On June 12, 2022, the Government issued Decree 38/2022/ND-CP with many notable changes related to regional minimum wages. Accordingly, there were also adjustments to the monthly salary used for calculating social insurance contributions for employees. Therefore, businesses need to develop and reissue their salary scales and tables to conform to these changes.
In this article, Expertis will guide you on how to build the latest salary scales and tables in accordance with current legal regulations.
1. Regulations on increasing the regional minimum wage from July 1, 2022
Minimum wage increase in the region effective July 1, 2022. According to Decree 38/2022/ND-CP, the specific rates are as follows:
2. How to construct salary scales and payrolls from July 1, 2022
The increase in the regional minimum wage from July 1, 2022, according to Decree 38/2022/ND-CP, also leads to adjustments in the minimum monthly salary for mandatory social insurance contributions. Accordingly, businesses need to develop and update their salary scales and tables in accordance with labor laws and related regulations.
Based on Clauses 1 and 2 of Article 4 of Decree 38/2022/ND-CP, it is stipulated that:
- The monthly minimum wage is the lowest wage level used as a basis for negotiating and paying wages to employees who are paid monthly. It ensures that the wage for an employee working the full normal working hours in the month and completing the agreed-upon labor quota or work cannot be lower than the monthly minimum wage.
- The minimum hourly wage is the lowest wage used as a basis for negotiating and paying wages to workers who are paid on an hourly basis. It ensures that the wage for the job or position of a worker who works for one hour and completes the agreed-upon labor quota or work cannot be lower than the minimum hourly wage.
Based on Decision 595/QD-BHXH as follows:
- For workers performing the simplest jobs or positions under normal working conditions: The contribution must not be lower than the regional minimum wage at the time of contribution.
- For workers performing jobs or holding positions requiring vocational training or apprenticeship (even if the company provides its own training): The minimum monthly salary for mandatory social insurance contributions must be at least 7% higher than the regional minimum wage.
2.1. The specific way to record Level 1 is as follows:
- The minimum wage for social insurance contributions paid to workers performing the simplest tasks under normal working conditions must not be lower than the regional minimum wage.
Therefore, the lowest salary to be recorded in Tier 1 for employees performing simple tasks (janitors, cleaning staff) is VND 4.680.000/month for Region I; VND 4.160.000/month for Region II; VND 3.640.000/month for Region III, and VND 3.250.000/month for Region IV.
- The minimum wage for social insurance contributions that must be paid to workers performing jobs requiring vocational training or apprenticeship is: At least 7% higher than the regional minimum wage.
Therefore, for workers who have completed vocational training, the lowest salary level to be recorded in Tier 1 is as follows:
| Region | The lowest wage for workers who have undergone apprenticeship or vocational training. |
| Region I | = 4.680.000 + (4.680.000 x 7%) = 5.007.600 VND/month |
| Region II | = 4.160.000 + (4.160.000 x 7%) = 4.451.200 VND/month |
| Region III | = 3.640.000 + (3.640.000 x 7%) = 3.894.800 VND/month |
| Region IV | = 3.250.000 + (3.250.000 x 7%) = 3.477.500 VND/month |
2.2. How to record the following levels (from Level 2 onwards)
On December 14, 2020, the Government issued Decree 145/2020/ND-CP detailing and guiding the implementation of several articles of the Labor Code on working conditions and labor relations, replacing Decree 49/2013/ND-CP. This decree no longer stipulates the gap between salary levels; instead, businesses independently develop salary scales and tables, must consult with the collective labor representative organization at the enterprise, and publicly announce them at the workplace.
Therefore, when establishing levels from Level 2 onwards, businesses can apply the old regulations in Decree 49, with a minimum difference of 5% between levels, or they can create their own level differences depending on the nature and complexity of the work and job requirements. The number of levels is usually 5-7.
2.3. Documents for constructing the latest salary scale.
- Salary scale system
- Decision to issue a salary scale system
- Minutes of the consultation with representatives of the collective of employees (for enterprises with an employee representative organization)
- Table of applicable standards and conditions
- Regulations on salaries, bonuses, and allowances
One notable point in Decree 145/2020/ND-CP is that businesses are no longer required to submit salary scales to the Department of Labor, War Invalids and Social Affairs; instead, they only need to create and keep them within the company so that they can provide explanations when requested by state agencies.
See more: Consulting services for establishing a salary system.