How do employers lower employees' wages without breaking the law during the Covid-19 pandemic in Vietnam, Reduce the employers' wages legally, Negotiate to amend the clause about salaries in the labor contract, Transfer the employee to another position, lower employees' wages without breaking the law during the Covid-19 pandemic

How do employers lower employees’ wages without breaking the law during the Covid-19 pandemic in Vietnam?

The Covid-19 has had long-lasting impacts on all sectors of the economic and the social health of the citizens of Vietnam, as well as in other countries in the world. If counted among the affected individuals and organizations by this pandemic then businesses must be one of the most affected aspects of society. To deal with the negative influences of the pandemic, many businesses have tried to lay off staff or at least, lower their wages. However, businesses can’t just lower their employees’ salaries without a reasonable cause or they will break the law. So, how do employers lower employees’ wages without breaking the law during the Covid-19 pandemic in Vietnam?

In the Covid-19 context, one of the most utilized solutions applied by many businesses in Vietnam and around the world is to reduce workers’ wages which in turn, reduce the economic burden on their businesses.

However, not everyone is happy when their salaries are cut off. Accordingly, when the employees see that their wages are getting decrease gradually every month and then, especially during the difficult time due to the Covid-19 pandemic, they are gonna fight back. This means that they could bring the matter to the Union of that business to meditate. If the related parties can’t come to an agreement, the employees might even conduct a civil action.  

Nobody wants that, both the employees and the employers. 

Accordingly, business owners should deal with the matter of reducing the employers’ wages while still ensuring compliance with the principle of the law.

Reduce the employers’ wages legally

Basically, in order to reduce the employees’ wages legally, there are 2 main methods that business owners can consult:

Negotiate to amend the clause about salaries in the labor contract

The labor contract is signed based on a voluntary agreement between the business and the employee. Article 33 of the Labor Code 2019 allows the parties to agree to amend and supplement the content of the contract if there is a need arose.

Thus, if employers want to relieve the burden to their businesses by reducing the wages of their employees, it’s best that they negotiate with their employees about the adjustment of the salary clause, the duration of the salary reduction, and other binding terms between the parties (if any) in the signed labor contract. 

It should be noted that when a business wishes to negotiate a salary reduction with an employee, they must notify the employee at least 03 working days before conducting the negotiation process.

If the two parties can reach an agreement, the amendment and supplementation of the labor contract’s contents shall be carried out by signing an addendum to the labor contract or concluding a new labor contract.

In case the employee does not agree to the salary reduction, the business must retain the agreed salary of the employee as acknowledged in the signed labor contract, not to arbitrarily reduce the employee’s salary.

Transfer the employee to another position

If the business wants to reduce the employees’ wages due to the negative impacts from the Covid-19 pandemic, businesses should consider transferring the employee to other positions different from the agreed job in the labor contract.

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How do employers lower employees’ wages without breaking the law during the Covid-19 pandemic in Vietnam?

Accordingly, Article 29 of the Labor Code 2019 stipulates that in the event of sudden difficulties such as natural disasters, fire, major epidemics, implementation of preventive and remedial measures for occupational accidents or diseases, electricity and water supply failures, or for reasons of business and production demands, the employer may temporarily assign an employee to perform a work which is not prescribed in the labor contract for an accumulated period of up to 60 working days within 1 year, unless otherwise agreed in writing by the employee.

If the business wants to transfer the employee to a job different than the job in the labor contract for more than 60 cumulative working days in 1 year, it can only be done when the employee agrees in writing.

The employee who is assigned another job different than the job in the labor contract is paid according to the new job. If the salary of the new job is lower than the salary of the old job, the salary of the old job is kept unchanged for 30 working days. The salary according to the new job must be at least 85% of the salary of the old job but not less than the minimum wage.

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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