regulations on the salary increase regime according to the law of Vietnam, the salary increase regime according to the law of Vietnam, salary increase regime according to the law of Vietnam, the salary increase regime,

Regulations on the salary increase regime according to the law of Vietnam

Salary is always a sensitive and complicated topic in every business. When working for an enterprise for a long time without a salary increase (despite good performance and no violation of discipline), employees will inevitably be frustrated. Some employees even think that the business has a responsibility to increase their salary every year. So, is this true? What are the regulations on the salary increase regime according to the law of Vietnam?

Pursuant to the provisions of Clause 1, Article 90 of the Labor Code 2019, salary is the amount paid to an employee to perform a job as agreed with the employer, including the salary according to the job or title, salary allowance, and other additional payments.

Accordingly, the issue of salarys at a reasonable level is entirely dependent on the agreement between the employer and the employee.

Reasonable here is when it does not violate the provisions of the law to protect the interests of employees such as not agreeing on a salary below the minimum salary, refusing to pay social insurance to receive an additional amount, etc.

Accordingly, to a reasonable extent, salary issues, including the regulation of periodic salary increases, are entirely dependent on the agreement between the employee and the employer.

Clause 6, Article 3 of Circular 10/2020/TT-BLDTBXH guiding the promotion and salary increase regime clearly stipulates that the promotion and salary increase regime is implemented according to the agreement of the two parties on conditions and time, salary level after promotion, salary increase or comply with the collective labor agreement and regulations of the employer.

Accordingly, the salary increase will be done according to the agreement of the parties or the collective labor agreement and the company’s regulations.

Note about the salary increase according to the agreement

Usually, the labor contract will not contain any provisions that force the employer to increase the salary of the employee after a certain period of time.

Instead, the agreement between the two parties will normally be a mechanism to review salary increases every 6 months or every 12 months. Note that this is just a review, not an absolute increase, and is based on many different factors such as employee performance, business situation, etc., which lead to the result that the employee may not get a raise.

In Vietnam, there are still cases of the agreement to increase the salary periodically for employees, but this regulation mostly only applies to the seniority regime for employees working in factories. For example, after 5 years, there is a salary increase for employees, also known as seniority salary. However, at present, these regimes are also gradually being abolished because many enterprises consider that when employees do not create efficiency in their work and still get a salary increase, it is not fair to talented and creative young employees in the factory.

In summary, Vietnamese law does not have any regulations or provisions that require employers to increase salaries annually for employees. Before signing a labor contract, the employee should learn carefully about the salary increase mechanism of each enterprise and ask questions before entering the job.

If there is a mechanism to consider raising salaries and employees feel that they are qualified but still do not receive a raise, employees can actively propose to the management board to ensure their interests.

In the case of a labor contract with a regulation that requires an official salary increase after a period of time, such as a seniority salary regime, but the employer does not increase it as agreed in the labor contract, the employee can sue the enterprise and in these cases, the employer will be administratively fined for the act of failing to pay the employee’s salaries in full according to the agreement specified in Clause 2, Article 17 of Decree 12/ 2022/ND-CP.

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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