a legal perspective on paying employees with products in Vietnam, legal perspective on paying employees with products in Vietnam, legal perspective on paying employees with products, paying employees with products , paying employees with products in Vietnam ,

A legal perspective on paying employees with products in Vietnam

In order to handle inventory problems as well as save costs and optimize the company’s finances, many businesses have applied payment and rewards for employees with products. This leads to many social inadequacies such as one household at the end of the month is paid a part of the salary equal to 10 barrels of cooking oil, but does not have money to buy essential necessities such as vegetables and meat. So, is it legal to pay employees with products from a legal perspective?

Status of salary by product in Vietnam

The payment of wages by product in Vietnam takes place mainly in factories and enterprises producing products and goods when the business owner for some reason leads the enterprise to a state of excess of goods and products while the money to pay wages to employees is lacking.

The reasons can include errors in the operation mechanism, overproduction of the necessary product, the partner canceling the contract because of the company’s mistake, or other reasons such as difficulty in transportation due to majeure events,…

The reasons can be diverse, but the main consequence is only one: the amount of products produced and traded is redundant and stagnant, causing the enterprise’s revenue to be reduced, insufficient or difficult to pay employees with cash.

In most cases, these products and goods are essential to daily life. However, there is also no shortage of cases where factories produce products such as furniture, tables, and chairs, ceiling fans, televisions, refrigerators, ceramic pots, face towels, sanitary napkins, pesticides, insecticides,…

These products are completely unsuitable for the essential needs in the daily life of employees. Even for essential products such as cooking oil, fish sauce, spices, soup powder, etc., the payment of wages with the above products in too much quantity is not suitable for the needs of employees.

In 2015, Viet Phu General Joint Stock Company took the reason that it was facing difficulties, so when paying wages to employees, it paid 30-50% of their salary by vouchers at the affiliated trade centers.

Among 150 employees at Viet Phu General Joint Stock Company, the group of employees is paid 70% in cash by Viet Phu company, while the office block receives 50%. The remaining salary is paid by this business by vouchers at Ong Bo Trade Center under the Company.

It is known that the average salary for employees at this enterprise at that time was from 3-5 million VND. When the new salary payment mechanism is applied, employees lose from about 1 million to 2.5 million dongs of income.

In addition, employees who were arbitrarily forced to be paid by product also reported that the price of food at Ong Bo trade center is much more expensive than the price of the food they usually buy at the local market.

The payment of wages with products is not in line with the interests of the employees. In contrast, legally, are the actions of these businesses legal?

Legal basis for paying employees with products

According to the provisions of Clause 1, Article 90 of the Labor Code 2019, salary is the amount of money that an employer pays an employee under an agreement to perform a job, including a salary according to the job or title, salary allowance, and other supplements.

In addition, the provisions of Clause 2, Article 95 of the Labor Code 2019 also clearly stipulate, “The salary stated in the labor contract and the salary paid to the employee is in Vietnam Dong, in case the employees are foreign employees in Vietnam, the payment can be in foreign currency.”

Thereby, according to the provisions of the labor law, the employer has the responsibility and obligation to pay the salary to the employee in Vietnam Dong or in foreign currency, not the product made by the company or other products or services.

This salary can be paid directly in cash but is not limited to cash. The employer can transfer money through the employee’s personal account opened at the bank.

From the above grounds, it can be affirmed that forcing employees to receive wages by products manufactured and sold by the company is against the law.

In case the initial labor contract signed between the employee and the employer has an agreement on payment of wages by products and services, this agreement will also be invalidated due to violations of labor law according to the provisions of Clause 2, Article 49 of the Labor Code 2019.

In case the enterprise forces the employee to receive the salary with the product but the employee does not agree, leading to the payment of wages not being on time, the enterprise must be held responsible before the law for the act of not paying or not paying enough money for employees as agreed in the labor contract.

Pursuant to Article 17 of Decree 12/2022/ND-CP, in case the employer fails to pay or does not pay enough salary to the employee as agreed in the labor contract, he will be administratively sanctioned from 5 million VND up to 50 million dongs for violations from 1 to 301 employees or more.

This fine is applied to individual employers. To enterprises and companies, the fine will be doubled as prescribed in Article 6 of Decree No. 12/2022/ND-CP with the maximum fine of 100 million VND.

In addition to the fine, the employer is also required to take the remedial measure of paying the full salary plus interest at the highest interest rate on demand deposits of state-owned commercial banks announced at the time the company was sanctioned.

Rewards, bonuses with products

In addition to the fixed salary, the bonus is also a remarkable amount of payment in working life. So, if the enterprise stipulates paying bonuses with products to employees, is it legal or not?

Article 104 of the Labor Code 2019 stipulates that a bonus is an amount of money or property or in other forms that an employer rewards to employees based on production and business results, the degree of completion of employees’ work.

Accordingly, bonus is not a fixed policy applicable to all companies and enterprises in the territory of Vietnam. Regulations on bonuses are prescribed by the employer, and publicly announced at the workplace after consulting with the employee representative organization at the grassroots level for the place where the representative organization is located.

The enterprise stipulates the bonus mechanism, so the enterprise will have the full right to decide on the form of the bonus, which can be in cash or in products, depending on the production and business situation of the enterprise as well as its own policies to motivate and encourage employees.

If eligible for the bonus, employees will be able to be rewarded with money or company products, even non-company products such as real estate, airline tickets, travel tickets, etc.

Conclusion

In short, it is illegal and prohibited for an enterprise to pay wages with products to employees, and for paying bonuses with products, it is a legal act, not limited by the form of rewards.

Not only is it illegal, but paying with products also makes employees lose trust in the business. It is certain that employees, whether they agree on paper or outright disagree with the employee’s decision to pay wages, will have frustrations, affecting work performance, and most likely they will revolt, consider quitting, or changing jobs.

Q&A

Client: “If the employee is paid by the product, contrary to their wishes by the employer in the above case, do they have grounds to sue the enterprise? What are the basic procedures to initiate a lawsuit in this case?”

According to the provisions on settlement of labor disputes of the Labor Code 2019, disputes related to wages must be resolved through the mediation procedure of the labor conciliator according to the provisions of Article 188 before requesting the Labor Arbitration Council or the Court to settle. The statute of limitations for requesting a labor mediator to mediate an individual labor dispute is 06 months from the date of discovering an act in which the disputing party believes that his/her legitimate rights and interests are violated. An employee may submit a request for dispute resolution to a labor conciliator or a specialized labor agency under the People’s Committee. Accordingly, the labor mediator will hold a mediation session, the mediation will end within 05 working days from the date the labor mediator receives the request.

The parties have the right to request the Labor Arbitration Council or the Court to settle in one of the following cases:

– One of the parties fails to implement the agreements in the conciliation minutes.

– When the conciliation period expires, the mediator does not conduct the mediation.

– Mediation failed.

The request for settlement by the Labor Arbitration Council must be on the basis of the consensus of the parties. The statute of limitations for requesting the Labor Arbitration Council to settle an individual labor dispute is 9 months from the date of discovering an act in which the disputing party believes that his/her legitimate rights and interests are infringed. When requesting the Labor Arbitration Council to settle a dispute, the parties must not simultaneously request the Court for settlement. In case one of the parties fails to execute the dispute settlement decision of the Labor Arbitration Board, the parties have the right to request the Court to settle the dispute.

The settlement of disputes by the Court will be conducted according to civil procedures. The statute of limitations for requesting the Court to settle an individual labor dispute is 01 year from the date of discovering the act in which the disputing party believes that his/her legitimate rights and interests are infringed.

Related posts:

  1. Preservation of leave for Vietnamese employees
  2. Regulations on the recruitment and employment of minor employees in Vietnam
  3. Regulations on payment of wages for overtime employees working at night in Vietnam
  4. Cases not entitled to the occupational accident regime in Vietnam in 2022
  5. Authorization to receive wages on behalf of employees in Vietnam in 2022

ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.

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