On June 30, 2024, the Vietnamese government issued Decree 74/2024/ND-CP, which established new minimum wage rates for employees working under employment contracts, effective July 1, 2024.
Background
The Vietnamese Labor Code provides that wages may not fall below a minimum level, which will be adjusted periodically based on various market conditions upon the recommendations of the National Salary Council. (Labor Code, No. 45/2019/QH14, arts. 90 para. 2, 91 paras. 3, 4.) The National Salary Council is established under the Labor Code to advise the government in determining minimum wages. (Art. 92.)
The minimum wage requirement is intended to ensure that workers in the lowest-paying jobs receive wages sufficient to ensure the employees and their families can afford living conditions suitable for their socio-economic development. (Art. 91, para. 1.)
Failure of an employer to pay at least the minimum wage to employees is subject to monetary fines ranging from 20 million to 75 million Vietnamese Dong (around US$790 to $2,960), depending on the number of the violated cases. (Decree 12/2022 providing administrative fines in labor, insurance, employees worked overseas dated January 17, 2022, art. 17, para. 3.)
Decree 74
On January 12, 2024, the National Salary Council issued a report to the government of Vietnam recommending an increase in the prevailing statutory minimum wage of 6%. The government issued Decree 74 in response.
Decree 74 provides the monthly and hourly minimum wages for employment contract-based employees. There are four rates corresponding to four different regions of the country, reflecting the regions’ economic conditions. The rates range from 4,960,000 to 3,450,000 Dong (around US$196 to $137). (Art. 3, para. 1.) Decree 74 includes an annex with an exhaustive list of which cities, provinces, communes fall within the four regions that are subject to the four minimum wage categorizations. (Art. 3, para. 2.)
Prior to the increase in Decree 74, the minimum wage ranged between 4,680,000 and 3,250,000 Dong (around US$163 to $128). (Decree 38/2022/ND-CP, June 12, 2022, art. 3, para. 1.)
Employers are obligated to pay the respective statutory minimum wages applicable in their areas, and in cases where employers have branches or offices located in different areas, they must pay the minimum wage applicable to the region in which each branch or office operates. However, for employers operating in industrial or import-export zones in different regions, the highest minimum wage rate shall apply. (Art. 3, para. 3.)
Prepared by Nguyet Le, foreign law intern, under the supervision of Sayuri Umeda, Foreign Law Specialist
Law Library of Congress, August 9, 2024
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