Pay Mix: Fixed, Variable and Bonuses

Pay structure answers a management question: of an employee’s total income, how much is fixed and certain, how much varies with results, and how much is a year-end bonus decided afterwards. There is no standard ratio for every company, but there are lines that may not be crossed: the fixed part must itself stand above the regional minimum wage, and a structure written into the contract changes only by agreement.

Three components and reference ratios by role group

Fixed pay is the part paid for the job or position, tied to the salary scale under Article 93 of the Labour Code 45/2019/QH14. Variable pay moves with measured results in the period — output, personal KPIs or unit results. The annual bonus follows Article 104, decided on overall business results. Common reference ratios: direct production staff lean toward output-variable pay (60–70% fixed), office staff are more balanced (75–85% fixed), and senior managers carry the largest variable and annual bonus share. These are design references from market practice, not statutory ratios.

Legal boundary lines that may not be crossed

First, fixed pay for standard working time may not sit below the locality’s regional minimum wage — a company cannot “design” a below-floor fixed part and top it up with variable pay, because the minimum is tested against job-based salary. Second, overtime, night work and wage-linked regimes must be computed on statutory bases, not on a self-set structure ratio. Third, pay structure is content of the employment contract and rules: changing the fixed–variable ratio alters agreed conditions and requires re-agreement with the employee and a signed annex, not a unilateral internal notice.

Designing variable pay that does not manufacture disputes

Variable pay only works when its result metrics meet three conditions: measurable by objective data, largely within the employee’s control, and a formula published before the measurement period. Classic errors are metrics changed mid-period, output data hand-recorded by supervisors with no reconciliation, and undeclared caps on variable pay. When disputes arise, courts and mediators look at the rules and the measurement data — a variable pay system that cannot prove its own numbers is treated as a commitment to pay the shortfall.

Frequently asked questions

What pay structure is reasonable?

Reasonable by role group: direct production often 60–70% fixed plus output-variable pay; office roles 75–85% fixed; senior managers carry more variable and annual bonus. The mandatory point is that fixed pay meets the regional minimum and the whole structure is written into contracts and rules.

What fixed–variable ratio is appropriate?

There is no statutory ratio. The ratio is chosen by how measurable the role’s results are and how much income risk that staff group can accept; the harder individual results are to measure, the higher the fixed share must be to keep income stable.

Does changing the pay structure need employee consent?

Yes, where the change alters pay conditions agreed in the employment contract: it requires agreement and a signed contract annex. The company may unilaterally adjust only components within its rule-making authority that do not contradict contract commitments.

How are variable pay disputes resolved?

By reconciling the pay rules, the published formula and the result-measurement data for the disputed period. A company that cannot prove the basis of its variable pay computation must pay the substantiated difference the employee claims.

Reviewed by the Legal Practice Group – FLAT LAW FIRM

This legal analysis has been verified against current Vietnamese regulations and cross-border FDI transaction practices by the attorneys at FLAT LAW FIRM.

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