Vietnam Minimum Wage: Four Regional Rates for the New Year

Vietnam minimum wage rules change on January 1, when Decree 122/2015/ND-CP takes effect. The decree sets four regional monthly rates: 3,500,000 VND in Region I, 3,100,000 in Region II, 2,700,000 in Region III and 2,400,000 in Region IV. Every employer with staff on labor contracts needs to check which region applies and update pay before that date.

The four rates at a glance

The Government signed the decree on November 14, 2015. It replaces the rates set by Decree 103/2014/ND-CP, which has applied during 2015. All four regions go up. Here is the change, region by region, in VND per month.

• Region I: from 3,100,000 to 3,500,000, a rise of 400,000.
• Region II: from 2,750,000 to 3,100,000, a rise of 350,000.
• Region III: from 2,400,000 to 2,700,000, a rise of 300,000.
• Region IV: from 2,150,000 to 2,400,000, a rise of 250,000.

In percentage terms the rise is about 12.9 percent in Region I, 12.7 percent in Region II, 12.5 percent in Region III and 11.6 percent in Region IV. These percentages are our own arithmetic from the figures above.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

Which region applies to you

The rate depends on where the business operates. It does not depend on where the owner lives or where the head office is registered if the work happens somewhere else. The decree lists the cities, districts and towns that belong to each region. Region I is the highest rate, and Region IV covers the remaining areas at the lowest rate.

Start with the address where your staff actually work. Find that district in the decree's list. Write down the region next to the address. If you run more than one site, do this for each site, because two sites can sit in two different regions.

A business that moves a team to a new district should check again. A change of district can change the legal floor.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

What the rate means in practice

The regional rate is a floor. It is the lowest monthly amount that an employee on a labor contract may be paid under the decree. It is not a target and it is not a suggested salary. If you already pay more, the rule does not ask you to change that pay.

The check is simple. Take each employee's base monthly pay and compare it with the rate for your region. If the pay is lower, it must go up to at least the new rate when the decree takes effect. If it is equal or higher, nothing is required by this rule.

Pay close attention to staff who sit close to the old rate. A worker paid exactly 3,100,000 VND in Region I now falls below the new floor by 400,000 VND. Those are the contracts most likely to need an update.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

A quick cost check for employers

Do the sum before January. Count the staff who earn less than the new rate. Multiply each gap by the number of people in it. Add the results, and you have the extra monthly cost of base pay.

Here is an example. A small workshop in Region I has ten workers paid exactly 3,100,000 VND. Each needs a raise of 400,000 VND. That is 4,000,000 VND more per month, or 48,000,000 VND over twelve months, before any other costs that your own contracts link to base pay.

That last point matters. Some employers tie allowances or other amounts to base pay in the contract. Read your contract templates and your internal pay rules. If a figure follows base pay, it will move too. Your accountant or legal adviser can confirm how each item is treated in your case.

This article gives general information only. It is not legal advice.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

What employees and new hires should do

If you work under a labor contract, look at your payslip and your contract. Find the base monthly amount. Compare it with the rate for the region where you work. The rate is public and printed in the decree.

If you are about to sign a new contract, check the figure before you sign. A new offer below the regional rate for that place does not meet the rule. If something looks wrong, ask the employer to explain it in writing. You can also ask the local labor office, which handles questions about wage rules.

Keep a copy of your contract and your pay records. They are your proof if there is ever a question about what was agreed.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

Steps to take before January 1

A short plan keeps the change calm. Employers can use the list below, and workers can use it to know what to expect.

• Find the region for every work site, using the decree's list.
• List every employee whose base pay is below the new rate for that region.
• Work out the extra monthly cost and add it to the budget.
• Update contracts or pay notices so the new base pay is clear in writing.
• Tell staff the new amount before the first pay run that is affected.
• Keep the decree text and your own calculations in one file.

Doing this in December leaves time to fix mistakes. Doing it in January risks paying under the floor for a month.

Source: Decree 122/2015/ND-CP of the Government, signed November 14, 2015.

Sources

• Decree 122/2015/ND-CP of the Government, signed November 14, 2015, on the regional minimum wage for employees working under labor contracts.
• Decree 103/2014/ND-CP of the Government, signed November 11, 2014, on the regional minimum wage, which set the rates used in 2015.