Issue 130326 – Pay scales, payrolls and labor productivity norms – compliance obligations and legal risks enterprises should note

Dear Valued Clients,

Pay scales, payrolls and labor productivity norms are core management tools in an enterprise’s wage policy. They are not only instruments of internal governance but also mandatory legal obligations under the Labor Code 2019 and its implementing regulations. Improper establishment of pay scales, payrolls and labor productivity norms whether by violating principles, failing to ensure transparency, or paying wages below the regional minimum wage may lead to administrative sanctions with significant fines, obligations to retroactively pay wages to employees, and collective labor disputes that affect corporate reputation and disrupt business operations. This article consolidates key legal provisions and common risks, enabling enterprises to proactively ensure compliance and mitigate legal exposure.

1. Concept and role of pay scales, payrolls, and labor productivity norms in enterprise management

1.1. Pay scales and payrolls

In human resource management, pay scales and payrolls are systems designed by enterprises to classify, arrange, and manage income levels according to each position, title, professional qualification, and the actual capacity of employees. Although the law does not provide an official definition, they can be summarized as follows:

• Pay scale: A system of salary grades arranged in ascending order, associated with each title or group of titles. Each grade reflects differences in experience, skills, responsibilities, and work performance. The pay scale serves as an important basis for negotiating salaries in labor contracts, considering grade advancement and periodic salary increases, managing personnel costs, and planning the wage budget.
• Payroll: A consolidated table of all salary levels applied to positions and titles within the enterprise, often accompanied by allowances and fixed supplements. The payroll is the foundation for calculating the actual amount paid to employees (including salary, allowances, deductions for social insurance, personal income tax, etc.), ensuring transparency and fairness in wage policies, and serving as a legal basis for tax finalization and mandatory social insurance contributions.

Accordingly, pay scales and payrolls are not merely administrative formalities but serve as strategic management tools, specifically:

• Salary negotiation in labor contracts, determination of wages subject to compulsory social insurance contributions, and important documentation for corporate income tax finalization;
• Helping enterprises control the wage fund, maintain internal fairness, and create motivation through clear pathways for promotion and periodic salary increases;
• A transparent and law‑compliant system that reduces the risk of labor disputes and avoids administrative sanctions.

1.2. Labor productivity norms

Labor productivity norms refer to the volume of work or output determined as the basis for wage payment. This is a particularly important factor, especially in manufacturing enterprises, where income is directly linked to production volume and work efficiency.

The establishment of labor productivity norms by enterprises ensures that employees receive wages corresponding to the amount of work completed and encourages them to improve performance. At the same time, it helps enterprises control costs, optimize resources, and enhance transparency, thereby reducing complaints related to wages and workload.

2. Principles of establishment under the law

According to Article 93 of the Labor Code 2019, when establishing pay scales, payrolls and labor productivity norms, enterprises must comply with the following fundamental principles:

• Basis for wage payment and conclusion of labor contracts: Enterprises must establish pay scales, payrolls and labor productivity norms as the foundation for recruitment, use of labor, negotiation of salaries according to the job or title stated in the labor contract, and payment of wages to employees.
• Reasonable labor productivity norms: Labor norms must be set at an average level that the majority of employees can achieve without extending normal working hours, and must be tested before being officially implemented.
• Consultation with employee representative organizations: Enterprises must consult with the representative organization of employees at the workplace (if any) when establishing pay scales, payrolls and labor productivity norms.
• Public disclosure prior to implementation: Pay scales, payrolls and labor productivity norms must be publicly posted at the workplace before being applied.

3. Minimum wage – Mandatory basis for establishing pay scales and payrolls

According to Clause 1, Article 91 of the Labor Code 2019, the minimum wage is the lowest wage paid to employees performing the simplest jobs under normal working conditions, intended to ensure the minimum standard of living for employees and their families, in line with the country’s socio – economic development.

Accordingly, the principle for determining the minimum wage is based on regions, stipulated by month and by hour, and adjusted according to factors such as: The minimum living standard of employees and their families; The correlation between the minimum wage and prevailing wages in the labor market; Consumer price index and economic growth rate; Labor supply and demand, employment and unemployment levels; Labor productivity; The payment capacity of enterprises.

Thus, when establishing pay scales and payrolls, enterprises must base them on the regional minimum wage to comply with the principle of wage payment. Clause 1, Article 3 of Decree No. 293/2025/ND‑CP stipulates the monthly minimum wage and hourly minimum wage applicable to employees working for enterprises by region as follows:

Enterprises must ensure that the wages paid to employees who work full normal working hours and fulfill labor productivity norms are not lower than the regional minimum wages stated above. The list of localities belonging to each region is specified in detail in the Appendix attached to Decree No. 293/2025/ND‑CP.

At the same time, the principles for applying regional minimum wages are determined as follows:

• Enterprises operating in a locality belonging to a specific region shall apply the minimum wage prescribed for that locality.
• Enterprises with units or branches operating in different localities with different minimum wages shall apply the minimum wage corresponding to the locality where each unit or branch is located.
• Enterprises operating in industrial zones, export processing zones, high‑tech zones, or concentrated digital technology zones located across localities with different minimum wages shall apply the highest minimum wage among those localities.
• Enterprises operating in localities that undergo a change of name or division shall temporarily apply the minimum wage prescribed for the locality before the change of name or division until new regulations are issued by the Government.
• Enterprises operating in newly established localities formed from one or more localities with different minimum wages shall apply the highest minimum wage among those localities until new regulations are issued by the Government.

In addition, according to the Law on Social Insurance 2024 and Decree No. 158/2025/ND‑CP, wages used as the basis for compulsory social insurance contributions include:

• The salary corresponding to the job or title recorded in the enterprise’s pay scale and payroll;
• Salary allowances to compensate for working conditions, the complexity of the job, living conditions, and similar factors, …;
• Other supplements with a specific monetary amount that are paid regularly in each wage period.

This means that the wage used for social insurance contributions must be directly linked to the enterprise’s pay scale and payroll as well as the labor contract, and must not be lower than the regional minimum wage.

4. Common violations in establishing pay scales and payrolls and applicable sanctions

According to Clause 1, Article 17 of Decree No. 12/2022/ND‑CP, enterprises may be fined from VND 10,000,000 to VND 20,000,000 if they commit the following violations:

• Failure to publicly disclose at the workplace before implementation: pay scales, payrolls, labor productivity norms, or bonus regulations;
• Failure to establish pay scales, payrolls, or labor productivity norms; failure to test labor productivity norms before official issuance;
• Failure to consult with the representative organization of employees at the workplace (where such organization exists) when establishing pay scales, payrolls, labor productivity norms, or bonus regulations;
• Failure to provide wage statements to employees, or providing wage statements that do not comply with regulations;
• Failure to ensure equal pay or gender equality for employees performing work of equal value.

In addition, under Clause 3 Article 17 of Decree No. 12/2022/ND‑CP, enterprises that pay employees less than the minimum wage prescribed by the Government shall be subject to the following fines:

• From VND 40,000,000 to VND 60,000,000 for violations involving 01 to 10 employees;
• From VND 60,000,000 to VND 100,000,000 for violations involving 11 to 50 employees;
• From VND 100,000,000 to VND 150,000,000 for violations involving 51 employees or more.

In addition to monetary fines, enterprises must remedy the consequences by paying the full number of wages owed together with interest on the delayed or underpaid wages, calculated at the highest non‑term deposit interest rate announced by state‑owned commercial banks at the time of sanction.

5. Risk management recommendations for enterprises

In practice, legal risks arise not only from failing to establish pay scales, payrolls and labor productivity norms, but also from establishing them in a merely formalistic manner without documentation proving a proper process. To mitigate risks, enterprises should take note of the following: Update pay scales and payrolls in line with the latest regional minimum wages to ensure compliance with the law; Record and retain minutes of consultation with the representative organization of employees at the workplace (if any); Establish labor productivity norms based on job analysis, practical testing, and prepare minutes of trial application before official issuance; Verify consistency between pay scales, payrolls and the contents of labor contracts to avoid conflicts; Implement equal pay policies without discrimination, thereby maintaining transparency and stability in labor relations.

It should also be noted that the Labor Code 2019 does not distinguish between enterprises by size. Therefore, all enterprises employing workers under labor contracts are required to establish pay scales, payrolls and labor productivity norms in accordance with the law.

In summary, pay scales, payrolls and labor productivity norms are not merely administrative compliance requirements, but form the foundation of a transparent and sustainable wage system that helps prevent disputes. Proper establishment from the outset enables enterprises to avoid fines, retroactive payment obligations, and the risk of collective complaints related to wages.

As always, we hope our clients find this article informative and look forward to working with you in the future.

Kind regards,

ENT Law LLC