Salary and wages

Wage is an amount in cash or in kind that is paid to the employee by the employer based on mutually agreement (i.e. labour contract) made by the two parties.

Salary calculation principles

According to the Labor Code 2019 and Decree 145 in 2020 guiding implementation of the Code, there are three (3) forms of salary and wages payment:

• Working time

• Number of products/services being produced/ provided

• Work lump-sum

Depending on the nature of work and business, the company may choose one of among three above mentioned forms. Alternatively, the company may also combine these forms while calculating the salary and wages for its employees.

Working time is the most common way of paying wages for businesses in Vietnam. Manufacturer would tend to pay factory workers based on number of products being produced. Salary payment based on work lump-sum would be popularly applied by companies carrying out construction contracts.

How to calculate salary?

Payment based on working time

The calculation is based on either the actual number of working days in the month or a pre-determined number of working days.

These two calculations might come up with different results as the actual number of working days in a month which is varied by holidays and non-working days such as Saturdays and/or Sundays may differ from the pre-determined number of working days (i.e. 22, 24 or 26 days). The company could choose the appropriate method for its salary calculation.

Payment based on number of products being produced

With this payment method, companies need to keep track of the number of finished goods or services being produced or provided and the cost norm for producing one unit of the product or services.

Payment based on work lump-sum

Following this method, the employer needs to agree with its employees on the salary norm and the amount of work completed by employees.

Attention when calculating salary

The Labor Code 2019 (effective January 1, 2021) and Decree 145 in 2020 specifically stipulate detail of overtime, New Year holidays, and work disruptions (e.g. natural disasters, Covid-19).

References of laws and regulations

Labour Code 2019 – Labor Code 45/2019/QH14 dated November 20, 2019 (effective January 1, 2021)

Decree 145 of 2020 – Decree 145/2020/ND-CP dated December 14, 2020 guiding on working conditions and labour relations stipulated by the Labour CodeAt RB KTC, we do support clients in set-up payroll. Please contact us for further details: hr@ktcvietnam.com