In recent years, the manufacturing and business market has continued its recovery trend. The labor market remains stable, with wages and incomes of workers continuing to rise. These are positive signals for the socio-economic situation in Vietnam. In response to this positive trend, on July 1, 2024, the Ministry of Labor, Invalids, and Social Affairs adjusted the regional minimum wage. This wage adjustment is viewed as crucial to ensure the rights of workers, increase employee satisfaction and productivity, and contribute to the sustainable development of businesses. Pursuant to this minimum wage adjustment, reforming the salary scale is now mandatory for all businesses. The following key points are intended to assist enterprises to easily comply with the new regulations when creating their salary scales.

Regional Minimum Wage Adjustment from July 1, 2024

The regional minimum wage adjustment for 2024 has been increased by 0.6% compared to the 2023 level, as assessed by the National Wage Council. This adjustment harmonizes the benefits of workers and businesses, improving workers’ living standards while ensuring the viability and development of business production. It essentially ensures the minimum living standard for workers until 2025. The details are as follows:

• Region I increases by 280,000 VND, from 4.68 million VND/month to 4.96 million VND/month.
• Region II increases by 250,000 VND, from 4.16 million VND/month to 4.41 million VND/month.
• Region III increases by 220,000 VND, from 3.64 million VND/month to 3.86 million VND/month.
• Region IV increases by 200,000 VND, from 3.25 million VND/month to 3.45 million VND/month.

Legal Principles Regarding Salary Adjustment and Construction

Adjusting salaries to ensure workers’ rights, increase employees’ satisfaction and productivity, and contribute to the sustainable development of businesses requires strict compliance with legal principles regarding wages. Specifically, the principles are:

Fairness and Non-Discrimination: This requires fairness and non-discrimination in benefits and wages. Salaries should be paid based on productivity, quality, and work efficiency. Further, all workers, regardless of gender, age, or any personal factor, must be treated fairly in terms of wages. This contributes to building a positive work environment and motivates all employees.

Compliance with Wage Laws: Enterprises must strictly follow wage-related laws, including minimum wage levels and payment deadlines. This ensures that the rights of workers are fully protected and helps businesses avoid legal risks and potential labor conflicts.

Respecting Agreed Wages: The wage agreement is based upon the initial voluntary and mutual respect principle in labor relations. This agreement should be based on transparency and fairness, providing for the rights of both workers and employers. Both parties are responsible for fulfilling the agreement during the contract’s validity.

Within Legal Wage Limits: Wages must be maintained at a certain level, not lower than the minimum wage, ensuring workers’ rights and strict legal compliance. Additionally, wage adjustments should guarantee that workers are paid enough to meet basic living needs, including food, housing, and daily living expenses. Further, wage adjustments must consider the economic and financial conditions of the business to maintain stability and sustainable development.

Key Points for Businesses When Creating Salary Scales in 2024

Salary scales are a mandatory wage regulation that all businesses must comply with pursuant to Clause 1, Article 93 of the 2019 Labor Code. Employers must form a salary scale to serve as the basis for recruitment, labor use, and wage agreements according to job or position titles in labor contracts. When creating salary scales, businesses should consider the following:

Changes in Regional Minimum Wage Application.  In addition to the minimum wage increase, Decree 74/2024/ND-CP adjusts and updates the minimum wage status of several towns, cities and districts due to administrative boundary rearrangements. Specifically, upgrades from Region II to Region I for Quang Yen Town, Dong Trieu Town, Uong Bi City, and Mong Cai City in Quang Ninh Province. Upgrades from Region III to Region II for Thai Binh City in Thai Binh Province; Thanh Hoa City, Sam Son City, Nghi Son Town, and Bim Son Town in Thanh Hoa Province; Ninh Hoa Town in Khanh Hoa Province; and Soc Trang City in Soc Trang Province. Upgrades from Region IV to Region III for Thai Thuy District and Tien Hai District in Thai Binh Province; Trieu Son, Tho Xuan, Yen Dinh, Vinh Loc, Thieu Hoa, Ha Trung, Hau Loc, Nga Son, Hoang Hoa, and Nong Cong Districts in Thanh Hoa Province; and Ninh Phuoc District in Ninh Thuan Province.

Businesses Have the Autonomy to Decide Wage Gaps Between Salary Grades.  The wage level recorded at each grade is the wage for the job or position in the labor contract. Previously, Decree 49/2013/ND-CP mandated a minimum 5% gap between consecutive wage grades. However, Decree 145/2020/ND-CP and subsequently Decree 74/2024/ND-CP no longer mandate the minimum 0.5% gap between grades, allowing businesses to determine wage grade differences based on actual conditions.

No Maximum Wage Grade Limit.  Wage grades are important in establishing fair and effective salary policies in each business. Further, businesses often combine KPI systems and wage grades to evaluate workers’ job performance. Wage grades represent workers’ wage progression levels and each wage grade corresponds to a certain wage coefficient. Workers eligible for a wage increase will move up one grade. The law does not limit the maximum number of wage grades businesses must have but requires at least two grades. Currently, salary scales in businesses usually range from 5 to 15 grades, with the wage at grade 1 not lower than the regional minimum wage.

Mandatory Salary Scales.  Businesses must form their salary scales and labor norms, which provide a basis for recruitment, labor use, and wage agreements, according to job or position titles in labor contracts. Failure to establish a salary scale will result in administrative penalties in the labor field. Clause 1, Article 17 of Decree 12/2022/ND-CP stipulates a fine of 5,000,000 VND to 10,000,000 VND for employers committing any of the following violations: Not publicly disclosing the salary scale, labor norms, and reward conditions at the workplace before implementation; not creating a salary scale or labor norms or not conducting trials of labor norms before official issuance; not consulting the representative organization of workers at the workplace when creating the salary scale, labor norms, and reward conditions; not notifying workers of the payroll list or improperly notifying workers of the payroll list; not paying equal wages or discriminating based on gender for workers doing equal value work.

Providing for a salary scale ensures workers’ legal interests, is a labor-management tool for businesses, and is the basis for state labor management at each local level. Businesses need to comply properly.

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