Fine for the enterprise who pays lower wage than region-based minimum wage

1. What are the principles of wage payment?

In accordance with Clause 1, Article 94 of the Labor Code 2019, the employer shall pay wages directly, fully, and timely to employees.

The employer shall pay wages to employees based on agreed wage levels, labor productivity, and work quality. Pursuant to the Clause 1, Article 91 of the Labor Code 2019, the wages include:

- Job- or title-based wage.

- Wage-based allowance, and other additional amounts.

Within that, the job- or title-based wage amount must not be lower than the minimum wage level. On the other ways, wage-based allowance, and other additional amounts shall be agreed upon by parties.
 

Therefore, the minimum wages must be equal to the minimum wage levels shall be determined by region.

From July 01, 2022, the level of the minimum wage which is applicable for employees working in enterprises shall be implemented in accordance with the Decree No. 38/2022/ND-CP as follows:

Region	Region-based minimum wage
Region I	VND 4.68 million/month
Region II	VND 4.16 million/month
Region III	VND 3.64 million/month
Region IV	VND 3.25 million/month

2. What are the fines for enterprises when paying lower wages than region-based minimum wages for employees?

As mentioned above, the employer shall pay wages to employees based on agreed wage levels, labor productivity, and work quality, but cannot be lower than the region-based minimum wage. Fines shall be imposed on any employer that pays employees less than the minimum wage prescribed by the Government under Clause 3, Article 17, Decree No. 12/2022/ND-CP as follows:

a) A fine of between VND 20,000,000 and VND 30,000,000 for violations related to between 01 worker and 10 workers;

b) A fine of between VND 30,000,000 and VND 50,000,000 for violations related to between 11 and 50 workers;

c) A fine of between VND 50,000,000 and VND 75,000,000 for violations related to 51 workers or more.

Therefore, a fine ranging from VND 20 million - 75 million for the acts imposing on the employers pay employees less than the region-based minimum wage. Accordingly, in accordance with Clause 1, Article 6, the Decree 12 prescribes that the employer as an organization shall be imposed a double fine from VND 40 million - VND 150 million.

Beside the fines, compelling the employer to pay full wages and the interest on the employee's late payment or underpayment thereof. The interest rate is calculated according to the highest demand deposit interest rate of the state commercial banks announced at the time the penalties are imposed.

3. What do the employees do to claim the benefits?

In order to take the total wage, employees who receive a lower wage than the region-based minimum wage can take one of the methods to get the full wage back as follows:

 

Method 1. Complaints

In accordance with Decree No. 24/2018/ND-CP, the employees must send the complaint to enterprises for the full payment of wages according to the region-based minimum wage.

If the enterprises do not have a satisfactory handle, employees can make a second complaint to the Chief Inspector of the Department of Labor, War Invalid and Social Affairs, where the employer located the headquarter. 

In the process of handling the complaint, the chief inspector shall impose administrative violations on the enterprises and requires the enterprise to pay full salary and interest for employees.

Method 2. Denunciations

The act of paying wages lower than the region-based minimum wage is an act of law violation and infringes upon the legitimate rights and interests of employees. Therefore, in accordance with Decree No. 24/2018/ND-CP, employees can make direct denunciations to the Chief Inspector of the Department of Labor, War Invalid and Social Affairs, where the employer located the headquarter. 

When handling the complaint, the chief inspector shall impose administrative violations on the enterprises and requires the enterprise to pay full salary and interest for employees.