Recently, the Government issued Decree 24/2023/ND-CP, replacing Decree 38/2019/ND-CP, which officially increases the basic salary from VND 1.490.000 to VND 1.800.000, effective from July 1, 2023.
1. What is the base salary?
According to Clause 1, Article 3 of Decree 38/2019/ND-CP, the basic salary is understood as the basis for calculating:
- Salaries, allowances, and other benefits are determined in salary scales as prescribed by law for the respective categories of employees;
- Living expenses and operating costs are regulated by law;
- Fund allocations and employee benefits.
2. How will the salaries of civil servants and public employees change after the increase in the base salary?
On November 11, 2022, the National Assembly officially approved the Resolution on the State Budget Estimate for 2023. Accordingly, starting from July 1, 2023, the basic salary for civil servants and public employees will be increased to VND 1.800.000 per month, a 20,8% increase compared to the current basic salary of VND 1.490.000 per month.
Salaries for civil servants and public employees are calculated according to the formula stipulated in Decree 204/2004/ND-CP as follows:
Salary = Base salary x Salary coefficient
For example: A civil servant in category A0 has a starting salary coefficient of 2,41. If calculated based on a base salary of 1.490.000 VND, the salary received is 3.590.000 VND/month. When the base salary increases to 1.800.000 VND, the salary increases to 4.338.000 VND/month.
The monthly salary and additional income calculated from July 1, 2023, based on the base salary of VND 1,8 million/month under the special mechanism, must ensure that it does not exceed the average salary and additional income in 2022 (excluding the increase due to adjustment of salary coefficients according to rank and grade).
3. Changes to the maximum salary for social insurance contributions when the base salary increases.
According to Clause 3, Article 89 of the 2014 Social Insurance Law, the monthly salary used for calculating social insurance contributions is equal to 20 times the basic salary.
The current base salary from January 1, 2023 to June 30, 2023 is VND 1.490.000/month, which means the maximum salary for mandatory social insurance contributions from January 1, 2023 to June 30, 2023 is VND 29.800.000/month.
However, according to Decree 24/2023/ND-CP, from July 1, 2023, the basic salary is 1.8 million VND/month. Therefore, the maximum salary for mandatory social insurance contributions from July 1, 2023, is 36.000.000 VND.
4. What components of the monthly salary are included in the mandatory social insurance contributions for 2023?
For employees whose social insurance contributions are based on a salary determined by the employer: The monthly salary for social insurance contributions is the salary, salary allowances, and other supplementary payments as stipulated in point a, sub-point b1 of point b, and sub-point c1 of point c, clause 5, Article 3. Circular 10 / 2020 / TT-BLĐTBXH. Specifically:
(1). Salary level according to job or position:
Record the time-based salary for the job or position according to the salary scale or salary table established by the employer as prescribed in Article 93. Labor Code;
For workers paid on a piecework or contract basis, record the time-based wage rate to determine the unit price of the product or the contract wage.
(2). Salary allowance as agreed upon by both parties:
Salary allowances are intended to compensate for factors related to working conditions, job complexity, living conditions, and the level of attractiveness of the job that have not been taken into account or have not been fully taken into account in the agreed salary in the labor contract.
(3). Other additional amounts as agreed upon by both parties as follows:
These additional payments are a specific amount of money determined in conjunction with the agreed-upon salary in the employment contract and are paid regularly during each pay period.
5. Which groups are eligible for the increase in basic salary?
Decree 24/2023/ND-CP clearly stipulates the basic salary level that will apply to the following specific groups:
- Group 1: Officials and civil servants from the central to district levels as stipulated in Clauses 1 and 2, Article 4 of the 2008 Law on Officials and Civil Servants;
- Group 2: Officials and civil servants at the commune level as stipulated in Clause 3, Article 4 of the 2008 Law on Officials and Civil Servants;
- Group 3: Public employees working in public institutions as stipulated in the 2010 Law on Public Employees;
- Group 4: Individuals working under labor contracts as stipulated in Decree 111/2022/ND-CP for certain types of work in administrative agencies, Party and State units, and socio-political organizations, in cases where the provisions apply or are agreed upon in the labor contract;
- Group 5: Individuals working within the staffing quota at associations that receive operating funds from the state budget as stipulated in Government Decree 45/2010/ND-CP on the organization, operation, and management of associations;
- Group 6: Officers, professional soldiers, non-commissioned officers, soldiers, workers, defense officials and contract laborers of the Vietnam People's Army;
- Group 7: Officers, non-commissioned officers receiving salaries, non-commissioned officers, conscripted soldiers, police workers and contract laborers belonging to the People's Public Security;
- Group 8: Individuals working in classified organizations;
- Group 9: Non-professional activists at the commune, village, and neighborhood levels.
Furthermore, the Decree also clarifies that in cases where units and agencies implement special financial and income mechanisms, they shall continue to do so until a comprehensive reform of salary policies is implemented.