On June 30, 2024, the Government issued Decree 74/2024/ND-CP stipulating the minimum wage for employees working under labor contracts, replacing Decree 38/2022/ND-CP and Decree 73/2024/ND-CP stipulating the basic salary and bonus regime for cadres, civil servants, public employees, and the armed forces. This decree introduces several notable changes related to regional minimum wages and monthly wages used for social insurance contributions. Therefore, businesses need to rebuild and reissue their salary scales and adjust monthly wages for social insurance, health insurance, unemployment insurance, and occupational accident and disease insurance contributions for employees to reflect these changes.
1. Increase in regional minimum wage effective July 1, 2024
Decree 74/2024/ND-CP stipulates the minimum monthly wage and minimum hourly wage for employees working for employers in specific regions as follows:
2. Increase in basic salary effective July 1, 2024
The government issued Decree 73/2024/ND-CP on June 30, 2024, stipulating the basic salary and bonus regime for officials, civil servants, public employees, and members of the armed forces. Accordingly, from July 1, 2024, the basic salary will be 2,34 million VND/month, replacing the current 1,8 million VND/month.
3. What should businesses do when there are changes to the regional minimum wage and base salary from July 1, 2024?
3.1. Rebuilding the salary scale within the enterprise.
The regional minimum wage will increase from July 1, 2024, according to Decree 74/2024/ND-CP. Therefore, businesses need to develop and update their wage scales and tables in accordance with current labor laws and relevant regulations.
Note: Businesses are no longer required to submit salary scales to the Department of Labor, War Invalids and Social Affairs; they only need to create and keep them at the company for explanation when requested by the state agency (Based on Decree 145/2020/ND-CP).
3.2. Adjusting the salary subject to mandatory social insurance contributions for employees.
In accordance with Decree No. 73/2024/ND-CP, which stipulates that the basic salary will be increased from VND 1.800.000 to VND 2.340.000, the salary levels for compulsory social insurance (BHXH), health insurance (BHYT), unemployment insurance (BHTN), and occupational accident and disease insurance (BHTNLĐ-BNN) will be adjusted as follows:
- The minimum contribution rate for social insurance, health insurance, unemployment insurance, and occupational accident and disease insurance is equal to the regional minimum wage.
- The maximum contribution rate for social insurance, health insurance, and occupational accident and disease insurance is 20 times the basic salary.
- The maximum unemployment insurance contribution rate is 20 times the regional minimum wage.
Based on Article 90 of the 2019 Labor Law, the regulations on wages are as follows:
- Wages are the amount of money that an employer pays to an employee according to an agreement for performing work, including the salary based on the job or position, salary allowances, and other additional payments.
- Salary according to job or title must not be lower than the minimum wage.
- Employers must ensure equal pay, regardless of gender, for employees doing work of equal value.
Therefore, employers adjust the salary used for calculating social insurance contributions for employees based on the salary for the job or position, salary allowances, and other supplementary payments as prescribed. However, the salary for the job or position must not be lower than the minimum wage stipulated by the Government from July 1, 2024.
The above is important information effective from July 1, 2024, updated by Expertis for our valued customers. For further assistance or advice, please contact our team of specialists.