Decree No. 51/2016/ND-CP dated June 13, 2016 of the Government on management of employees, salaries, bonuses of employees in single-member limited liability companies of which charter capital is wholly owned by the State

THE GOVERNMENT

DecreeNo. 51/2016/ND-CP dated June 13, 2016 of the Government on management of employees, salaries, bonuses of employees in single-member limited liability companies of which charter capital is wholly owned by the State

Pursuant to the Law on Government organization dated June 19, 2015;

Pursuant to the Labor Code dated June 18, 2012;

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on management and allocation of State capital to production and business activities of enterprises dated November 26, 2014;

At request of the Minister of Labor War Invalids and Social Affairs;

The Government hereby issues this Decree stipulating regulations on management of employees, salaries, bonuses of employees in single-member limited liability companies of which charter capital is wholly owned by the State.

Article 1. Scopeof regulation

This Decree stipulates the management of employees, employees’ salaries and bonuses by single-member limited liability companies of which charter capital is wholly owned by the State, including:

1.Single-member limited liability companies of which charter capital is wholly owned by the State which are parent companies of State-owned economic corporations or State-owned general companies or parent companies belonging to the group of parent-subsidiary companies

2.Independent single-member limited companies wholly owned by the State

3. Single-member limited companies (hereinafter referred to as “company”) prescribed in clauses 1 and 2 of this article.

Article 2. Subject of application

1.Employees working under labor contracts under the Labor Code.

2.Every Board of Members or company President, Head of Control Boards, controller, Director General or Director of companies.

3.Ministries, Ministerial-level agencies, Governmental agencies, People s Committees of provinces and centrally-affiliated cities or organizations legally established under regulations of laws authorized to exercise rights and take on responsibilities as the representatives for the owner’s interest in companies by the Government (hereinafter referred to as “owner’s representative entity”).

4.Individual or institutional entities participating in the management of employees, their salaries and bonuses in such companies.

Article 3. Employee management

1.Every company shall prepare an annual employment plan as the basis for recruitment and allocation of employees.

2.The annual employment plan is drawn up according to the business/production plan, organizational structure and work re-arrangement (especially, review of managerial levels, indirect downsizing arrangement) and output quotas.

3.In normal operational conditions, the average number of employees in the annual employment plan shall not exceed 5% of the actual employees of the immediately preceding year (after the restructuring stipulated in clause 2 of this Article).

4.The Director General or Director shall prepare and submit annual employment plan to the company President.The president of the Board of Members or President, Director General and Directors shall be responsible for the annual employment plan.

5.The President of the Board of Members or company President shall request the representative entity to give opinions on the annual employment plan prior to approval. The representative entity shall give their comments about the annual employment plan. Parent companies of State-owned economic corporations, special-ranked corporations and public services corporations playing vital role in the economy (hereinafter referred to as “public service Corporation”) shall submit their annual employment plan to the Ministry of Labor War Invalids and Social Affairs for aggregation and supervision purposes.

6.According to employment plan, the Director General and Director shall conduct recruitment, hiring, placement and allocation of employees that must be made known to the public and ensure transparency in accordance with regulations of laws and regulations on recruitment and allocation of employees and company s charter.

7. Each year, the Board of Members or President of the company shall direct the Director General and Directors to assess the implementation of employment plan, define responsibilities for recruitment and allocation of employees, take care of all employee’s benefits and interests after the labor contract is terminated.

8.In case the number of recruited employees exceeds that in the employment plan or is inconsistent with the employment plan causing downsizing due to lack of work, the Director General and Director shall take all responsibilities towards the Board of Members or President of the company; and the Board of Members or President shall take responsibilities towards the owner’s representative entity and shall not be awarded any bonus or pay raise or even have their salary cut. This is considered as one of criteria for management performance assessment under the Government’s Decree No. 97/2015/ND-CP dated October 19, 2015 on management of managerial-level persons in wholly State-owned single limited liability company.

9.Every company shall conduct allocation and arrangement of employee’s accordance to optimize the productivity and award pay raise to employees.

Article 4. Pay scale, payroll and allowances

Every company shall release their pay scale, payroll and allowances as the basis for offering salaries and other benefits under labor laws in accordance with the Government Decree No. 49/2013/ND-CP detailing a number of articles of the Labor Code regarding wage.

Article 5. Determination of payroll budget

1.The payroll budget is determined according to the expected number of employees and budgeted average pay rate under clause 2 of this Article.

2.The budgeted average pay rate is determined according to the amount of salary prescribed in labor contracts, the average salary by productivity of immediately preceding year, output quota and business or production plan of the company. To be specific:

a) For profitable companies, the budgeted average pay rate shall be higher than the average pay rate stated in labor contracts and is calculated according to the actual average salary by the immediately preceding year’s business performance and productivity increase/decrease (total revenue minus total expense excluding salaries, or sales volume) which is planned in comparison with that which is recognized in the immediately preceding year according to the following rules:

If both productivity and planned profit increase, the salary increase shall not exceed the amount of productivity growth;

If only productivity increases, the salary increase shall not exceed 80% of the productivity growth;

If the productivity increases but planned profit decreases, the salary increase shall not exceed 50% of the productivity growth;

If the productivity decreases, the salary shall be cut down.

b)In case of losses or break-even (except for those affected by objective factors prescribed in clause 3 of this Article), the budgeted average pay rate is determined according the average salary in labor contracts, including days-off or holidays,  Tet holidays, overtime pay, and night shift pay under the Labor Code.

c) In case of loss reduction or new companies, the salary is determined according to the extent of loss reduction or business or production plans.

3.As the time the salary budget is determined, the following objective factors that may affect the company profit or productivity shall be deemed beyond the control of the company:

a) Price adjustments (for products or services priced by the State), corporate income tax incentives, State capital investment or withdrawal, amendments to policies by the State, company relocation or  company’s scale reduction that directly affect the company’s productivity and profit at request of the State,

b) Company’s involvement in political missions, social security and economic equilibrium, acquisition or transfer of the State capital representative entitlement (for companies undergoing restructure, debt settlement or debt restructuring) at request of the Prime Minister, new investment, business expansion, increases in depreciation for cost recovery approved by competent authorities, differences in lottery payouts in comparison the that in the immediately preceding year (for lottery companies)

c) Disaster, conflagration, epidemics, wars and other force majeure events.

4.For companies providing public services or products planned and awarding contracts by the State, the payroll budget shall be determined according to the quantity of such products or public services.

5.For companies producing and providing services and products whose output quota is set by the State leading to the stabilization or decrease in productivity under the Resolution on annual socio-economic development plan of the National assembly, the average salary increase shall not exceed the consumer price index growth.

6.For companies whose business or production plan is amended, the average salary and payroll budget shall be adjusted in conformity with provision of this Article.

7.According to the business or production plan and the reality, every company shall estimate their piece rate according to the production quota set in the business/production plan or products or services and may have their employee receive salary in advance.

Article 6. Determination of realized payroll

1.The realized payroll is determined according to the expected number of employees under clause 2, Article 3 of this Decree and the budgeted average pay rate by expected productivity and planned profit under clauses 2, and 3, Article 5 of this Decree.

2.The company shall assess the impact of objective factors on the actual productivity and profit to deduct when determining the realized payroll.

3.The company shall determine the employee’s remaining salary payable according to the realized payroll and salary advance.  In case of overdraft of the realized payroll, it shall be offset against the salary budget of the following year.

Article 7. Salary budget allocation

1.Every company shall set aside a reserve fund for the salary budget of the following year according to their realized payroll. The reserve fund shall not exceed 17% of the realized payroll. For seasonal companies, the reserve budget shall not exceed 20% of the realized payroll as prescribed in clause 1, Article 6 of this Decree.

2.Every company shall introduce position-based and skilled-based salary policies for talented, skilful employees.

3.Every company shall pay salaries to their employees under the company’s salary policies and shall not use the budget for employee salary for paying for members of the Board of Members, Company’s president, controllers, Director General, Director, Deputy Directors, Deputy Directors General or Chief Accountant.

Article 8. Bonuses

1.The bonus budget for employees is set aside from the company welfare fund under the Government’s regulations.

2.Bonuses shall be awarded to employees under the company s reward scheme.

Article 9. Responsibilities of implementation organizations

1.Every Director General and Director shall:

a) Set output quotas, prepare employment plans, payroll budget, realized payroll of immediately preceding year and set aside a reserve fund after consulting the Executive Board of the company’s trade union within the first quarter of every year.

b) Cooperate with the Executive Board of the company’s trade union to examine and publish titles, positions, pay scale, payroll, allowances, position-based salaries, jobs, standards for job titles, professions, salary and reward schemes on principle of democracy and transparency under regulations of laws.

c) Advance and award bonuses and salaries to employees in accordance with the company’s salary and reward scheme.

d) Periodically submit reports on employment, salary and bonus payment to the Board of Members or President of the company; provide reports, documents and figures about employees, salaries and bonuses at requests of the Head of Control Board and controllers.

2.Every Board of Members or President of companies shall:

a) Request the representative entity to give opinions about the employment plans within the first quarter of every year; approve business or production plans, output quotas, employment plans, payroll budgets and immediately preceding year realized payroll.

b) Submit reports on output quotas, employment plans, payroll budget and immediately preceding year realized payroll to the representative entity and controllers no less than 10 days from the approval day.

For parent companies of State-owned economic corporations, special-class corporations and public services corporations, submit their reports on employment and salaries prescribed in point a and b , clause 2 of this Article to the Ministry of Labor War Invalids and Social Affairs.

c)  Set up human resources departments that take charge of management of employees, salaries and bonuses under this Decree.

d) Publish the total number of employees, salary and bonus budgets, and employee’s average income in the immediately preceding year on the company’s website under regulations of laws, and submit reports on such elements to the representative entity.

3.Every Head of Control Boards and controllers shall:

a) Supervise, inspect and periodically submit reports on the compliance with this Decree by the Board of Members or President, Director General and Directors of the company to the representative entity. If any contradiction is found, the Head of Control Board or controllers shall request the Board of Members or President of the company to amend. In case it is not amended by the Board of Members or President, the Head of Control Board or controllers shall report to the representative entity.

b) Examine, verify and submit a report on the realized payroll verification to the representative entity within 15 days from the date of receipt of the report from the Board of Members or company’s President and take all responsibilities for the accuracy and reliability of the report.

4.Every representative entity shall:

a) Examine reports on output quotas, employment plans, payroll budgets and immediately preceding year realized payroll and objective factors affect the productivity and company’s profit (if any).

In case any violation against provisions hereof is found, the representative entity shall send a written request for amendments to the Board of Members or President of the company within 30 days from the date of receipt. The representative entity shall impose penalties on the President of the Board of Members and President of the company such as lengthening period of time for pay raise, reducing salaries and bonuses, criticism, layoff according to the seriousness of violations.

b) Take charge of and cooperate with the Ministry of Labor War Invalids and Social Affairs to supervise and inspect the salary policy of parent companies of State-owned economic corporations, special-class corporations and public services corporations.

c) Annually inspect the implementation of employment and salary policies by their own company and take responsibilities towards the Government and Prime Minister.

d)  Submit the aggregate status report on employment, salaries and bonuses of the immediately preceding year and salary plans and payroll budget of their affiliates or members to the Ministry of Labor War Invalids and Social Affairs by May of every year.

5.The Ministry of Labor War Invalids and Social Affairs shall:

a) Take charge of and cooperate with relevant agencies to provide guidance on management of employees, salaries and bonuses under this Decree.

b) Take charge of and cooperate with the representative entity to supervise the salary policies of parent companies of State-owned economic corporations, special-class corporations and public services corporations.

c) Inspect the compliance with policies on employment, salaries and bonuses by companies. In case of contradictions between the salary budget and regulations of laws, the Ministry of Labor War Invalids and Social Affairs shall request the company to adjust or remove disallowed expenditures under regulations of laws.

d) Periodically submit reports on salaries and bonuses to the Prime Minister.

Article 10. Effect

1.This Decree takes effect on August 01, 2016. All provisions of this Decree shall be applied from January 01, 2016.

2.This Decree replaces Decree No. 50/2013/ND-CP dated May 14, 2013 of the Government providing the management of employment, wages and bonuses for employees working in State-owned one-member limited liability companies.

3.Vietnam Military Telecommunications Group shall continue to pilot employee s salary management under the Government’s regulations.

4.Salaries and bonuses of Directors General, Directors, Deputy Directors, Deputy Directors General and Chief Accountants of wholly State-owned companies shall be separated from employee’s salary and bonus budgets and shall be included in the company’s operation costs.

5.Member Assemblies or Presidents of parent companies prescribed in Article 1 of this Decree shall manage salaries and bonuses of employees in subsidiaries wholly owned by such parent companies in accordance with provisions hereof.

6.The  Ministry of Labor War Invalids and Social Affairs, after consulting relevant regulatory authorities, shall provide guidance on management of employees, salaries and bonuses together with productivity and performance efficiency according the company’s features to entities incorporated and operated as wholly State-owned limited liability companies in accordance with the Law on Securities, Law on Credit institutions, off-budget financial funds; or State s debt selling and purchasing organizations operating as wholly State-owned limited liability companies.

7.Political organizations and socio-political organizations shall apply this Decree to their organizations.

8.Ministers, Heads of Ministerial-level authorities, heads of Governmental agencies, Presidents of People’s Committees of provinces and centrally-affiliated cities, Board of Members or Presidents of wholly-State-owned limited liability companies shall be responsible for the implementation of this Decree ./.

For the Government

The Prime Minister

Nguyen Xuan Phuc