coming periods.

 

Labor Code 2019 (effective January 1, 2021) - Article 93, stipulates the principles of salary ranges and norms in corporates. In accordance with the law, employers must publicly announce the salary ranges and norms at the workplace. For corporates having a representative organization of employees, the employers must consult this body on the matters.

 

According to the Labor Code 2019, employee representative organizations include trade union and workers' organization at the company.

 

Principles of establishing corporates’ salary range and norms

 

Although no guidance on implementing Labor Code 2019 especially on salary and wages has been issued yet, some thresholds must have been applied as previously prescribed in Decree 49 of 2013 (expired on February 1, 2021). According to this Decree, when establishing salary ranges and norms, enterprises must follow the below principles:

 

·         Salary range is set-up based on the employee's rank and position in the company. Normally, salary range would start from the lowest position (level 1) to higher positions. In common practice, the level range should be graded from 5 to 7.

 

·         Employee at level 1 is the one that is considered working a simple kind of work in normal working conditions. Salary for level 1 must not be lower than the regional minimum wages (see the most up-to-date published regional minimum wages below). Employee at level 1 who has been internally or vocationally trained must enjoy a salary that is at least 7% higher than the regional minimum wage.

 

·         Employee who is working in arduous, hazardous and dangerous conditions and super-arduous, super-hazardous and super-dangerous ones compared to the employee at the equivalent level working in normal conditions must enjoy at least 5% and 7% higher, respectively.

 

·         Variation between two consecutive levels in the ranges should not be less than 5%.

 

Regional minimum wages

 

The regional minimum wage is the lowest wage that an employer should pay employees under a normal working conditions. Regional minimum wages shall be publicly updated and amended by the government.

 

According to Decree 90 in 2019, the regional minimum wages (applicable in 2022) is as follows:

 

No.

Zone

Regional minimum wages applicable in 2022

(VND)

1

Zone 1

4.420.000

2

Zone 2

3.920.000

3

Zone 3

3.430.000

4

Zone 4

3.070.000

 

Attention for establishing the salary ranges

 

From January 1, 2021, company is not required to submit the salary range to the local authority (i.e. Department of Labor, War Invalids and Social Affairs – DOLISA).

 

References of laws and regulations

 

Labor Code 2019 - Labor Code 45/2019/QH14 dated November 20, 2019

 

Decree 90 of 2019 – Decree 90/2019/ND-CP dated November 15, 2019 stipulating the regional minimum wages

 

Decree 49 of 2013 - Decree 49/2013/ND-CP dated May 14, 2013 guiding the implementation of the Labor Code on salary and wages (Article 7)

 

At RB KTC, we do support clients in set-up payroll and prepare salary ranges. Please contact us for further details: This e-mail address is being protected from spambots. You need JavaScript enabled to view it