Decree No. 20/2020/ND-CP the pilot management of labor, wages and bonuses of state orporations

DECREE

On the pilot management of labor, wages and bonuses of a number of state economic groups and corporations^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government;

Pursuant to the June 18, 2012 Labor Code;

Pursuant to the November 26, 2014 Law on Enterprises;

Pursuant to the November 26, 2014 Law on Management and Use of State Capital Invested in Production and Business at Enterprises;

At the proposal of the Minister of Labor, Invalids and Social Affairs;

The Government promulgates the Decree on the pilot management of labor, wages and bonuses of a number of state economic groups and corporations.

Chapter I

GENEREAL PROVISIONS

Article 1.Scope of regulation

This Decree prescribes the pilot management of labor, formulation of wage scales and wage tables; wages and bonuses of employees, Directors General, Deputy Directors General, and Chief Accountants; wages, remuneration and bonuses of members of Members’ Councils or Boards of Directors, heads of Supervisory Boards, and supervisors of the following groups and corporations in 2020:

1. Parent company - Vietnam Posts and Telecommunications Group.

2. Parent company - Vietnam Airlines Corporation.

3. Parent company - Vietnam Air Traffic Management Corporation.

The above-mentioned parent companies are below collectively referred to as companies.

Article 2.Subjects of application

1. Employees prescribed in the Labor Code.

2. Directors General, Deputy Directors General, and Chief Accountants.

3. Members of Members’ Councils or Boards of Directors, heads of Supervisory Boards and supervisors.

4. Representatives of state capital amounts invested in companies, owners’ direct representatives and owners’ representative agencies under the Law on Management and Use of State Capital Invested in Production and Business at Enterprises.

5. Agencies, organizations and individuals involved in the implementation of this Decree.

Article 3.Principles ofmanagement of labor, wages and bonuses

1. Companies shall decide on their policies on recruitment and employment, wages and bonuses in accordance with law and their charters.

2. Wages and bonuses of employees, Director General, Deputy Directors General, Chief Accountant, members of the Members’ Council or Board of Directors, head of the Supervisory Board and supervisors of a company shall be based on its labor productivity and production and business efficiency.

3. The State shall manage labor, wages, remuneration and bonuses of companies with 100% charter capital held by the State through defining tasks and responsibilities of owners’ representative agencies and owners’ direct representatives at companies; for joint stock companies, owners’ representative agencies shall direct representatives of state capital amounts invested in such companies to participate in, and vote at, meetings of the Boards of Directors and the General Meetings of Shareholders in accordance with this Decree.

Article 4.Exclusion of objective factors

A company may exclude objective factors (if any) that directly increase or decrease labor productivity, profits and return on equity ratio as a basis for determining wages and bonuses in accordance with this Decree, including:

1. The State’s adjustment of prices (for products and services with prices or price brackets set by the State); enterprises income tax preferences; adjustment of mechanisms or policies or request for relocation or narrowing of the company’s production or business establishments; accelerated depreciation for quick capital recovery; increase or decrease of the charter capital or the state capital amount invested in the company.

2. The company’s implementation of social security tasks, market valorization, supply-demand balancing for the economy under the Prime Minister’s decisions; expansion of production and business scale; investment in, and development of, new products and services; implementation of competent state agencies’ regulations, agreements, treaties, or regulations or recommendations of international organizations to which Vietnam is a contracting party.

3. The market’s direct effects on the basic input production factors of the company; natural disasters, fire, epidemics, wars and otherforce majeurecircumstances.

Chapter II

MANAGEMENT OF LABOR AND FORMULATION OF WAGE SCALES AND WAGE TABLES

Article 5.Labor management

1. A company shall make a labor plan for use as the basis for labor recruitment.

2. A labor plan shall be made based on production and business plans, labor norms, and streamlined and reasonable organizational apparatus and indirect labor structure.

3. A labor plan shall be approved by the Members’ Council or Board of Directors before being implemented.

4. Labor recruitment must be public and transparent in accordance with law, and the company’s labor recruitment regulation and charter.

5. In case the number of recruited employees exceeds the employment demand, thus leading to labor surplus and termination of labor contracts, and leading to an increase in the company’s expenses, the Director General shall take responsibility before the Members’ Council or Board of Directors (even having his/her wage and bonus reduced).

Article 6.Formulation of wage scales and wage tables

Based on its production and labor organization, and operation charter, a company shall formulate and issue wage scales and wage tables (including wage-based allowances) to implement law-prescribed regimes for employees, Director General, Deputy Directors General, Chief Accountant, members of the Members’ Council or Board of Directors, head of the Supervisory Board and supervisors, including:

1. Wage scales and wage tables for employees.

2. Wage table for the Director General, Deputy Directors General and Chief Accountant (below referred to as the Executive Board).

3. Wage table for full-time members of the Members’ Council or Board of Directors, head of the Supervisory Board and full-time supervisors.

Chapter III

WAGES AND BONUSES OF EMPLOYEES AND EXECUTIVE BOARD

Article 7.Contractual wage unit prices

1. Wages of employees and the Executive Board shall be fixed according to wage unit price (below referred to as contractual unit price) as follows:

a/ For the parent company - Vietnam Posts and Telecommunications Group, the contractual unit price based on percentage of total revenue minus total costs exclusive of wages shall be determined based on the average unit price in the 2018-2019 period inclusive of the negative difference between wages paid by the company for employees directly producing hi-tech products on the list of hi-tech products issued by the Prime Minister or a line ministry and wages paid for persons doing the same jobs on the market.

b/ For the parent company - Vietnam Airlines Corporation, the contractual unit price based on ton-kilometer norm with revenue shall be determined based on the average unit price in the 2018-2019 period inclusive of the negative difference between wages paid Vietnamese pilots and wages paid for foreign pilots by the company.

c/ For the parent company - Vietnam Air Traffic Management Corporation, the contractual unit price based on norm of air traffic controlled distance (km) shall be determined based on the average unit price in the 2018-2019 period and wage and safety bonus (if any) of the number of employees expected to be additionally recruited in 2020 at the request of competent state agencies for aviation security and safety.

2. The average unit price in the 2018-2019 period shall be determined on the basis of the total annual actual fund of wages and safety bonus (if any) for employees and the Executive Board divided by the norm for calculating contractual unit price prescribed in Clause 1 of this Article in the 2018-2019 period.

3. When determining the contractual unit price prescribed in Clause 1 this Article, a company shall ensure that the (before-tax) profit planned for 2020 is not lower than the average earned profit in the 2018-2019 period.

4. A company shall decide on annual advance payment of wages for employees and the Executive Board which must not exceed 85% of contractual unit price.

Article 8.Paid wage funds

1. The paid wage fund shall be determined by multiplying the contractual unit price by the norm for calculation of contractual unit price prescribed in Article 7 of this Decree, ensuring that the average wage increase rate is lower than the average labor productivity increase rate and that the earned profit is not lower than the average earned profit in the 2018-2019 period.

2. 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 (accounted as expenses) 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 2 months’ paid wage amount.

3. 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 (%) or the negative difference between the earned profit and the average profit in the 2018-2019 period. The deducted amount must not exceed 2 months’ wage amount and must ensure that the paid wage fund is lower than the wage fund calculated based on the average wage under the labor contract.

4. Based on the paid wage fund and wages paid in advance to employees, a company shall determine the remaining wage fund it may use. If the advanced and paid amount exceeds the paid wage fund, the company shall refund the deficit from the wage fund of the following year.

Article 9.Bonus funds

1. Based on the earned profit after fulfilling obligations toward the State and shareholders and making deductions to set up funds under the State’s regulations on profit distribution, a company may make deductions to set up a bonus and welfare fund for employees and the Executive Board which must not exceed 3 months’ paid wage amount, if the earned profit is not lower than the planned profit; or must not exceed 3 months’ paid wage amount multiplied by the percentage (%) of the earned profit to the planned profit, if the earned profit is lower than the planned profit.

2. Based on the bonus and welfare fund prescribed in Clause 1 of this Article, the company shall decide to allocate it into a bonus fund and welfare fund, of which the bonus fund shall be used to pay bonuses to employees and the Executive Board, while the welfare fund shall be used for construction or repair of welfare works, and payment for welfare activities of the company (including members of the Members’ Council or Board of Directors, the head of the Supervisory Board and supervisors).

Article 10.Payment of wages and bonuses

Employees’ and the executive board’s wages and bonuses shall be paid under a company’s regulations, specifically as follows:

1. Wage and bonus payment regulation shall be issued by the chairperson of the Members’ Council or Board of Directors, ensuring democracy, publicity and consultation with the grassroots organization representing the labor collective.

2. Wages and bonuses shall be paid to employees based on their jobs or titles and task performance. Wages and bonuses shall be paid to the Executive Board based on their positions in association with profits, return on equity ratio and task performance by each person, of which the wage and bonus of the Director General must not exceed 7 times the average wage and bonus of an employee. For a Director General hired under a labor contract, his/her wage and bonus shall be paid as agreed upon in such contract.

3. The Director General shall assess and decide on wages and bonuses of employees; the Members’ Council or Board of Directors shall assess and decide on wages and bonuses of the Director General, Deputy Directors General and Chief Accountant.

Chapter IV

WAGES, REMUNERATION AND BONUSES OF MEMBERS OF MEMBERS’ COUNCILS OR BOARDS OF DIRECTORS, HEADS OF SUPERVISORY BOARDS AND SUPERVISORS

Article 11.Basic wage levels

1. Basic wage levels for members of the Members’ Council or Board of Directors, the head of the Supervisory Board and full-time supervisors are provided as follow:

2. The types of company prescribed in Clause 1 of this Article shall be determined as follows:

a/ Type 1, applicable to a company having the following planned targets: equity of VND 10 trillion or more; turnover of VND 30 trillion or more; and 10 units under its management (subsidiary companies practicing independent or dependent cost-accounting) or 5,000 or more employees.

b/ Type 2, applicable to a company having the following planned targets: equity of under VND 10 trillion; turnover of under VND 30 trillion; and under 10 units under its management or under 5,000 employees.

3. A company shall, based on its planned targets, determine its type and basic wage levels for members of the Members’ Council or Board of Directors, the head of the Supervisory Board and full-time supervisors.

Article 12.Wage levels

1. Planned wage levels for members of the Members’ Council or Board of Directors, the head of the Supervisory Board and full-time supervisors shall be determined based on the basic wage level in association with planned profit and after-tax return on equity ratio (below referred to as return on equity ratio) compared to the profit and return on equity ratio in the preceding year, specifically as follows:

a/ If the planned profit and return on equity ratio are equal to or higher than the profit and return on equity ratio in the preceding year, the planned wage level must not exceed 2 times the basic wage level.

b/ If the planned profit or return on equity ratio is lower than the profit or return on equity ratio in the preceding year, the planned wage level must not exceed 2 times the basic wage level multiplied by percentage (%) of the planned profit or percentage (%) of the planned return on equity ratio. In case the planned profit and return on equity ratio are lower than the profit and return on equity ratio in the preceding year, the planned wage level must not exceed 2 times the basic wage level multiplied by percentage (%) of the planned profit compared to the profit in the preceding year and multiplied by the planned return on equity ratio compared to the return on equity ratio in the preceding year. The planned wage level calculated based on the profit or return on equity ratio must not be lower than 50% of the basic wage level.

c/ If no profit is made, the planned wage level must not exceed 50% of the basic wage level; if loss is suffered, the planned wage level must not exceed 30% of the basic wage level.

2. The paid wage level shall be based on the planned wage level, and implemented profit and return on equity ratio compared to the planned ones on the principles prescribed in Clause 1 of this Article. In case the implemented profit and return on equity ratio exceed the planned profit and return on equity ratio, the difference may be included in the wage amount (accounted as expenses) on the principle that for an increase of 1% in profit, the wage fund may be added by 2% provided that the addition must not exceed 2 months’ planned wage level.

Article 13.Remuneration levels

Remuneration for part-time members of the Members’ Council or Board of Directors and supervisors shall be determined according to their tasks and working period, but must not exceed 20% of salaries of full-time members of the Members’ Council or Board of Directors and supervisors.

Article 14.Bonus levels

Based on the earned profit after fulfilling obligations toward the State and making deductions to set up funds under the State’s regulations on profit distribution, a company may make deductions for bonuses for members of the Members’ Council or Board of Directors, the head of the Supervisory Board and supervisors as follows:

1. A company with 100% charter capital held by the State may make deductions for bonuses based on the reached profit target and ranking of the company, which must not exceed 2 months’ wage and remuneration, if the earned profit is equal to or higher than the planned profit and the company is ranked grade A; or not exceed 2 months’ wage and remuneration multiplied by percentage (%) of the earned profit compared to the planned profit, if the earned profit is lower than the planned profit and the company is ranked grade A or grade B; no deduction for bonuses is made if the company is ranked grade C or is not ranked.

The ranking of companies must comply with the Government’ regulations and the Ministry of Finance’s guidance on the supervision of state capital invested in enterprises; supervision of finance, evaluation of operation efficiency and disclosure of financial information of state enterprises and state capital-invested enterprises.

2. After fulfilling obligations toward shareholders, a joint stock company may make deductions for bonuses based on the reached profit target, which must not exceed 2 months’ wage and remuneration, if the earned profit is equal to or higher than the planned profit; or not exceed 2 months’ wage and remuneration multiplied by percentage (%) of the earned profit compared to the planned profit, if the earned profit is lower than the planned profit.

Article 15.Payment of wages, remuneration and bonuses

1. Members of the Members’ Council or Board of Directors, the head of the Supervisory Board and supervisors may receive in advance monthly wage and remuneration not exceeding 85% of the planned wage and remuneration level.

2. The level of wages, remuneration and bonuses received in a year shall be determined on the basis of the wage, remuneration and bonus levels specified in this Decree and task performance by each person.

Owners’ representative agencies shall formulate evaluation criteria and evaluate the task performance, and decide on levels of wages, remuneration and bonuses to be paid to each member of the Members’ Council or Board of Directors who is the representative of the state capital amount at the company, the head of the Supervisory Board and supervisors.

3. In case a member of the Members’ Council or Board of Directors, the head of the Supervisory Board or a supervisor has received in advance a wage and remuneration amount exceeding the amount he/she is eligible to receive, he/she shall pay the difference right in such year.

Chapter V

RESPONSIBILITY FOR ORGANIZATION OF IMPLEMENTATION

Article 16.Responsibilities of a company with 100% charter capital held by the State

1. The Director General shall:

a/ Determine and report to the Members’ Council on contractual unit price, regulation on wage payment and bonuses for employees and the Executive Board, wage scale and wage table.

b/ Determine the planned wage fund to be used for advance payment of wages to employees; submit to the Members’ Council the labor plan, the wage fund paid for employees and the Executive Board in the preceding year, and level of wage and bonus of each person in the Executive Board.

c/ Publicize wages, remuneration and bonuses of the Executive Board, members of the Members’ Council, the head of the Supervisory Board and supervisors under regulations.

2. The Chairperson of the Members’ Council shall:

a/ Consult the owner’s representative agency about the wage table for members of the Members’ Council, the head of the Supervisory Board and supervisors, and wage level for the Board of Management in the regulation on wage payment; to issue the regulation on wage payment and bonuses for employees and the Executive Board and wage scales, wage tables; to submit the contractual unit price to the owner’s representative agency for approval.

b/ Approve the labor plan, the wage fund paid for employees and the Executive Board in the preceding year; to approve the wage and bonus level for each member of the Executive Board; to determine and report to the owner’s representative agency on exclusion of objective factors (if any), wage, remuneration and bonus for each member in the Members’ Council, the head of the Supervisory Board and supervisors.

c/ In the fourth quarter of 2020, review the pilot implementation under this Decree and report it to the owner’s representative agency and Ministry of Labor, Invalids and Social Affairs.

3. The head of the Supervisory Board and supervisors shall assist the owner’s representative agency in examining and supervising the implementation by the Members’ Council and Director General in accordance with law and this Decree.

Article 17.Responsibilities of the representative of the state capital amount invested in a joint stock company

1. To give opinions to the Board of Directors for defining the responsibilities of the Chairperson of the Board of Directors, Director General, the head of the Supervisory Board and supervisors for the management of labor, wages, remuneration and bonuses prescribed in Article 16 of this Decree.

2. To report and consult the owner’s representative agency on employment plan, contractual unit price, bonuses of employees and the Executive Board; wages, remuneration and bonuses of members of the Board of Directors, the head of the Supervisory Board and supervisors before giving opinions and voting at the meeting of the Board of Directors or the General Meeting of Shareholders; to report on the implementation after obtaining approval from the Board of Directors or the General Meeting of Shareholders.

3. To evaluate the supervision of the implementation of regulations on labor, wages, remuneration and bonuses by the company. In case of failure of task accomplishment, to determine responsibilities and causes for the failure, and propose solutions.

Article 18.Responsibilities of the owner’s representative agency

1. To approve the contractual unit price for a company with 100% charter capital held by the State or notify directing opinions on the contractual unit price for a joint stock company to the representative of the state capital amount at the company after consulting the Ministry of Labor, Invalids and Social Affairs.

2. To approve (for companies with 100% charter capital held by the State), or notify the representative of the state capital amount at the company of directing opinions (for joint stock companies) on, the planned wage level, wage amount to be paid and bonus for each member of the Members’ Council or the Board of Directors who is the representative of the state capital amount, the head of the Supervisory Board or supervisor; at the same time, to send documents stating the above-mentioned approval and notification to the Ministry of Labor, Invalids and Social Affairs for inspection and supervision.

3. In the fourth quarter of 2020, to review the pilot implementation under this Decree and report implementation results to the Ministry of Labor, Invalids and Social Affairs.

Article 19.Responsibilities of the Ministry of Labor, Invalids and Social Affairs

1. To guide the implementation of provisions on contractual unit prices and paid wage funds for employees and Executive Boards specified in Articles 7 and 8 of this Decree.

2. In the fourth quarter of 2020, to review the pilot implementation under this Decree for reporting to the Prime Minister.

Chapter VI

IMPLEMENTATION PROVISIONS

Article 20.Effect

1. This Decree takes effect on April 1, 2020.

2. This Decree’s provisions on wages and bonuses of employees and Executive Boards; wages, remuneration and bonuses of members of Members’ Councils or Boards of Directors, heads of Supervisory Boards and supervisors shall apply from January 1, 2020, through December 31, 2020.

Article 21.Organization of implementation

1. Pursuant to this Decree, the Members’ Council or Board of Directors of a parent company shall decide on the pilot management of its subsidiary companies with 51% charter capital or more held by the parent company, ensuring that wages and bonuses of the Members’ Council, supervisors and the Board of Directors of a subsidiary company must not exceed maximum wage and bonus level prescribed for the parent company.

2. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, chairpersons of provincial-level People’s Committees, and related organizations and individuals shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN XUAN PHUC