Increase in region-based minimum wage 2020: 3 must-to-do tasks for enterprises

1. How does the region-based wage increase?

The Decree No. 90/2019/ND-CP of the Government has imposed the region-based minimum wage 2020 as follows:

Unit: VND/month

2. Enterprises must do?

Firstly: Restructure wage scales and tables

In accordance with clause 3, Article 7 of the Decree No. 49/2013/ND-CP, enterprise’s restructure of wage scales and tables shall be made basing on the principles as follows:

 “The lowest wage level of the simplest job or title in the normal working conditions must not be lower than region-based wage levels;

The lowest wage level of a job or title requiring trained employees (including those trained by enterprises) must be at least 7% higher than region-based wage levels;

The wage level of a job or title to be performed in heavy, hazardous and dangerous working conditions must be at least 5% higher; a job or title in exceptionally heavy, hazardous and dangerous working conditions must be at least 7% higher than the wage level of a job or title with a similar complexity but in the normal labor conditions.”

Therefore, enterprises must restructure wage scales and tables in accordance with legal regulations when the region-based minimum wage 2020 increase, but the labor’s wage level is under the region-based minimum wages.

Secondly: Increase the wages of compulsory social insurance

At the point 2.6, clause 2, Article 6 of the Decision No. 595/QD-BHXH in 2017, the Vietnam Social Insurance requires:

The monthly salary as the basis for payment of compulsory social insurance specified in this Clause must not fall below the region-based minimum wage of the person holding the simplest position under normal working conditions.

 A person whose job or position requires training (including training provided by the employer) must be higher than the region-based minimum wage by at least 7%;

The salary of a person working under strenuous, toxic or dangerous conditions must be higher by at least 5% than that of a person having a similar job or position under normal working conditions; The salary of a person working under extremely strenuous, toxic or dangerous conditions must be higher by at least 7% than that of a person having a similar job or position under normal working conditions.

In the conformity with the above regulations, enterprises that have social insurance for labors under the region-based minimum wage must have suitable adjustment in payment.

Thirdly: Increase the trade-union fee

Remittance of trade-union fee is the responsibilities of all enterprises with regardless of whether such enterprises has been had grassroots trade-union organizations or not.

In accordance with Article 5 of the Decree No. 191/2013/ND-CP:

The remittance level shall be 2% of salary fund which are used as the basis for social insurance payment for employees.

This salary fund shall be total salaries of employees under objects payable social insurance in accordance with law on social insurance.

From above analysis, enterprises must have adjustment in the remittance of trade-union fee when the region-based minimum wage increases.

3. Conclusion

Above 03 must-to-do things should be put in action when the region-based minimum wage increases from January 01, 2020.

Only enterprises that have wages and social insurances lower than the region-based minimum wage must have adjustment.

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