Issue 240326 - Regulations on salary advances under Vietnamese labor law

Dear Valued Clients,

In practice, during the course of employment, there are numerous cases in which employees develop a need for salary advances to cover living expenses or urgent personal needs prior to the regular pay date. Salary advances constitute a flexible mechanism that contributes to ensuring employees’ livelihoods and maintaining stable labor relations. However, the current law provides for certain regulations regarding the conditions, principles, and responsibilities of the parties when implementing salary advances. Without a clear understanding of these provisions, enterprises may encounter legal risks related to payment obligations, labor management, and compliance with legal regulations. So, how are regulations on salary advances to be understood, and what issues should enterprises pay attention to? Clients may refer to our article below.

Definition of salary advance

Salary is understood as the amount of money that the employer is required to pay to the employee for the performance of work as agreed by both parties, including the salary based on the job or position, salary allowances, and other additional payments. Accordingly, the salary based on the job or position must not be lower than the minimum wage.

A salary advance means that the employer pays in advance to the employee a certain amount from the salary that the employee will be entitled to receive in the next pay period or in the future, in accordance with the agreement or the provisions of law.

A salary advance is intended to support employees in cases of legitimate financial need, while ensuring the rights and obligations of the parties in the labor relationship.

Cases of salary advance in accordance with legal provisions

2.1. Salary advance by agreement

Pursuant to Clause 1, Article 101 of the Labor Code 2019, an employee has the right to agree with the employer on a salary advance. The law does not limit the number of times, the amount of advance, or the timing of the advance, provided that there is mutual consent between the parties. In practice, employers often stipulate specific conditions, advance amounts, and methods of repayment in internal labor regulations or internal financial regulations.

2.2. Salary advance in case of annual leave

In the event that an employee takes annual leave and requests a salary advance, the employer must provide an advance of at least an amount equal to the salary for the leave days, as prescribed in Clause 2, Article 101 of the Labor Code 2019. This is a mandatory obligation of the employer, regardless of whether there are internal regulations or not.

2.3. Salary advance for employees paid on a piece-rate or lump-sum basis

Employees who are paid on a piece-rate or lump-sum basis are generally paid after completing a certain quantity of products or a specific amount of work. However, in practice, many jobs extend over a long period, even several months, and receiving payment based on piece-rate or lump-sum arrangements may affect the employees’ ability to cover their living expenses. Therefore, in the spirit of protecting employees, the law provides specific regulations on salary advances in cases where employees are paid on a piece-rate or lump-sum basis.

Pursuant to Clause 3, Article 97 of the Labor Code 2019, employees paid on a piece-rate or lump-sum basis shall be paid in accordance with the agreement between the parties; if the work is to be performed over multiple months, the employee shall be advanced a salary on a monthly basis corresponding to the volume of work completed in that month.

2.4. Salary advance in case of temporary suspension of work

Pursuant to Clause 2, Article 128 of the Labor Code 2019, in the event that an employee is temporarily suspended from work, the employee shall be advanced 50% of the salary prior to the suspension.

For other cases, the law respects the agreement between the parties and only requires the employer to provide a salary advance to the employee, but does not prescribe specific sanctions if the employer fails to do so. However, in this case under Section 2.4, if the employer fails to provide a salary advance or provides an insufficient advance during the period of temporary suspension as prescribed, the employer shall be subject to administrative penalties in accordance with Article 17 of Decree No. 12/2022/ND-CP, with fines ranging from VND 10,000,000 to VND 100,000,000 depending on the number of affected employees. Specifically:

From VND 10,000,000 to VND 20,000,000 for violations involving from 01 to 10 employees;
From VND 20,000,000 to VND 40,000,000 for violations involving from 11 to 50 employees;
From VND 40,000,000 to VND 60,000,000 for violations involving from 51 to 100 employees;
From VND 60,000,000 to VND 80,000,000 for violations involving from 101 to 300 employees;
From VND 80,000,000 to VND 100,000,000 for violations involving 301 employees or more.

2.5. Salary advance in case of performance of civic obligations

Civic obligations herein are understood as duties that citizens are required to perform, for example: participating in elections, obligations related to labor, etc. In this case, the employer must provide a salary advance to the employee corresponding to the number of days the employee temporarily takes leave from work to perform such civic obligations, but not exceeding one month’s salary under the labor contract; however, the employee must repay the amount advanced.

Pursuant to Clause 2, Article 101 of the Labor Code 2019, the employer is obliged to provide a salary advance to the employee where the employee must temporarily leave work to perform civic obligations in accordance with the law, except in the case of performing military service. The period of leave is from one week or more, but the advance must not exceed one month’s salary under the labor contract, and the employee must repay the amount advanced.

CONCLUSION

Salary advance is a flexible mechanism that reflects the employer’s support for employees while still ensuring the principles of mutual agreement and compliance with labor law. Understanding and correctly applying the regulations related to salary advances not only helps protect employees’ rights but also enables enterprises to control legal risks and maintain stable and harmonious labor relations.

However, in practice, the implementation of these regulations still encounters many difficulties, mainly arising from internal understanding and organizational practices within enterprises. The absence of specific internal rules regarding advance conditions, amounts, and repayment mechanisms can lead to inconsistent application and complaints. Legal risks may also arise in cases where salary advances are confused with employee loans, or where the employer deducts salary to recover advances in excess of the legal limit. In particular, when an employee terminates the labor contract without a clear written agreement on repayment, the enterprise may face difficulties in reconciling, settling, and recovering the advanced amount. Moreover, failing to fulfill the obligation to provide salary advances in cases mandated by law—especially when employees take annual leave and request an advance—also carries the risk of violating labor law.

Therefore, to minimize legal risks, employers need to establish and issue clear internal regulations on salary advances in labor rules or remuneration policies, specifying the conditions, maximum advance amount, and repayment period. Advances and repayments should be documented in writing or properly acknowledged to ensure transparency and serve as a basis for dispute resolution if necessary. At the same time, enterprises must strictly comply with regulations on salary deductions, must not misuse the advance mechanism to the detriment of employees, and must reconcile and settle advanced salaries in accordance with legal pro cedures when employees terminate their labor contracts.

As always, we hope that you find this article useful and we look forward to accompanying and supporting you in the time ahead.

Sincerely,