The necessity of corporates’ salary range establishment
The labor code regulates that corporate needs to establish the salary range and norms. In practice, establishing salary ranges and norms would help corporates monitor salary budgets and costs. With an up-to-date salary range and norms, business owners would be able to track and analyze the salary movement over the 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 enterprises. In accordance with the law, employers must publicly announce the salary ranges and norms at the workplace. If corporates have a representative organization of employees, the employers must consult this body on matters.
According to the Labor Code 2019, employee representative organizations include trade unions and workers’ organizations at the company.
From January 1, 2021, the company is not required to submit the salary range to the local authority (i.e. Department of Labor, War Invalids, and Social Affairs – DOLISA).
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:
- The salary range is set up based on the employee’s rank and position in the company. Normally, the 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.
- An employee at level 1 is the one that is considered to work 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).
The 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.
- An 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%.
|Main principles: Salary range should be from 5 to 7 levels Level 1 should be not less than most updated minimum wages Variation between two levels shouldn’t be less than 5% Additionally, since January 1, 2021 salary range registration is not compulsorily submitted.|
Regional minimum wages
The regional minimum wage is the lowest wage that an employer should pay employees under normal working conditions. Regional minimum wages shall be publicly updated and amended by the government.
According to Decree 90 in 2019, the regional minimum wage (applicable in 2022) is as follows:
|No.||Zone||Regional minimum wages applicable in 2022 (VND)|
Laws and regulations references
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)
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