Regulations on payroll and downsizing of payroll in Vietnam, payroll, downsizing of payroll, downsizing of payroll in Vietnam, Regulations on payroll and downsizing of payroll, payroll and downsizing of payroll, The subject of downsizing of payroll in Vietnam, The subject of downsizing of payroll

Regulations on payroll and downsizing of payroll in Vietnam

In the territory of Vietnam in the 21st century, the number of cadres, civil servants, and public employees in organizations of the whole political system is constantly increasing, especially in the administrative, judicial, and non-business units. Accordingly, there is too many personnel that is a ‘burden’ or ‘unnecessary’ to keep the system running at 100% capacity, creating waste to national’s resources. This creates a need to lay off those extra employees and that is the basic principle of downsizing payroll. So, what are the regulations on payroll and downsizing of payroll in Vietnam?

Definition of payroll in Vietnam

Although payroll is a word that is used by many people as well as appears quite a lot in documents in the Law on Cadres and Civil servants, the Law on Public Employees, or in documents on downsizing the payroll, etc., there is no specific definition of what payroll is.

Although there is no specific definition, principally, Payroll is understood as the necessary number of laborers in a reasonable structure in both quantity and quality to effectively carry out the work of agencies, units, and organizations of the political system. These human resources are paid from the state budget, so they can be collectively referred to as the state payroll.

Regulations on payroll and downsizing of payroll in Vietnam
Regulations on payroll and downsizing of payroll in Vietnam

On a more specific detail, payroll can also be understood as the required number of people working in a State agency that is stable, long-term, indefinite, and can maintain their jobs, salary, and allowance regimes until retirement.

Definition of downsizing of payroll in Vietnam

According to the provisions of Decree No. 108/2014/ND-CP stipulating the policy of downsizing (reducing) the payroll, Downsizing is understood as the assessment, classification, and removal from the payroll of those who are redundant, do not meet job requirements, cannot continue to arrange other work arrangements and settle regimes and policies for those subject to downsizing.

Although payroll is often considered a “guarantee” for cadres, civil servants, and public employees to have jobs until retirement with stable salary and allowance regimes, there are still cases of downsizing of payroll in Vietnam.

The subject of downsizing of payroll in Vietnam

Decree No. 108/2014/ND-CP prescribes the policy of downsizing the payroll for implementation in the following agencies, organizations, and units:

  • Agencies and organizations of the Party, State, socio-political organizations from central to commune level;
  • Public non-business units of the Party, State, socio-political organizations;
  • The associations are assigned payroll and the state budget provides financial support to pay salaries;
  • A one-member limited liability company owned by the State or owned by a political organization or socio-political organization is converted from a state company, a company belonging to a political organization, socio-political organizations, which continue to be approved by the competent authority, reorganize according to the plan of equitization, assignment, sale, dissolution, merger, consolidation, division, separation, bankruptcy or transformed into a limited liability company with two or more members or into a public non-business unit;
  • State-contributed joint-stock companies are now allowed to sell off all state capital by competent authorities;
  • State-owned agriculture and forestry farms are rearranged according to the provisions of law.

The subjects who are targeted for downsizing of payroll are: 

  • Cadres and civil servants from central to commune level;
  • Public employees in public non-business units;
  • Persons working under the regime of indefinite-term labor contracts specified in the Government’s Decree No. 68/2000/ND-CP of November 17, 2000, on the performance of contract regimes for certain types of work in state administrative agencies, non-business units, and in accordance with other provisions of law.
  • Company president, members of the Members’ Council, General Director, Deputy General Director, Director, Deputy Director, Chief Accountant, controller in one-member limited liability companies owned by the State country or owned by a political organization, socio-political organization (excluding the General Director, Deputy General Director, Chief Accountant working under the labor contract regime).
  • People who are cadres and civil servants appointed by competent agencies to act as authorized representatives of the state capital portion in state-owned enterprises.
  • People working on the payroll are assigned by competent state agencies to associations.

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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