Tiếng Việt
中文 (中国)
In early July 2022 in Vietnam, employers across the country will have to apply the new regional minimum wage policy. However, there will certainly be many cases where enterprises do not comply with the regulations and still maintain the current salary, which is less or much less than the prescribed regional minimum wage. So, what are the penalties for enterprises that do not follow the policy of increasing the regional minimum wage from July in Vietnam?
Not only now, but probably throughout the history of Vietnam, there are always cases in which enterprises pay wages lower than the regional minimum wage for employees, employers force employees to pay the money they have to pay into the social insurance fund, the employee and the employer agree not to pay social insurance and in return, the employee will receive a small amount of money added to the monthly salary, etc.
These acts of violating and evading the law happen continuously every day on this S-shaped strip of land and every business knows that this is a violation of the law but still intentionally does it to make a profit, based on the downfall of workers.
However, this change in regional minimum wages in 2022 will certainly be a wake-up call for enterprises because the government will examine violations more rigorously after nearly 3 years of no change in the minimum wages due to the Covid pandemic.
Penalties for paying wages lower than the regional minimum wage for employees in Vietnam
If the enterprise does not comply with the regulations on updating the regional minimum wage, the enterprise will be forced to pay the employee the amount agreed upon by the parties but must not be lower than the regional minimum wage.
It should be noted that the salary here is the Gross salary – the total monthly income the employee receives, including the basic salary and allowances, commissions, etc., including insurance contributions and personal income tax (PIT).
Employees who agree on a salary equal to the minimum wage will certainly receive the actual salary lower than the minimum because they have to pay 10.5% into the social insurance fund (the employee pays about 20-21.5%). Accordingly, employees should not consider the salary received at the end of the month but should consider the salary in the labor contract or agreement with the employer.
If the employer agrees or officially signs a labor contract with the employee with a salary lower than the regional minimum wage, they will be administratively fined the following amount according to the provisions of Clause 3, Article 17 of Decree 12/2022/ND-CP:
a) A fine ranging from VND 20,000,000 to VND 30,000,000 for violations of between 01 to 10 employees;
b) A fine ranging from VND 30,000,000 to VND 50,000,000 for violations of between 11 and 50 employees;
c) A fine ranging from VND 50,000,000 to VND 75,000,000 for violations of 51 or more employees.
Accordingly, depending on the number of employees who are paid less than the regional minimum wage, the employer will have to pay a fine ranging from 20 to 75 million VND for individuals or from 40 to 150 million VND for organizations.
In addition to being fined and forced to pay the full salary due to employees, the enterprise must also pay interest on the underpayment to employees at an interest rate calculated according to the highest interest rate on demand deposits of state-owned commercial banks announced at the time the enterprises are sanctioned.
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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