CIRCULAR

GUIDELINES FOR SOME ARTICLES ON WAGES OF THE GOVERNMENT'S DECREE NO. 05/2015/NĐ-CP DATED JANUARY 12, 2015 ON GUIDELINES FOR SOME CONTENTS OF THE LABOR CODE

Pursuant to the Government's Decree No. 106/2012/NĐ-CP dated December 20, 2012, defining the functions, tasks, powers and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

Pursuant to the Government's Decree No. 05/2015/NĐ-CP dated January 12, 2015 on guidelines for some contents of the Labor Code;

At the request of Director of Employment – Wage Department

The Minister of Labor, War Invalids and Social Affairs promulgates a Circular to provide guidelines for some Articles on wages of the Government's Decree No. 05/2015/NĐ-CP dated January 12, 2015 on guidelines for some contents of the Labor Code.

Article 1. Scope

This Circular provides for guidelines for some Articles on wages of the Government's Decree No. 05/2015/NĐ-CP dated January 12, 2015 on guidelines for some contents of the Labor Code (hereinafter referred to as Decree No. 05/2015/NĐ-CP).

Article 2. Regulated entities

Employers, employees, representative organizations of employee collectives, organizations and individuals directly involved in labor relation in implementation of some regulations on wages in Decree No. 05/2015/NĐ-CP.

Article 3. Wages

Wages are prescribed in Clause 1 and Clause 2 Article 21 of Decree No. 05/2015/NĐ-CP and elaborated as follows:

1. The wage written in the employment contract is agreed between the employee and employer to for performance of certain tasks. Wages include:

a) The pay rate corresponding to the job or position according to the pay scale established by the employer in accordance with Article 93 of the Labor Code, Article 7, Clause 2 Article 10 of the Government's Decree No. 49/2013/NĐ-CP dated May 14, 2013 on guidelines for some Articles on wages of the Labor Code;

b) Allowances meant to make up for working conditions, work complications, living conditions, necessity of labor attraction that are not taken into account or not adequately included in the wage corresponding to the tasks or positions on the pay scale. To be specific:

- Making up for working conditions, including arduous, harmful, dangerous works, or particularly arduous, harmful, dangerous works.

- Making up for work complications such as works that require training, professional skills and knowledge, heavy responsibility, affecting other works, requiring long experience, working skills, communications skills, and cooperation.

- Making up for living conditions such as works in remote areas, disadvantaged areas with extreme climate, expensive areas with housing difficulties; works that require employees to frequently change the workplace, residence, and other factor that make the employees’ life inconvenient.

- Labor attraction such as encouraging workers to new economic areas, new markets; unattractive jobs that lack workers; encouraging workers with high productivity and work quality or able to meet work schedules.

c) Additional payments are amounts in addition to wage and allowances related to the job or position written in the employment contract. Additional payments do not include: bonus prescribed in Article 103 of the Labor Code; payment for mid-shift meals; assistance for employees upon death, marriage of their relatives, employees’ birthday parties, assistance for employees having difficulties from occupational accidents, occupational diseases, other assistance and allowance not related to the job or position written in the employment contract.

2. The wage paid to an employee depends on the wage written in the employment contract, productivity, work load, and work quality of the employee. The wage paid to the employee that does the simplest job in normal working conditions for normal working hours and completes the given workload or tasks (not including overtime pay or night work pay) must not falls below the region-based minimum pay rates prescribed by the government.

Article 4. Method of payment

Methods of payment of wages are prescribed Article 22 of Decree No. 05/2015/NĐ-CP and elaborated as follows:

1. Time-based wages (monthly, weekly, daily, or hourly) are paid to employees for their actual working time by month, week, day, or hour. To be specific:

a) Monthly wage is paid for one working month based on the employment contract;

b) Weekly wage is paid for one working week, which equals (=) monthly wage multiplied by (x) 12 months and divided by (:) 52 weeks;

c) Daily wage is paid for one working day which equals (=) monthly wage divided by (:) number of working days in the month (depending on each month of the solar calendar and employees have averagely 04 days off in a month) under regulations of law as selected by the enterprise;

d) Hourly wage is paid for one working hour which equals (=) daily wage divided by (:) number of normal working hours in the day as prescribed in Article 104 of the Labor Code.

2. Piece rates are paid to employees who are paid by the piece (piece workers) according to the completion of work in terms of quantity and quality of products under the given norm and rate.

3. Fixed wage is paid to employees who agree to receive fixed wage according to the workload, work quality, and deadline for work completion.

Depending on the characteristics of work and business conditions, employers shall decide on the method of wage payment that ensure wage matches the work performance, encourage employees to improve work efficiency and performance. The selection or change of wage payment method must be written in employment contracts and collective bargaining agreement.

Article 5. Monthly wage payment term

Monthly wage payment term is prescribed in Article 23 of Decree No. 05/2015/NĐ-CP and elaborated as follows:

1. Monthly wage shall be paid once or twice a month within the month in which the employee works.

2. Both parties shall reach an agreement on a fixed time of wage payment in the month.

Article 6. Overtime pay

Overtime pay paid to employees who work overtime is prescribed in Clause 1 Article 25 of Decree No. 05/2015/NĐ-CP and elaborated as follows:

1. Every employee who receives time-based wage and works overtime in addition to the working time established by the employer shall receive overtime pay as prescribed in Article 104 of the Labor Code, which is calculated as follows:

Where:

a) Actual hourly wage on a normal working day equals (=) the actual wage for the current job of the month in which the employee works overtime (minus overtime pay and extra pay for night work) divided by (:) actual number of working hours in the month (exclusive of overtime hours). If the employee receives a daily or weekly wage, the overtime pay equals (=) the actual wage of that working day or week (minus overtime pay and extra pay for night work) divided by (:) actual number of working hours in the day or week (exclusive of overtime hours);

b) The overtime pay on a normal working day is at least 150% of actual hourly wage on a normal working day.

c) The overtime pay on a weekly day off is at least 200% of actual hourly wage on a normal working day.

d) The overtime pay on a public holiday or paid day off (exclusive of wages of public holidays and paid days off prescribed by the Labor Code) is at least 300% of actual hourly wage on a normal working day. This rate is applied to employees receiving daily wages.

Employees receiving daily wages are those whose wages are paid daily according to the employment contract and do not include wages of public holidays and paid days off prescribed by the Labor Code.

2. With regard to piece workers who receive overtime pay when the employees and the employer reach an agreement on overtime work in additional to normal working hours to increase the quantity of completed products or works in additional to the agreed workload, overtime pay is calculated as follows:

Where:

b) The overtime pay for products done on a normal working day is at least 150% of piece rate on a normal working day.

b) The overtime pay for products done on a weekly day off is at least 200% of piece rate on a normal working day.

c) The overtime pay for products done on public holiday or paid day off is at least 300% of piece rate on a normal working day.

Article 7. Pay for night work

Employees working at night as prescribed in Clause 3 Article 25 of Decree No. 05/2015/NĐ-CP shall be paid as follows:

1. With regard to employees receiving time-based wages:

Where: Actual hourly wage on a normal working day is determined in accordance with Point a Clause 1 Article 6 of this Circular.

2.  With regard to piece workers:

Article 8. Pay for overtime night work

Employees working overtime at night as prescribed in Clause 4 Article 25 of Decree No. 05/2015/NĐ-CP shall be paid as follows:

1. With regard to employees receiving time-based wages shall be paid as follows:

Where:

a) Actual hourly wage on a normal working day is determined in accordance with Point a Clause 1 Article 6 of this Circular;

b) Hourly wage during the day on a normal working day or weekly day off or public holiday or paid day off is determined as follows:

- Hourly wage during the day on a normal working day is at least 100% of hourly wage on a normal working day if the employee does not work overtime during the day on that day (before working overtime at night); at least 150% of hourly wage on a normal working day if the employee works overtime during the day on that day (before working overtime at night).

- Hourly wage during the day of a weekly day off is at least 200% of actual hourly wage on a normal working day.

- Hourly wage during the day of a public holiday or paid day off is at least 300% of actual hourly wage on a normal working day.

2. With regard to piece workers:

Where:

a) Piece rate during the day on a normal working day or weekly day off or public holiday or paid day off is determined as follows:

-  Piece rate during the day on a normal working day is at least 100% of piece rate on a normal working day if the employee does not work overtime during the day on that day (before working overtime at night); at least 150% of piece rate on a normal working day if the employee works overtime during the day on that day (before working overtime at night);

- Piece rate during the day of a weekly day off is at least 200% of that on a normal working day.

- Piece rate during the day of a public holiday or paid day off is at least 300% of that on a normal working day.

Article 9. Effect

1. This Circular comes into force from August 08, 2015.

2. The regulations of this Circular are applied from the effective date of Decree No. 05/2015/NĐ-CP.

3. Ministers, Heads of ministerial agencies, Heads of Governmental agencies, Presidents of the People’s Committees of provinces are responsible for providing guidance, supervising, and inspecting the implementation of this Circular.

Difficulties that arise during the implementation of this Circular should be reported to the Ministry of Labor, War Invalids and Social Affairs for timely instructions./.