New noteworthy change in regulation on regulatory minimum wage

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The minimum wage was introduced and applied in Vietnam for the first time in 2012 as a mechanism to ensure workers are paid not less than their minimum standard of living. The minimum wage is typically adjusted each year based on a variety of socioeconomic factors and the balance of interests between employees and employers. After 2 consecutive years of no adjustment due to the epidemic and its impact on the economy, the Government has just issued Decree 38/2022/ND-CP (“Decree 38”) with several changes in the minimum wage that enterprises need to know to make appropriate adjustments to wages, social insurance and other benefits for employees.

Minimum wage

From 1 July 2022, the minimum wage will be increased by 6%.

Additionally, the Government has removed the regulation requiring employers to pay workers who perform jobs that need vocational training or education at least 7% higher than the regional minimum wage. Accordingly, the minimum wage will be applied by region, regardless of the type of labor performed.

Decree 38 also marks the first time that the minimum wage is set on an hourly basis, compatible with the provisions of the Labor Code 2019.

The following is the table of minimum wages applied from 1 July 2022:

Region Statutory minimum wages per month

(Unit: VND/month)
Statutory minimum wages per hour

(Unit: VND/hour)
Region I 4,680,000 22,500
Region II 4,160,000 20,000
Region III 3,640,000 17,500
Region IV 3,250,000 15,600

Region

Basically, the guidelines on determining a region as the basis for application of the minimum wage are not changed compared to the previous regulations. However, the allocation of regions has some adjustments as follows:

  • Areas are adjusted from Region 2 to Region 1: Ha Long city in Quang Ninh province, Xuan Loc district in Dong Nai province.
  • Areas are adjusted from Region 3 to Region 2: Quang Yen and Dong Trieu townships in Quang Ninh province; Hoa Binh city and Luong Son district of Hoa Binh province; Vinh city, Cua Lo town and Nghi Loc and Hung Nguyen districts of Nghe An province; Hoa Thanh town in Tay Ninh province; Bac Lieu city of Bac Lieu province; Vinh Long city, Binh Minh town in Vinh Long province.
  • Areas are adjusted from Region 4 to Region 3: districts of Van Don, Hai Ha, Dam Ha, Tien Yen in Quang Ninh province; districts of Quynh Luu, Yen Thanh, Dien Chau, Do Luong, Nam Dan, Nghia Dan and the towns of Thai Hoa and Hoang Mai in Nghe An province; Hoa Binh district of Bac Lieu province; Mang Thit district of Vinh Long province.

Principle of application

Decree 38 amends and supplements a number of regulations on the principles of applying the minimum wage, such as:

  • Supplementing the principle of applying regional minimum wages by month or by the hour, corresponding to the form of monthly or hourly salary as agreed by the parties.
  • For weekly or daily wages or product or package wages, Decree 38 stipulates how to convert them to monthly or hourly wages. Accordingly, the salary after conversion must not be lower than the minimum salary stated in the decree.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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