Company Wage Policies in Vietnam

Wages under the Labor Code 2019: Composition and Principles

Article 90 of the Labor Code 2019 defines wages as the amount the employer pays the employee by agreement to perform work, including job- or title-based wage rates, wage allowances and other additional payments. These three components have different legal meanings: the job- or title-based wage rate is the main basis for social insurance contributions; wage allowances compensate for working condition factors and job complexity not factored into the wage rate or not fully factored; other additional payments are amounts beyond wages and allowances related to job performance or titles in the labor contract.

Two foundational principles in Article 90: the job- or title-based wage rate must not be lower than the minimum wage prescribed by the Government; and employers must ensure equal pay without gender discrimination for employees doing work of equal value.

Building Wage Scales and Tables: a Simplified Mandatory Obligation

Article 93 of the Labor Code 2019 requires employers to build wage scales, wage tables and labor norms as the basis for recruitment, employment, agreeing job- or title-based wage rates stated in labor contracts and paying employees. Labor norms must be average levels that the majority of employees can achieve. When building wage scales, wage tables and labor norms, employers must consult the grassroots employee representative organization where such an organization exists, and must publicly announce them at the workplace before implementation.

Compared to the Labor Code 2012, companies are no longer obligated to submit or register wage scales and tables with state labor management authorities. However, “no registration required” does not mean “no building required”: during inspections, authorities still require presentation of the issued wage scales and tables, and companies that have not built them are still subject to administrative penalties. See relations with employee representative organizations on union consultation procedures.

Pay and Bonus Regulations: Corporate Autonomy

Besides the framework wage scales and tables, companies should issue pay regulations to specify calculation methods for each group: time-based, output-based and lump-sum wages; allowance calculation methods; salary increase and grade promotion principles; and pay periods. Pay regulations standardize payments, limit emotional decisions by middle management and create grounds for resolving wage complaints.

On bonuses, Article 104 provides that bonuses are money, assets or other forms the employer awards employees based on production and business results and work completion levels. Bonus regulations are decided by the employer and publicly announced at the workplace after consulting the grassroots employee representative organization where one exists. Key note: bonuses are not a mandatory obligation — but once committed in regulations or contracts, the company must honor the commitment.

Pay Principles: Direct, Full and Timely

Article 94 requires employers to pay wages directly, fully and on time to employees; where employees cannot receive wages directly, payment may be made to persons lawfully authorized by them. All wage deductions may only be made in cases permitted by law and within prescribed limits.

On pay periods, Article 95 distinguishes by payment form: hourly, daily or weekly earners are paid after the hour, day or week worked or aggregated by agreement but aggregation must not exceed 15 days per payment; monthly earners are paid once a month or twice a month; output-based or lump-sum earners are paid by agreement, and if work spans many months then monthly advances are paid based on completed work volume. Delayed payment without legitimate reason is a violation that employees may invoke to unilaterally terminate the labor contract.

Regional Minimum Wages and Update Obligations

Regional minimum wages are prescribed by the Government and periodically adjusted according to socio-economic conditions. Every wage agreement in labor contracts and every grade in wage scales and tables must not be lower than the regional minimum wage applicable in the locality where the company operates. When the Government increases regional minimum wages, companies must review and adjust wage levels below the new minimum — this obligation arises automatically by law, regardless of whether labor contracts contain adjustment clauses.

Many FDI companies have branches and offices in localities applying different minimum wage levels — the correct level of each locality where employees work must be applied, not one uniform level for the whole system. Paying below the minimum is a punishable violation requiring back payment of the difference.

Allowances, Additional Payments and the Insurance Wage Base

Clearly distinguishing the three wage components — job-based wage rates, wage allowances and other additional payments — not only serves payroll but also determines the wage base for social insurance contributions. Under the Social Insurance Law 2024 (effective from 01/7/2025), the mandatory social insurance contribution wage base for the corporate sector includes job- or title-based wage rates, wage allowances and other additional payments paid regularly and stably in each pay period. Details are analyzed in social insurance and payroll compliance for FDI companies.

A common mistake is “restructuring” wages to reduce title-based wage rates and increase formal support payments to lower insurance contributions — this approach is high-risk when social insurance authorities inspect and collect arrears. All regularly and stably paid amounts tied to job performance should be reflected truthfully and calculated for contributions per regulations.

Pay in Special Cases

When employees must stop working, Article 99 distinguishes: if due to the employer’s fault, employees receive full contractual wages; if due to the employee’s fault, no wages are paid; if due to power or water incidents not caused by the employer or due to natural disasters, fires, dangerous epidemics, enemy sabotage, relocation of operations at state authorities’ request or economic reasons, the parties agree on stoppage wages.

Upon labor contract termination, companies must fully pay outstanding wages, severance or job-loss allowances (if eligible) and other benefits within prescribed time limits. See workforce reduction during corporate restructuring on job-loss allowances and overtime compliance for companies on overtime wages — two payments often arising together with final pay settlement at contract termination.

Designing Wage Policies for FDI Companies

For FDI companies, wage policies often must reconcile the parent group’s global standards with Vietnam’s legal framework. Three points to standardize: wage scales and pay regulations must be issued in Vietnamese, consult the employee representative organization and be publicly announced; global policy wage concepts (base salary, allowances, bonuses, 13th-month pay) need clear “mapping” to the three Vietnamese wage components for correct insurance and tax calculation; and periodic salary adjustment mechanisms should be tied to regional minimum wage fluctuations in Vietnam.

A good wage policy not only aids compliance but is also a talent retention tool: transparency in calculation methods, clear grade promotion paths and performance-linked bonus mechanisms. Companies should review wage policies at least once a year, alongside performance review cycles and before each regional minimum wage adjustment. Overview of the labor compliance framework at the labor law advisory hub.

Frequently Asked Questions

Useful Links

• Labor Law Advisory – the labor law hub for companies.
• Social Insurance and Payroll Compliance for FDI Companies – the contribution wage base.
• Overtime Compliance for Companies – wage unit prices and overtime pay.
• Workforce Reduction during Corporate Restructuring – severance and job-loss allowances.