2 August, 2019
The Government recently issued a Draft Decree replacing Decree No. 157/2018/ND-CP, dated 16 November 2018, providing the regional minimum area wages (RMS) for employees working pursuant to a labour contract (Draft Decree).
By law, the RMS is generally the minimum monthly salary level applicable to employees who perform the simplest work which does not require any training or qualification. With respect to employees having jobs which require training or qualification, their monthly salary must be higher than the RMS by at least seven percent.
As from 1 January 2020, under the Draft Decree, the RMS shall be divided into different categories based on the location of the employers as follows:
|
No. |
Region |
Minimum Wage in VND |
Minimum Wage in USD |
|
1 |
Region I |
4,420,000 |
190 |
|
2 |
Region II |
3,920,000 |
168 |
|
3 |
Region III |
3,430,000 |
147 |
|
4 |
Region IV |
3,070,000 |
132 |
The Appendix to this Draft Decree contains the List of Geographical Areas in each Region I, II, III and IV. Most districts in Hanoi and Ho Chi Minh City fall within Region I.
It should be noted that the RMS is used to determine a cap amount in calculating unemployment insurance contributions for both employers and employees. Specifically, the salary which is used to calculate the unemployment insurance contribution is capped at 20 times the RMS. An increase in the RMS therefore will lead to an increase in the unemployment insurance contribution, and accordingly, to an increase in the labor costs borne by employers.
For further information, please contact:
Mark Fraser, CEO/ Managing Partner, Frasers Law Company
mark.fraser@fraservn.com
