Circular 04/2020/TT-BLDTBXH guidance on fund of wage under Decree 20/2020/ND-CP

CIRCULAR

On providing guidance on the implementation of the regulations on contractual unit and the fund of wage for operation of employees and the Executive Board prescribed in Article 7 and Article 8 of the Government’s Decree No. 20/2020/ND-CP dated February 17, 2020 on the pilot management of labor, wages and bonuses of a number of state economic groups and corporations

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Pursuant to the Government s Decree No. 14/2017/ND-CP dated February 17, 2017, on defining the functions, rights, responsibilities and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

Pursuant to the Government’s Decree No. 20/2020/ND-CP dated February 17, 2020 on pilot implementation of labor management, wage and bonus for a number of economic groups and state corporations;

At the proposal of the Director General of the Department of Industrial Relations and Wage;

The Minister of Labor, War Invalid and Social Affairs hereby promulgates the Circular on providing guidance on the implementation of the regulations on contractual unit and the fund of wage for operation of employees and the Executive Board prescribed in Article 7 and Article 8 of the Government’s Decree No. 20/2020/ND-CP dated February 17, 2020 on the pilot management of labor, wages and bonuses of a number of state economic groups and corporations.

Article 1. Scope of regulation

This Circular provides guidance on the determination of the contractual wage unit prices under Article 7 and determination of the paid wage funds under Article 8 for employees and the Executive Board as prescribed in Clauses 1, 2 and 3, Article 1 of the Government’s Decree No. 20/2020/ND-CP dated February 17, 2020 on the pilot management of labor, wages and bonuses of a number of state economic groups and corporations (hereinafter referred to as to the Decree No. 20/2020/ND-CP).

Article 2. Subjects of application

Subjects of application of this Circular shall comply with Article 2 of the Decree No. 20/2020/ND-CP.

Article 3. Contractual wage unit prices

The contractual wage unit price (hereinafter referred to as the contractual unit price) for employees and the Executive Board in 2020 as prescribed in Article 7 of the Decree No. 20/2020/ND-CP shall be calculated according to the formula as follows:

In which:

1. UP_{contractual2020}: The maximum contractual unit price applicable for 2020 and shall be calculated according to the following targets:

a) For the parent company - Vietnam Posts and Telecommunications Group (hereinafter referred to as VNPT), the contractual unit price shall be calculated by percentage (%) ratio of total revenue minus total costs exclusive of wages (equivalent to the unit price is Vietnam dong/100 Vietnam dong in total revenue minus total costs exclusive of wages). Norms on total revenue and total costs shall be calculated in accordance with the Government’s regulations on investment of state capital to companys and financial management with a company with 100% charter capital held by the State and guiding documents of the Ministry of Finance, excluding revenues and costs of non-business units directly under VNPT.

b) For the parent company - Vietnam Airlines Corporation (hereinafter referred to as VNA), the contractual unit price shall be calculated by targets of tons - kilometers norm with revenue of air transport (equivalent to the unit price is Vietnam dong/one ton - kilometer with revenue of air transport). Norms of tons - kilometers with revenue of air transport shall be determined according to the general standards applicable to aviation carriers of the International Civil Aviation Organization (ICAO).

c) For the parent company - Viet Nam Air Traffic Management Corporation (hereinafter referred to as VATM), the contractual unit price shall be calculated according to the kilometers of converted flight operation (equivalent to the unit price is Vietnam dong/one kilometer of converted flight operation). Norms of kilometers of converted flight operation shall be calculated on the basis of the total number of kilometers of converted flight operation for each flight distance of all flights; where the number of kilometers of converted flight operation for each flight distance is calculated by the actual flight control distance (kilometer) multiplied by the conversion factor of the aircraft and multiplied by the flight operation complexity coefficient on each flight distance. The method to determine the number of km of converted flight operation shall be formulated by VATM and submitted to the Ministry of Transport for approval.

2. T_NWQ2018and T_NWQ2019: The norm of wage quotas (for VNPT is the total revenue minus total costs exclusive of wages, excluding revenue and costs of non-business units; for VNA is the total tons - kilometers with revenue of air transport; for VATM is the total number of kilometers of converted flight operation) actually implemented in 2018 and 2019.

3. F_w2018and F_w2019: The total fund of wage and safety bonus (if any) actually implemented in 2018 and 2019 for employees working under labor contracts and the Executive Board as prescribed by law, within that:

a) The total fund of wage and safety bonus actually implemented in 2018 and 2019 for employees, including the fund of wage as prescribed in the Circular No. 26/2016/TT-BLDTBXH dated September 01, 2016 of the Ministry of Labor, War Invalid and Social Affairs, on providing guidelines for the management of labor, wage and incentives for employees in wholly state-owned single-member limited liability companys and the Circular No. 28/2016/TT-BLDTBXH dated September 01, 2016 of the Ministry of Labor, War Invalid and Social Affairs, on providing guidance on implementation of regulations on labor, wage, compensation and bonus for companies whose shares or contributed capital portions are predominantly owned by the State and the safety bonus (if any).

b) The total fund of wage and safety bonus actually implemented in 2018 and 2019 for the Executive Board, which is calculated by total of wage and safety bonus actually paid for the General Director, Deputy General Directors and Chief Accountant according to the company s payment regime.

4. F_additional: The Fund of wage added to the contractual unit price for each company shall be determined as follow:

a) For VNPT, the additional wage fund shall be determine by the maximum average wage difference in 2018 and 2019 between the rates paid by companies in the market and the rates paid by VNPT to employees directly producing hi-tech products with the same position, multiplied by the average number of VNPT employees employed in 2018 and 2019 directly implementing high-tech products with lower wages than other companies in the market.

Hi-tech products shall be determined according to the List of hi-tech products issued by the Prime Minister or a line ministry. The average wage of employees directly producing hi-tech products paid by companies in the market based on the Report on wage published by the market investigation company shall be collected and reported to the owner representative agency with the contractual unit price by VNPT.

b) For VNA, the additional wage fund shall be determine by the maximum average wage difference in 2018 and 2019 between the wage paid for a pilot being foreigner and the wage paid for a pilot being Vietnamese with the same position by VNA, multiplied by the average number of Vietnamese pilots employed by VNA in 2018 and 2019 who have the wage lower than the foreign pilots.

c) For VATM, the maximum additional wage fund shall be determine by the difference number of employees expected to be additionally recruited in 2020 at the request of competent state agencies for aviation security and safety with the average number of employees employed in each year in 2018 and 2019, multiplied by the average safety bonus actually paid in 2018 and 2019 of VATM.

c) The wage fund added to the contractual unit price as prescribed in Points a, b and c of this Clause is the maximum rate for the company to additionally calculate in to the contractual unit price, ensuring that after adding the additional wage fund to the contractual unit price, the profit (before tax) for 2020 plan (after excluding objective factors as prescribed) of the company must not be lower than the average earned profit in the period of 2018 - 2019.

5. The wage fund calculated according to the contractual unit price in 2020 of the company shall be determined as follows:

F_w2020= UP_contractualx T_NWQ2020(2)

In which:

a) F_w2020: The wage fund calculated according to the contractual unit price in 2020.

b) UP_contractual: The contractual unit price as prescribed in Clause 1 of this Article.

c) T_NWQ2020: The norm of wage quotas implemented in 2020.

Article 4. Paid wage fund for the employee and the Executive Board

1. The company shall determine and exclude objective factors (if any) that may directly affect to the labor productivity and profits in 2020, compared to the labor productivity and profits earned in the period of 2018 - 2019 before calculating the paid wage fund for 2020 according to the principle that the impact of objective factors on labor productivity and profits must be quantified in detail; deducting the objective factors that increase and adding the objective factors to reduce labor productivity and profits earned in 2020.

2. The paid wage fund for 2020 of the company shall be determined by the wage fund calculated by the contractual unit price according to the formula (2) and adjusted according to the average labor productivity and profits (before tax) in each case as follows:

a) If the increase (by percentage) of the average wage in 2020 is lower than the increase (by percentage) of the average labor productivity and profits earned in 2020 by the average performance in the period of 2018 - 2019, the paid wage fund in 2020 shall be equal to the wage fund calculated by the contractual unit price; if the average wage increase in 2020 is equal to or higher than the average increase in labor productivity, the paid wage fund must be adjusted to ensure that the average wage increase is lower than the average increase in labor productivity.

b) If the profits earned in 2020 is lower or higher than the average profits earned in the 2018 - 2019 period, after adjusting the paid wage fund according to Point a of this Clause, the company shall adjust by profits as follows:

- In case a company’ earned profit is higher than the average profit in the 2018-2019 period, the company’s may additionally include the difference in the wage fund on the principle that for an increase of 1% in profit, the wage fund may be added by up to 2% provided that the addition must not exceed 20% of the excessive profit amount and 02 months’ paid wage amount of the actual average number of employees employed in a year.

- In case a company’ earned profit is lower than the average profit in the 2018 - 2019 period, the company’s wage fund shall be decreased by either of the following two ways as selected by the company:  deduction in percentage (%) and such deduction is equal to a percentage deduction (%) between earned profits that is lower than the average earned profits of the period 2018 - 2019; or deduction in absolute value by the difference between the profits earned in 2020 that is lower than the average profits earned in the period 2018 - 2019. The deducted amount of the two above-mentioned methods must not exceed 02 months’ average paid wage amount of the actual average number of employees employed in 2020 and must ensure that the paid wage fund is not lower than the wage fund calculated based on the average wage under the labor contract.

The average wage, labor productivity and the average earned profits shall be determined according to Appendix attached to this Circular.

Article 5. Effect

1. This Circular takes effect on July 10, 2020.

2. Provisions on contractual unit price, paid wage fund of employees and Executive Board specified in this Circular shall be applied from January 01, 2020 until the end of December 31, 2020.

3. For the company is implementing the regime of mid-shift meal not exceeding VND 730,000/person/month, it shall continue to implement until a new regulation is issued.

Any difficulties arising in the course of implementation of this Circular should be promptly reported to the Ministry of Labor, War Invalid and Social Affairs for additional guidance./.

* All Appendices are not translated herein.