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THE
MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
11-LDTBXH/TT
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Hanoi,
May 03, 1995
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CIRCULAR
GUIDING THE IMPLEMENTATION OF DECREE No.197-CP ON THE 31ST
OF DECEMBER 1994 OF THE GOVERNMENT CONCERNING THE WAGES OF VIETNAMESE LABOR IN
FOREIGN INVESTED ENTERPRISES, AND FOREIGN OR INTERNATIONAL AGENCIES AND
ORGANIZATIONS IN VIETNAM
In execution of Decree No.197-CP
on the 31st of December 1994 of the Government which provides details and
guides the implementation of a number of articles of the Labor Code concerning
wages and salaries, after consulting with the State Committee for Cooperation
and Investment, the Vietnam General Confederation of Labor and a number of
concerned ministries and branches, the Ministry of Labor, War Invalids and
Social Affairs gives the following guidance for the implementation of the
system of wages for Vietnamese labor in foreign-invested enterprises, in the
export processing zones, industrial parks and foreign or international agencies
and organizations in Vietnam:
I. OBJECTS
AND SCOPE OF REGULATION
1. Objects
and scope of regulation:
The subjects and scope of
regulation of this Circular are the same as already defined in Item 5, Item 6
of Article 1 of Decree No. 197-CP. More concretely:
- The foreign-invested
enterprises defined in the Law on Foreign Investment in Vietnam issued in 1987
and the Law on Amendments and Supplements to a Number of Articles of the Law on
Foreign Investment in Vietnam issued on the 30th of June 1990 and on the 23rd
of December 1992;
- The foreign-invested
enterprises, the foreign partners to joint ventures set up and operating in the
export processing zones under Decree No. 322-HDBT on the 28th of October 1991
of the Council of Ministers (now the Government) and in industrial parks under
Decree No.192-CP on the 25th of December 1994 of the Government;
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- Diplomatic representative
offices (embassies, general consulates, consulates, representative offices...),
international or non-governmental organizations, foreign news, press, radio and
television agencies based in Vietnam and employing Vietnamese labor, except
otherwise provided for in international treaties which the Socialist Republic
of Vietnam has signed or adhered to;
- Foreigners and those of
Vietnamese origin living abroad who temporarily reside in Vietnam and who hire
Vietnamese labor under Decree No.389-HDBT on the 10th of November 1990 of the
Council of Ministers (now the Government).
2. Objects
and scope of non-regulation :
The laborers who are Vietnamese
working in the organizations of those of Vietnamese origin residing abroad, and
foreigners who reside for long periods in Vietnam to invest in economic and
social fields under the Law on Promotion of Domestic Investment issued on the
22nd of June 1994.
II. MINIMUM
WAGE, SYSTEM OF WAGE SCALES AND BRACKETS
1. Minimum
wage :
The minimum wage stipulated in
Item 3, Article 3 of Decree No. 197-CP shall be applied as follows :
a/ The minimum wage is the wage
paid to the doer of the simplest jobs (untrained labor) in normal labor
conditions and environment.
b/ The minimum wage is
calculated in US dollars (USD/month).
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The minimum wage can be applied
in the payment for the laborers during the probationary period but for not more
than 60 days, as stipulated in Article 5 of Decree No.198/CP on the 31st of
December 1994 of the Government, in case the probationary wage is lower than
the minimum wage.
The minimum wage cannot be paid
to professionals or technicians who have been trained.
2. Wage
scale, wage brackets and wage subsidies:
The wage scale, wage bracket and
wage subsidies, and the statute on wage payment defined in Article 22 of Decree
No. 197-CP shall be applied as follows:
a/ The enterprises are allowed
to work out and apply their own wage scales and wage brackets, according to
their branches and professions or groups of branches and professions,
corresponding with the system of wage scales and wage brackets, based on each
branch and profession or each group of branches or professions, stipulated by
the Government for the businesses inside the country. But they have to comply
with the following principles:
- The number of grades in a wage
scale and bracket shall depend on the complexity required by the jobs, but the
coefficient of each grade shall not be lower than the coefficient of the
corresponding grade in the wage scale and bracket applied to the businesses in
the country; the multiple of the wage scale shall not be lower that of the wage
scale for the same branch or profession or groups of branches or professions
applied to the businesses in the country.
- The wage of Grade I in the
wage scale and bracket in normal labor conditions must be higher than the
minimum wage (30 USD or 35 USD/month depending on each region and each
profession, as stipulated in Decision No. 242/LDTBXH-QD on the 5th of May 1992
of the Minister of Labor, War Invalids and Social Affairs).
- The elaboration of the system
of wage scales and brackets should be done in consultation with the local trade
union organization, or the provisional trade union organization where no
official trade union organization has been set up, and must be recorded in the
collective labor accord.
b/ With regard to the newly
founded enterprises which still meet with difficulties in production and
business activities and which cannot apply immediately the system of wage
scales and brackets prescribed by the State, the employer can, within no more
than six months, apply a pay rate from 10% to 15% lower than the wages based on
the coefficient of the corresponding grades of the wage scales and brackets in
the branch or professions, or group of branches and professions, prescribed by
the State for the businesses in the country. However, in any case the wage of
the lowest grade shall not be lower than the minimum wage. Before its
application, this wage system must be subjected to comments by the local trade
union organization, or the provisional trade union organization where no
official trade union organization has been set up, and must be registered with
the local labor agency. After the time limit defined above, the enterprise must
apply the pay system according to the prescriptions of the State.
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The enterprise shall have to pay
the following wage subsidies:
- Area allowance: this must not
be lower than the rate prescribed by the State for the businesses in the
country located in the same area;
- Dearness allowance : this must
not be lower than the rate prescribed by the Government for the businesses in the
country located in the same area;
- Noxiousness and risk
allowance: this applies to the professions or jobs not yet defined in the wage
scales and brackets of the enterprise;
Besides, the enterprise may
devise other wage allowances and subsidies for the laborers.
The concrete wage and allowance
rate shall be mutually agreed upon between the employer and the laborers, but
they must be decided in consultation with the local trade union organization,
or the provisional trade union organization where no official trade union
organization has been set up, and must be recorded in the collective labor
accord.
d/ The employer has the
responsibility to work out the statute of wage payment. Before applying this
statute, he must consult the local trade union organization, or the provisional
trade union organization where no official trade union organization has been
set up.
e/ The salaries of the holders
of the posts of Director (or General Director) and Vice Director (or Vice
General Director) and other key posts in the enterprise shall be determined on
the following principles:
- The persons in the leading
posts shall have higher salaries than those who hold non-leading posts;
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- A Vietnamese and a foreigner
holding equivalent posts shall receive the same salary.
For a joint venture with a
foreign partner, if the enterprise hires a foreign Director (or General Director)
or a number of foreigners to assume some professional or technical posts which
cannot yet be assumed by Vietnamese, the salaries shall be mutually agreed
upon. Besides, the enterprise may pay them a number of subsidies such as
necessitated by their living far from their families and their countries. The
concrete rates shall be mutually agreed upon.
f/ With regard to some special
branches and professions such as oil and gas..., the wage scales, wage
brackets, wage rates, wage allowances and payment statute shall be publicized
after the authorized managing agency submits them to the Ministry of Labor, War
Invalids and Social Affairs for consideration and approval.
g/ The employer at the
representative offices, or the foreigners or those of Vietnamese origin living
abroad who temporarily reside in Vietnam and hire Vietnamese laborers, shall
base themselves on the above regulations to work out the wage scales, brackets
and rate as well as the wage allowances for the different posts for different
professions and jobs, and reach agreement with the laborers during the
negotiations on the labor contract.
III. REGIME
OF PAYMENT OF WAGES AND BONUSES
1/ Basing himself on the forms
of wage payment stipulated in Article 5 of Decree No.197-CP, the employer shall
choose the form of payment, or change the form of wage payment, in a way suited
to the conditions and character of the job, and production organization of the
enterprise. This choice must be written down in the collective labor accord, or
the labor contract. The wage of a Vietnamese laborer shall be paid in the
currency of the Vietnamese State Bank at the exchange rate of the US dollars
announced by the Vietnam State Bank at the time of the payment.
2/ Payment for overtime work
under Items I and 2 of Article 8 of Decree No.197-CP shall be effected as
follows:
a/ Objects: This payment applies
to all objects, except those who receive their wages by piecework, by package
deal, or by time-work with regard to jobs without fixed schedules, such as the
drivers of transport means on the road (including cars), or workers operating
on rivers, sea and air routes or those assigned with the purchase of sea
products, farm products and foods...
b/ Method of calculating wages
for overtime work:
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+ 150% of hourly wage in a
normal work-day applied to the overtime work hours of week-days.
+ 200% of hourly wage in a
normal work-day applied to the overtime workhours during the weekly rest day or
on holidays.
In case the laborer takes an
equivalent time off to make up for his overtime hours, the employer shall have
only to pay an extra wage of 50% of the hourly wage of a normal day if the
overtime work takes place on a normal workday, and an extra wage of 100 % of
the hourly wage of a normal workday if the overtime work takes place on the
weekly rest day or on holidays.
- In case of piecework, after
the laborer has fulfilled his quota in terms of quantity or volume of products
according to the standard time (under Article 3 of Decree No.195-CP on the 31st
December 1994 of the Government), if the employer requests the laborer to work
extra hours, the unit prices of the products made outside the quota of standard
time shall increase by 50% if the extra hours take place on normal days, and by
100% if they take place on the weekly rest day or on holidays.
3/ Night-time work under Item 3,
Article 8 of Decree No.197-CP shall be paid as follows:
a/ Payment rate :
- The lowest rate for overtime
work at night shall be 35%, if the laborer works continously for eight days and
more during a month, irrespective of the form of wage payment.
- The lowest rate for overtime
work at night shall be 30% applicable to all the other cases, irrespective of
the form of wage payment.
b/ Method of calculating
extra pay for overtime work at night:
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- With regard to the piecework
or packpage pay system, the unit wage for night-time shall be increased by at
least 30% or 35% over the unit wage for day-time work.
For the laborer under the piecework
or package pay system, if he/she works overtime at night, the unit wage shall
be increased by at least 30% or 35% over the unit wage for day-time work.
If the product is made during
the overtime work at night, the hourly wage of this overtime shall be the
overtime pay in daytime plus the extra pay for night time work.
4/ Regime of wage increase:
a/ The raising of the wage grade
of the laborer shall be decided by the employer after consulting the local
trade union organization, or the provisional trade union organization where the
official trade union organization has not been set up. This upgrading has to
comply with the following principles:
- The number of persons
receiving pay rise in the enterprise in a year depends on the requirements of
the work and the time of their work at the enterprise.
- Pay rise must be based on the
technical qualifications, and specialization and professional entitlement.
b/ Conditions for wage
increase:
- The persons who have signed
labor contracts with indefinite terms or contracts for more than one year, and
the persons holding posts hired by the Managing Board to run the enterprise.
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- The lengths of service for
entitlement for wage rise:
+ In case the enterprise applies
the system of wage scales and brackets prescribed by the State, the laborer
must have at lease two years (24 months) of service with regard to the
entitlement having a start-up wage coefficient (Grade I) lower than 1.78, and
at least three years (36 months) with regard to the entitlement having the
start-up wage coefficient (grade 1) from 1.78 upward after the latest wage
classification or rise.
+ In case the enterprise has not
yet elaborated its own system of wage scales and brackets, a laborer who has
gone through a job training period of less than 24 months and who has two years
(24 months) of service at the enterprise, shall be entitled to pay rise at
least by 10% of the wage level recorded in the labor contract; a laborer who
has through a period of job training of 24 months and more, and have three
years (36 months) of service at the enterprise, is entitled to pay rise at
least by 7% of the wage level recorded in the labor contract.
+ With regard to the laborer who
works with devotion and high efficiency, the employer may raise his wage
earlier than defined above.
c/ Upgrading:
The enterprise shall have to
organize tests for those who are entitled to upgrading on the wage scale.
- The test for workers shall be
based on the technical standard and norms corresponding with the work which
they are assuming.
- The test for professionalism,
specialization, performance, and services is based on the professional and
specialization entitlement.
In case the enterprise has not
elaborated its technical gradation standards or specialization and professional
standard, the employer shall have to set forth temporarily a number of
economic, technical and professional norms closely associated with the contents
of the work or responsibility assigned to the laborers. This is to be done in
consultation with the local trade union organization or the representative of
the collective of the laborers where no trade union organization has been set
up.
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e/ From now on, the enterprises
shall base themselves on this Circular to work out their plans for annual wage
increase in their production and business plans, in order to organize the test,
and decide the upgrading of the wages for those eligible for payrise under the
management of each enterprise.
5/ Deduction of bonuses from
remaining profits under Item 2, Article 9 of Decree No.197/CP shall be effected
as follows:
a/ Eligible for bonuses:
- All laborers who have at least
one year's service at the enterprise.
- Having contributed to the
results of production and business of the enterprise.
b/ Size of bonuses: The
annual bonus shall not be lower than one month's wage recorded in the labor
contract.
c/ Bonus statute: The
enterprise shall have to work out its bonus statute on the following principle:
- The bonus must be based on the
contributions of the laborer to the enterprise as reflected in his productivily
and the quality of his work;
- The bonus shall be based on
the duration of the laborer's service at the enterprise, those with a longer
service are entitled to bigger bonuses.
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The bonus statute must be worked
out in consultation with the local trade union organization, or the provisional
trade union organization where no official trade union organization has been
set up.
6/ The wage payment during work
stoppage under Item 3 of Article 12 of Decree No.197-CP shall be effected as
follows:
During a work shift, if work is
suspended for more than two hours, the laborer shall be paid for every hour of
the work stoppage. If the stoppage lasts until the end of the shift, he/she
shall be paid the wage of the full shift. If the stoppage lasts for a whole
week or a whole month, he/she shall be paid all the wages of that week or
month. The wage level to be paid for the period of work stoppage is the level
of the immediate previous month, and is calculated correspondingly with the
form of timework wage stipulated in Item 1, Article 5 of Decree No.197-CP.
IV.
ORGANIZATION OF IMPLEMENTATION:
1. The foreign-invested
enterprise, the enterprises in the export processing zones and industrial
parks, the foreign agencies and organizations in Vietnam should base themselves
on the guidance in this Circular to publicize at an early date their system of
wage scales and brackets and levels, and register them with the Labor, War
Invalids and Social Affairs Service, and report them to the State Committee for
Cooperation and Investment.
2. Every month, the employer
shall have to report to the local labor and finance agencies the real incomes,
including wages, bonuses and other incomes (if any) according to the wage
records of the laborers at the enterprise.
3. The Labor, War Invalids and
Social Affairs Service in the province or city shall coordinate with the
Federation of Labor in the province or city, the External Economic Relations
Service, the managing boards of the export processing zones or industrial
parks, and the authorized State agency to inspect the implementation of this
Circular.
This Circular takes effect on
the 1st of January 1995. All the earlier regulations contrary to this circular
are now annulled.
Should any difficulties arise in
the process of implementation, the concerned agencies are requested to report
them in time to the Ministry of Labor, War Invalids and Social Affairs for
consideration and settlement.
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THE
MINISTER OF LABOR,
WAR INVALIDS AND SOCIAL AFFAIRS
Tran Dinh Hoan