Understanding The Vietnam Minimum Wage 2024

  • Post category:Vietnam

Vietnam provides a business-friendly atmosphere, low trade costs, and strategic location. This attracts foreign investors to establish their company registration in Vietnam.

All agreements between employers and employees about monthly salaries and their payments are based on the statutory minimum wage each month. The statutory minimum earnings per month cannot be less than the job or position-based salary of an employee who guarantees regular monthly working hours and has completed his or her labour productivity norms or responsibilities as agreed.

vietnam minimum wage

On July 1, 2022, Vietnam revised the regional minimum wages by an average of 6% after nearly two and a half years of pandemic-related delays. Before implementing a new wage hike, organizations must prepare for and take into account the increase in HR expenses, operational capacity, and costs. 

The pay rise affects workers who are employed in accordance with the labour code, such as those employed by businesses, towns, cooperatives, households, and individuals.

MINIMUM WAGE RATES IN VIETNAM 2024

The common minimum salary and the regional minimum salary are the two minimum wage categories in Vietnam. The common minimum salary, which is set at VND 1.800,000 (about US$76.6), is used to set employee compensation in state-owned businesses and institutions.

It also establishes how much a corporation can provide to society; the highest possible contribution is equivalent to twenty times the minimum wage. The government-defined zones serve as the basis for the regional minimum wage, which is applicable to employees in non-state firms.

VIETNAM MINIMUM WAGE 2024

Region 2020 monthly minimum wage Hike  2022 monthly minimum wage
I VND 4,420,000 (US$190) VND 260,000 VND 4,680,000 (US$202)
II VND 3,920,000 (US$169) VND 240,000 VND 4,160,000 (US$179)
III VND 3,430,000 (US$148) VND 210,000 VND 3,640,000 (US$157)
IV VND 3,070,000 (US$132) VND 180,000 VND 3,250,000 (US$140)
  • Region I includes the cities of Ho Chi Minh City and Hanoi.
  • Region II includes Da Nang, Ho Chi Minh City, and rural Hanoi.
  • Provincial districts and cities of Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Binh Phuc, and other provinces not included in Regions I and II are included in Region III.
  • Region IV includes the remaining areas.

Minimum hourly wage rates for specific regions according to the labour code are:

  • Region I – VND 22,500 (US$0.97)
  • Region II – VND 20,000 (US$0.86)
  • Region III – VND 17,500 (US$0.75)
  • Region IV – VND 15,600 (US$0.67)

Wages for daily or weekly workers cannot be less than the minimum wage rate when changed to a monthly or hourly rate. Negotiations between the two parties determine the compensation of Vietnamese workers hired by international corporations in Vietnam. The salary, however, cannot go below the government-mandated minimum monthly wage rate.


HOW ARE RATES FOR MINIMUM WAGES APPLIED?

The lowest level of salary for any commercial agreement between an employer and an employee must be the minimum wage rate in all agreements. Businesses should make sure that the appropriate pay rate is used, particularly in the following situations:

  • Each employee of the company’s branches or subsidiary enterprises in other subregions shall receive the minimum wage determined by that specific region.
  • The highest minimum wage rate will apply to businesses situated in industrial parks or the export processing zone that spans two or more.

SALARY COMPONENTS

Generally speaking, an employee’s annual compensation package consists of their gross pay plus any necessary insurance benefits. After deducting necessary insurance contributions, the remaining amount will be subject to Personal income taxes (PIT).

Bonuses, allowances, overtime pay, and other benefits may occasionally be added to the gross salary.

Additionally, Vietnamese employees must be paid in Vietnamese Dong if they work for multinational corporations. Foreign employers may base their payment rates on US dollars or Vietnamese Dong; however, US dollar-based salaries must be converted to Vietnamese Dong.

However, if the corporation bases the salary rate on US dollars, then the necessary social insurance, personal income tax, and trade union payment must be converted into Vietnam Dong based on the foreign exchange rate set by the Vietnamese government.

OVERTIME PAY

If the employees do overtime, a company must pay its workers more than the minimum wage outlined in their employment agreement. The following are the percentages over the benchmark that will be applied in the event that particular work-related thresholds are surpassed. 

Overtime type Compensation rates
Weekday, daytime 150%
weekend, daytime 200%
Public holidays, paid leave days 300%
Weekday, nighttime 30% extra on the mentioned rates

According to the labour rules, overtime is allowed for 40 hours each month. The employers may schedule up to 300 hours of overtime yearly, including those involving positions requiring highly specialized training as well as the manufacture and export of electrical and electronic products.

PERFORMANCE AND EARNINGS-BASED BONUSES FOR EMPLOYEES

To boost employee morale and productivity, staff incentives are given out in response to performance and profit reports from the company. An organization may choose to provide a range of incentives to its staff during the year.

PIT is applicable to all Vietnamese bonuses and pay.

13th-month salary

One-third of an employee’s salary is typically given as an “annual bonus” by both domestic and foreign businesses in Vietnam to employees who have been with the company for at least a year. Bonuses for employees who have worked for a company for less than a year are often awarded on a prorated scale based on the length of their real employment.

Lunar New Year or Tet bonus

Before they take the Lunar New Year break, employees typically get a special incentive known as the “Lunar New Year” bonus, commonly referred to as the “Tet Bonus”.

The Tet Bonus amount is dependent on the company’s and its workers’ performance. It might be as little as one month’s salary or as much as a year’s salary.

Reach out to us at Relin Consultants – Leading Global Business Set Up Partners for further assistance.

FAQs

What is Vietnam’s maximum working duration?

According to the labour code, regular working hours cannot exceed eight hours per day or 48 hours per week. This means that there is a 48-hour workweek restriction. If an overtime agreement is reached between the employer and employee, overtime is limited to 12 hours per day, 40 hours per month, and 200 hours annually.

How frequently is Vietnam’s minimum wage changed?

Vietnam usually modifies its minimum wage rates once a year, frequently starting in January. The geography, the expense of living, and the state of the economy all play a role in the adjustment.

How is Vietnam’s minimum wage decided?

Vietnam sets its minimum wage by taking into account a number of variables, such as the demands of its workforce, the country’s average living standards, and the socioeconomic circumstances of its regions. The government and the National Wage Council play an important role in determining the minimum wage.

What benefits are provided to employees with the minimum wage?

Workers in Vietnam are entitled to a number of benefits in addition to the minimum wage, such as social insurance, health insurance, and other allowances. It is the employers’ responsibility to offer these perks to their staff.