Circular No. 23/2011/TT-BLDTBXH dated September 16, 2011 of the Ministry of Labor, War Invalids and Social Affairs guiding the implementation of region-based minimum wage levels for laborers working for companies, enterprises, cooperatives, cooperative groups, farms, households and individuals and other agencies, organizations employing laborers

THE MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS

Circular No. 23/2011/TT-BLDTBXH of September 16, 2011, guiding the application of region-based minimum wage levels for employees of companies, enterprises, cooperatives, cooperative groups, farms, households, individuals as well as agencies and organizations employing labor

Pursuant to the Government’s Decree No. 70/2011/ND-CP of August 22, 2011, on region-based minimum wage levels applicable to employees of companies, enterprises, cooperatives, cooperative groups, farms, households, individuals as well as agencies and organizations employing labor;

Pursuant to the Government’s Decree No. 186/2007/ND-CP of December 25, 2007, defining the functions, tasks, powers and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

The Ministry of Labor, War Invalids and Social Affairs guides the application of region-based minimum wage levels for employees of companies, enterprises, cooperatives, cooperative groups, farms, households, individuals as well as agencies and organizations employing labor as follows:

Article 1. Scope of regulation

1. Enterprises established, organized, managed and operating under the Law on Enterprises (including foreign-invested enterprises in Vietnam).

2. Cooperatives, cooperative unions, cooperative groups, farms, households, individuals and other Vietnamese organizations employing labor.

3. Labor-employing foreign agencies and organizations, international organizations and foreigners based in Vietnam (unless otherwise provided in treaties to which the Socialist Republic of Vietnam is a contracting party).

Companies, enterprises, agencies, organizations and individuals defined in Clauses 1, 2 and 3, Article 1 of this Circular are below collectively referred to as enterprises.

Article 2. Subjects of application

1. Laborers working under labor contracts as provided in the Government’s Decree No. 44/2003/ND-CP of May 9, 2003, detailing and guiding a number of articles of the Labor Code regarding labor contracts.

2. Salaried managerial officials of enterprises, including members of Boards of Directors, members of Members’ Councils or presidents of companies, directors general, directors, deputy directors general, deputy directors, chief accountants, controllers and other salaried persons engaged in management work.

Article 3. Region-based minimum wage levels

1. Region-based minimum wage levels to be applied from October 1, 2011, to the end of December 31, 2012, as specified in Article 2 of the Government’s Decree No. 70/2011/ND-CP of August 22, 2011 (below referred to as region-based minimum wage levels), are as follows:

a/ VND 2,000,000/person/month, for enterprises operating in localities in region I.

b/ VND 1,780,000/person/month, for enterprises operating in localities in region II.

c/ VND 1,550,000/person/month, for enterprises operating in localities in region III.

d/ VND 1,400,000/person/month, for enterprises operating in localities in region IV.

2. Localities in which region-based minimum wage levels are applied are specified in the Appendix to the Government’s Decree No. 70/2011/ND-CP of August 22, 2011.

3. Localities in which region-based minimum wage levels are applied are specified in some cases as follows:

a/ For a renamed or divided or split up locality, the region-based minimum wage level applicable to it before the renaming or division or splitting up will temporarily be applied; for a locality newly established from localities in which different region-based minimum wage levels are applied, the highest region-based minimum wage level will be applied; for a provincial city established from one locality or several localities in region IV, the region-based minimum wage level applicable to localities in region III will be applied.

b/ For an enterprise operating in adjacent localities in which different region-based minimum wage levels are applied, the highest region-based minimum wage level will be applied; for an enterprise with its units or branches operating in localities in which different region-based minimum wage levels are applied, the region-based minimum wage level applicable in the locality in which each unit or branch is operating will be applied to such unit or branch.

c/ For an enterprise operating in an industrial park or export-processing zone located in localities in which different region-based minimum wage levels are applied, the highest region-based minimum wage level will be applied; for an enterprise operating in an industrial park or export-processing zone with sub-zones located in localities in which different region-based minimum wage levels are applied, the region-based minimum wage level applicable to the locality in which the enterprise’s sub-zone is located will be applied.

Article 4. Application of region-based minimum wage levels

1. Each Government-prescribed region-based minimum wage level is the lowest wage level serving as a basis for enterprises and their employees to reach agreement on payable wages, provided that the monthly wage payable to an untrained employee doing the simplest job under normal working conditions with adequate working days in a month under regulations and fulfilling working norms or jobs as agreed must not be lower than the applicable Government-prescribed region-based minimum wage level.

2. The minimum wage payable to trained employees (including employees trained by enterprises themselves) must be at least 7% higher than the Government-prescribed region-based minimum wage level.

Trained employees include:

- Those who possess vocational certificates, vocational diplomas or vocational intermediate diplomas as specified in Decree No. 90/CP of November 24, 1993, on the national education system’s framework structure and education and training diplomas and certificates;

- Those who possess vocational certificates or diplomas under the 1998 Education Law and the 2005 Education Law;

- Those who possess certificates under continued job-training programs, vocational primary certificates, vocational intermediate diplomas or vocational collegial diplomas, or who have completed job-learning programs under job-learning contracts as provided in the Law on Vocational Training;

- Those who possess vocational diplomas or certificates granted by foreign training institutions;

- Those who have received vocational training from their enterprises or learned jobs by themselves and are examined and assigned by enterprises jobs requiring vocational training.

3. The Government-prescribed region-based minimum wage level will serve as a basis for enterprises to set and adjust wage levels applicable to their employees and set and promulgate salary scales and tables under the labor law as follows:

a/ Enterprises that have set and promulgated wage scales and tables shall base themselves on the Government-prescribed region-based minimum wage level to consider and adjust wage levels in wage scales, wage tables, wage-based allowances and wage levels in labor contracts, and implement other regimes towards their employees while satisfying the principles of setting wage scales and tables under the Government’s Decree No. 114/2002/ND-CP of December 31, 2002, detailing and guiding a number of articles of the Labor Code regarding wages, and the Labor, War Invalids and Social Affairs Ministry’s Circulars No. 13/2003/TT-BLDTBXH of May 30, 2003; No. 14/2003/TT-BLDTBXH of May 30, 2003; and No. 28/2007/TT-BLDTBXH of December 5, 2007;

b/ Enterprises that have not yet set wage scales and tables shall base themselves on the Government-prescribed region-based minimum wage level to calculate wage levels when setting their wage scales, wage tables and wage-based allowances, while satisfying the principles of setting wage scales and tables specified in the labor law (wage levels may be set in a coefficient multiplying the minimum wage level as chosen by enterprises or in specific money amount, provided that the grade-1 wage level in the wage scale and table must be higher than the Government-prescribed region-based minimum wage level); determine and adjust wage levels in labor contracts and properly implement other regimes towards employees.

c/ Enterprises, grassroots trade union executive boards or temporary trade union executive boards and employees shall reach agreement on determination of extents of adjusting wage levels in wage scales, wage tables and wage-based allowances (for enterprises having set and promulgated wage scales and tables) or determination of wage levels when setting wage scales and tables (for enterprises not having set wage scales and tables yet); extents of adjusting wage levels in labor contracts, and other regimes towards employees under Points a and b, Clause 3 of this Article, while ensuring a rational wage relationship between untrained and trained employees, employees with high professional and technical skills, newly recruited employees and employees with working seniority in enterprises.

4. When implementing this Circular, enterprises may not abolish or reduce wage regimes for laborers working overtime or at nighttime, wages or allowances for laborers working under heavy and hazardous conditions, allowances in kind for employees doing heavy and hazardous jobs, and other regimes under the labor law.

Allowances, subsidies and bonuses specified by enterprises comply with agreements in labor contracts or collective labor accords or enterprises’ regulations under the labor law.

5. Enterprises are encouraged to apply minimum wage levels higher than the Government-prescribed region-based minimum wage levels as a basis for implementing the regimes specified in Clause 3, Article 4 of this Circular; and pay employees wages higher than the levels specified in Clauses 1 and 2, Article 4 of this Circular.

Article 5. Effect

1. This Circular takes effect on October 31, 2011.

2. Enterprises are encouraged to provide mid-shift meals for employees, contributing to increasing their labor productivity and raising production and business efficiency. Enterprises, grassroots trade union executive boards or temporary trade union executive boards and employees shall reach agreement on allowance levels and provision of mid-shift meals, provided that such meals have sufficient nutrition and quality and ensure food safety and hygiene.

State-owned single-member limited liability companies, parent companies in state economic groups, state companies not yet transformed into limited liability companies or joint-stock companies, organizations and units currently implementing wage regimes like state companies shall continue to apply the mid-shift meal allowance level under Circular No. 12/2011/TT-BLDTBXH of April 26, 2011, of the Ministry of Labor, War Invalids and Social Affairs.

3. Companies, organizations and units defined in Clause 4, Article 5 of the Government’s Decree No. 70/2011/ND-CP of August 22, 2011, shall apply the common minimum wage level for calculating the wage unit price and wage levels in wage scales, wage tables and wage-based allowances issued together with the Government’s Decrees No. 205/2004/ND-CP and No. 204/2004/ND-CP of December 14, 2004, as a basis for implementing regimes on social insurance, health insurance and unemployment insurance as well as other regimes under the labor law; and pay wages to employees under regulations on application of the region-based minimum wage levels specified in Clauses 1 and 2, Article 4 of this Circular.

The common minimum wage level and region-based minimum wage level for determining the wage unit price, the planned wage fund and implemented wage fund shall be applied in some specific cases as follows:

3.1. In 2011:

When determining their wage funds, companies, organizations and units which fail to set and report on the wage unit price under regulations, or gain no profits or suffer losses, or have actual average labor productivity or gained profits lower than planned ones shall apply the Government-prescribed region-based minimum wage level (from January 1, 2011, to the end of September 30, 2011, under Decree No. 108/2010/ND-CP of September 30, 2010; or from October 1, 2011, to the end of December 31, 2011, under Decree No. 70/2011/ND-CP of August 22, 2011) for determining the prescribed wage fund for employees and the prescribed wage fund for managerial officials under Circulars No. 07/2005/TT-BLDTBXH and No. 08/2005/TT-BLDTBXH of January 5, 2005, and No. 27/2010/TT-BLDTBXH of September 14, 2010, of the Ministry of Labor, War Invalids and Social Affairs.

3.2. From 2012 on:

a/ Companies, organizations and units which satisfy the conditions specified at Point b, Clause 1, Section III of Circular No. 07/2005/TT-BLDTBXH of January 5, 2005; and Article 5 of Circular No. 27/2010/TT-BLDTBXH of September 14, 2010, of the Ministry of Labor, War Invalids and Social Affairs, may choose to apply the minimum wage level higher (not limited in maximum level) than the Government-prescribed region-based wage level in each period for determining the wage unit price for employees and the planned wage fund for managerial officials. In addition, they may choose to apply the adjustment coefficient for increasing the wage fund for determining the planned wage fund for managerial officials under Circular No. 08/2005/TT-BLDTBXH of January 5, 2005, and Circular No. 27/2010/TT-BLDTBXH of September 14, 2010, of the Ministry of Labor, War Invalids and Social Affairs, provided that the increased percentage of the planned average wage to the preceding year’s implemented wage (from the wage fund approved and appraised by the owner) for full-time managerial officials must not exceed the increased percentage of the planned average wage to the preceding year’s implemented wage for employees.

b/ Companies, organizations and units which fail to satisfy all the conditions specified at Point b, Clause 1, Section III of Circular No. 07/2005/TT-BLDTBXH of January 5, 2005; Article 5 of Circular No. 27/2010/TT-BLDTBXH of September 14, 2010, of the Ministry of Labor, War Invalids and Social Affairs, or suffer losses or have no profits, shall apply the Government-prescribed region-based wage level in each period for determining the wage unit price for employees and the planned wage fund for managerial officials under Circulars No. 07/2005/TT-BLDTBXH and No. 08/2005/TT-BLDTBXH  of January 5, 2005, and Circular No. 27/2010/TT-BLDTBXH of September 14, 2010, of the Ministry of Labor, War Invalids and Social Affairs.

Companies, organizations and units which fail to set and report on the wage unit price, or suffer losses or gain no profits, or have actual average labor productivity or gained profits lower than the planned ones shall apply the Government-prescribed region-based minimum wage level in each period for determining the prescribed wage fund for employees and the wage fund for managerial officials (if they fail to set and report on the wage unit price, or suffer losses or gain no profits), or the prescribed wage fund when adjusting the actual wage fund based on labor productivity and profits (if the implemented average labor productivity or gained profits is/are lower than the planned one/s).

When determining the actual wage fund, companies, organizations and units defined at Points b and c, Clause 3.2 of this Article may base themselves on the region-based minimum wage level to pay wages to employees, for employees enjoying the prescribed wage level (wage coefficient according to the wage scales and tables issued together with the Government’s Decrees No. 205/2004/ND-CP and No. 204/2004/ND-CP, multiplied by the common minimum wage level) lower than the Government-prescribed region-based minimum wage level.

Construction investment project management units under companies, organizations or units may choose to apply the minimum wage level which is higher than the common minimum wage level but must not exceed the minimum wage level they choose for calculating the wage unit price, and ensure that such higher wage level does not result in an increase in their management expenses, for use as a basis for setting the wage fund for paying wages to employees.

4. Funds for implementing the region-based minimum wage levels under this Circular shall be accounted as cost prices or production and business expenses of enterprises.

5. To annul the Labor, War Invalids and Social Affairs Ministry’s Circular No. 36/2010/TT-BLDTBXH of November 18, 2010, guiding the application of region-based minimum wage levels for enterprises, cooperatives, cooperative unions, cooperative groups, farms, households, individuals and other Vietnamese organizations employing labor; Clauses 1 and 2, Article 4 of the Labor, War Invalids and Social Affairs Ministry’s Circular No. 12/2011/TT-BLDTBXH of April 26, 2011, guiding the application of common minimum wage levels to state-owned single-member limited liability companies.

6. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and chairpersons of provincial-level People’s Committees shall direct, urge and examine enterprises in implementing this Circular.

Any problems arising in the course of implementation should be reported to the Ministry of Labor, War Invalids and Social Affairs for timely additional guidance.-

For the Minister of Labor, War Invalids and Social Affairs
Deputy Minister
PHAM MINH HUAN