Explainer · January 24, 2018
Tet Bonus in Vietnam: What the Labor Code Requires
Tet bonus in Vietnam is not a right written into the Labor Code. The law lets an employer pay a bonus from yearly business results, and it requires a clear, public rule when one exists. Nothing in the Code forces a company to pay a bonus at Tet.
What the Labor Code says about bonuses
The Labor Code (Law 10/2012/QH13) took effect on May 1, 2013. Article 103 defines a bonus as a sum of money an employer pays staff based on annual business results and each worker's level of work performance.
The article does not set an amount. It does not name Tet. It does not say a company must pay a 13th month. The size of the bonus, and whether there is one, depends on how the year went and on what the company has promised.
A promise can sit in three places: the labor contract, a collective agreement, or the company's bonus rule. If the contract says a worker will get a Tet bonus, the employer must keep that promise. If nothing says so, the employer has no legal duty to pay one.
The duty to publish a bonus rule
Article 103 has a second rule. The employer must decide the bonus regulation and announce it in public at the workplace. Before that, the employer must consult the organization that represents the workers at the grassroots level, such as the company union.
This is the part many firms skip. A good rule says who qualifies, how performance is judged, when the bonus is paid and what happens to staff who leave before Tet. When the rule is posted, a worker can read it and check that the payment matches.
For staff, the first step is simple: ask for the written bonus rule. For employers, the best protection is to keep the rule short, post it early in the year and apply it the same way to everyone.
Is the 13th month salary the same thing?
Many firms pay a 13th month salary in the last month of the lunar year and call it a Tet bonus. The two terms are used in different ways. The Code does not use the phrase 13th month salary at all.
So the label matters less than the paper behind it. If a contract promises a 13th month salary, it is a pay term the employer must meet. If it comes from the bonus rule, it follows that rule and the year's results.
Decree 05/2015/ND-CP, which guides parts of the Labor Code and took effect on March 1, 2015, treats a bonus as separate from wages. Article 21 lists bonus among the payments that are not counted as additional payments tied to the job or title in a labor contract.
The Tet holiday and paid leave
Pay for the holiday is a separate matter from the bonus, and here the law is firm. Article 115 of the Labor Code gives workers 5 days of Lunar New Year holiday with full pay. If a holiday day falls on a weekend, the worker gets a day off on the next working day.
In 2018 the first day of Tet is Friday, February 16. For public sector staff, the Ministry of Labour, Invalids and Social Affairs set a seven day break from Wednesday, February 14 to Tuesday, February 20 in Notice 5427/TB-LDTBXH of December 22, 2017. The notice covers public bodies. Private employers apply Article 115 and set their own schedules, often with the same dates.
The tax view
A Tet bonus counts as income from salaries and wages. Circular 111/2013/TT-BTC, which guides the Law on Personal Income Tax, lists monetary and non-monetary rewards in any form as taxable wage income. A bonus paid for Tet is added to the pay of the month in which it is received.
The circular exempts prize money that comes with State titles and commendations, such as Emulation titles, and a few other State-recognized awards. A company's year end bonus is not in those groups.
The personal deduction used before tax is VND 9 million a month, plus VND 3.6 million for each registered dependant. A large bonus can push a worker into a higher tax band that month, so employers often tell staff the net amount in advance.
A short checklist for staff and employers
Staff should ask four things: is a bonus promised in my contract, where is the posted bonus rule, how is the amount worked out, and when is it paid. Employers should write the rule, consult the worker representatives, post it and keep proof of both steps.
Set the pay date before the holiday, so workers can plan for Tet. Keep the figures clear, and state the tax that will be taken. Plain rules prevent most disputes.
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