Third-quarter results at an FDI plant sink into the red, and management proposes two measures: cut foreign specialists’ salaries by twenty percent for six months, and cancel the performance bonus written into their contract appendices. The specialists object: salary is a core term of the labour contract, not a dial the company turns with business results, and the bonus is tied to targets they have already met. Wage and bonus disputes in a loss-making period are the harshest test of the employment relationship, because they place the company’s survival problem directly against the stability of employee income.
The legal framework: agreed salary is an obligation; bonuses depend on the bonus regulation and its conditions
Salary in a labour contract is a binding agreement between the parties under the Labour Code No. 45/2019/QH14; the employer has no right to reduce it unilaterally merely because business turned bad. Changing salary levels requires negotiation and a signed contract appendix, or, in the graver scenario of downsizing, the mechanism for structural, technological or economic change in Article 42 of the Code, with a labour usage plan and corresponding allowances. Paying late or letting wage arrears accumulate is itself a violation: employees may unilaterally terminate where salary is not paid in full and on time, and the company faces administrative penalties under Decree No. 283/2026/ND-CP, which replaced Decree No. 12/2022/ND-CP from 10 September 2026.
Bonuses sit in a different legal position: a bonus is an amount the employer awards based on production and business results and work completion, under a bonus regulation the company issues after consulting the employee representative organization. If the regulation conditions payment on the company being profitable, a loss-making year can validly mean no bonus. But where individual targets were met and the regulation carries no profit condition, or the bonus was firmly promised in the contract, the employer can hardly plead losses to escape. The dispute line therefore runs entirely through the documents: what the contract says, what the bonus regulation says, and whether that regulation was issued and amended in proper order.
Applying the framework: three loss scenarios and how to handle them without breeding new disputes
Scenario one is temporary difficulty: the lawful route is written collective and individual negotiation to defer part of salary or reduce working hours with corresponding pay by time-limited written agreement, instead of unilateral deductions. For foreign specialists, note that a salary cut may pull pay below the level registered in the work-permit file and affect the social insurance base, so every reduction agreement must be cross-checked against those two files. Scenario two is structural loss forcing headcount cuts: the company takes the Article 42 route, builds a labour usage plan, consults the employee representative organization and pays the Article 47 job-loss allowance to staff who cannot be redeployed.
Scenario three is insolvency and recovery or bankruptcy proceedings. From 1 March 2026 the governing framework is the Law on Recovery and Bankruptcy No. 142/2025/QH15, replacing the Law on Bankruptcy No. 51/2014/QH13. In the distribution order for a bankrupt enterprise’s assets, unpaid wages, allowances and social insurance owed to employees rank in a priority group ahead of many unsecured claims, after bankruptcy costs. For foreign staff, confirming the wage debt early with the asset manager and keeping contracts, payrolls and transfer records decides whether they are placed in the right priority rank, because priority is only worth anything when the debt is proven and registered in the proceedings.
Checklist for handling wages and bonuses in a loss-making period
- Split the pay table into the part firmly promised by contract and the variable part under regulations, identifying what the company may adjust and what needs negotiation.
- Open written negotiation with the employee representative organization and each affected specialist before applying any reduction, with a restoration roadmap attached.
- Audit the bonus regulation: payment conditions, determining indicators, issuance and amendment procedure, before declaring no bonus in a loss year.
- Cross-check every salary-reduction option against the foreign staff’s work-permit files and social insurance bases to avoid chain violations.
- If cash flow shows insolvency signs, build a complete wage-debt schedule and take early advice under the Law on Recovery and Bankruptcy No. 142/2025/QH15 to protect employee priority.
Frequently Asked Questions
Can a loss-making company cut foreign workers’ wages and bonuses?
For salary written into the contract: no unilateral cut is allowed. A reduction is lawful only if the employee agrees by contract appendix, or the company runs the Article 42 redundancy mechanism of the Labour Code with full procedure and allowances. For bonuses, everything depends on the bonus regulation: if it conditions payment on profitability or unmet targets, non-payment may be valid; if the bonus was firmly promised in the contract and its conditions were satisfied, losses are no excuse for refusal.
What happens if the company owes wages?
The company faces administrative penalties in the labour field under Decree No. 283/2026/ND-CP and must pay wages in full with compensation for the late period under the Labour Code. Employees may also unilaterally terminate without prior notice in statutory cases where salary is not paid in full and on time, and may seek mediation and sue for the arrears. Persistent wage debt is also a signal that draws labour and social insurance inspections.
Where do foreign workers claim unpaid wages?
The general route is mediation by the local labour mediator, then a lawsuit before the competent Vietnamese people’s court if mediation fails; wage disputes belong to the individual-dispute group that may in certain statutory cases be filed directly. The file should contain the labour contract, salary appendices, payrolls, transfer records and any company document acknowledging the debt, because in wage disputes the payment evidence sits mainly with the employer.
What happens to wages if the company goes bankrupt?
When bankruptcy proceedings open under the Law on Recovery and Bankruptcy No. 142/2025/QH15, effective from 1 March 2026 and replacing the Law on Bankruptcy No. 51/2014/QH13, unpaid wages, severance, social insurance and other employee entitlements rank in a priority group paid from the enterprise’s assets after bankruptcy costs and ahead of many unsecured claims. Employees, including foreign staff, must register their debts with the asset manager with contract and payroll evidence to be placed in that priority rank.
This article has been quality-reviewed by the FLAW AI Legal Council
