Tiếng Việt
中文 (中国)
日本語
In the face of global economic fluctuations, many manufacturing companies in Vietnam experience difficulties due to declining orders, leading to reduced working hours or temporary production halts. This raises the question: can a company legally withhold wages from employees when there are no orders?
Employer’s Wage Payment Obligations Under the Law
According to the 2019 Labor Code, wages are a mandatory income that employers must pay to employees under their labor contracts. Article 94, Clause 1 of the Code states:
“The employer must pay wages directly, fully, and on time to the employee.”
Thus, regardless of whether the company has orders or not, as long as the labor contract remains in effect, employees must be paid according to the agreed terms.
Temporary Suspension of Production
If a company temporarily halts operations due to a lack of orders or objective difficulties, Article 99 of the 2019 Labor Code regulates wages during work suspension as follows:
- If the suspension is due to the employer’s fault (e.g., lack of orders, insufficient materials), employees must be paid as per their labor contract.
- If the suspension is due to the employee’s fault, wages are negotiated but must not be lower than the regional minimum wage.
- If the suspension is caused by force majeure (e.g., natural disasters, pandemics, fires), wages are negotiated but must not be lower than the regional minimum wage for the first 14 days.
Therefore, if a company runs out of orders and has to suspend production, employees are still entitled to a minimum agreed wage.
It is also important to note that many employers and employees in Vietnam agree on two wage levels: a base salary close to the minimum wage for social insurance contributions and a higher actual salary based on performance. In cases of work suspension due to order shortages, employees are only legally entitled to the base salary stated in the contract, not the full actual salary they usually receive.
Can the Company Terminate Employment Contracts?
If a company must cut staff due to a lack of orders, it may terminate labor contracts for economic reasons or structural changes under Article 42 of the 2019 Labor Code. However, the employer must:
- Provide advance notice of at least 30–45 days, depending on the type of contract.
- Pay severance to employees who have worked for at least 12 months.
If a company unilaterally suspends wages or terminates employment without legal grounds, employees have the right to file a complaint with labor authorities or initiate legal proceedings.
Conclusion
Manufacturing companies in Vietnam cannot arbitrarily withhold wages from employees when orders decline. If financial difficulties arise, companies must adopt legal solutions, such as reducing working hours, negotiating temporary wage adjustments, or properly terminating contracts. Employees should be aware of their rights to protect their legal interests in such situations.
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