ISSUE OF JULY 2022 – NEW STATUTORY MINIMUM WAGES FROM JULY 2022

Dear Valued Clients,

On June 12, 2022, the Government issued Decree 38/2022/ND-CP (“Decree 38”) prescribing the statutory minimum wages applicable to employees working under labor contracts, effective as of January 1^st, 2021.

In this Legal Update, we would like to summarize monthly and hourly statutory minimum wages of employees as per regions specified in Decree 38 for your kind reference and consideration.

1. Definition of statutory minimum wage^[1]

Statutory minimum wage is the minimum amount of remuneration that an employer is required to pay to an employee for the work performed during a given period in normal working conditions.

Statutory minimum wages are determinded on a basis of region, month or hour.

Statutory minimum wages shall be adjusted according to minimum living standards of emplopyees and their families; the relation between statutory minimum wages and market salaries; consumer price index, economy growth rate; labor supply and demand, productivity and financial capacity of enterprises.

2. Statutory monthly and hourly minimum wage^[2]

The statutory monthly minimum wage is the minimum wage used as the basis for any agreement between employers and employees on monthly salary and payment thereof. The job- or position-based salary of an employee who ensures the monthly normal working hours and has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per month.

The statutory minimum wage per hour is the minimum wage used as the basis for any agreement between employers and employees on hourly salary and payment thereof. The job- or position-based salary paid for every working hour to an employee who has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per hour.

3. Region-bassed statutory minimum wage levels

Regarding the statutory minimum wages per month and per hour, Decree 38 stipulates those wages as per regions as follows^[3]:

The above-mentioned statutory minimum wages have increased by an average of 6% (respectively increased from 180,000 VND to 260,000 VND) compared to the current minimum wages^[4].

The list of localities in regions I, II, III and IV are specified in the Appendix of the Decree 38^[5].

4. The application of localities[6]

An employer located in a specific subregion shall apply the respective statutory minimum wage applied thereto.

a) In the event that an employer has its affiliates and/or branches located in different subregions to which different statutory minimum wages apply, such affiliates and/or branches must apply the respective statutory minimum wages applied thereto.

b) If an employer is located in an industrial park or export processing zone located in the territory containing two or more subregions to which different statutory minimum wages apply, the highest statutory minimum wage shall apply.

c) If an employer is located in a subregion which is renamed or divided, the statutory minimum wage applied to that subregion before it is renamed or divided shall still apply until new regulations promulgated by the Government come into force.

d) If an employer is located in a subregion which is converted or established from a subregion or by consolidation of two or more subregions to which different statutory minimum wages apply, it shall apply the highest statutory minimum wage.

e) In case an employer is located in a provincial city which is established from one or more subregions in the region IV, it shall apply the statutory minimum wage applied to the remaining provincial cities as prescribed in Clause 3 of the Appendix enclosed herewith^[7].

As always, we hope you find this Legal Update informative and helpful and look forward to working with you in the near future.

Kind regards,

ENT Law LLC

The full version of this Legal Update can be found here.

———————————————–

[1] Article 91 of the Labor Law 2019.

[2] Article 4.1, 4.2 Decree 38.

[3] Article 3.1 Decree 38.

[4] Article 3.2 Decree 38.

[5] Article 3.2 Decree 38.

[6] Article 3.3 Decree 38.

[7] Article 3.3 Decree 38.