Wage payment by products: Is it legal or not?

Some employers pay wages by-products that are manufactured and traded on their own in order to process the inventories and get financial optimization. Whether this action is legal or not?

1. Is it legal for paying wages by product?

Pursuant to Article 94, Labor Code 2019, the employer shall pay wages directly, fully, and timely to employees.

The Code has no specific definition of a wage which is prescribed as the money amount which is paid by the employer to the employee as agreed upon for the latter to do a certain job.

Wages include:

  • Job- or title-based wage amount:  The job- or title-based wage amount must not be lower than the minimum wage level.
  • Wage-based allowance.
  • Other additional amounts.

Also in accordance with Clause 1, Article 95 of this Code, the employer shall pay wages to employees based on agreed wage levels, labor productivity, and work quality.

Wages written in labor contracts and wages paid to employees shall be calculated in Vietnam dong If the employee is a foreigner working in Vietnam, wages shall be calculated in a foreign currency.

From the above regulations, it can be emphasized that the employer must pay the employee by money amount, not by products. This wage can be paid directly by cash or by transfer via personal accounts of workers at banks.

Is it legal for paying wages by product?

2. What are the fines for employers for paying wages by products?

The employer is not allowed to pay wage by products to his/her employees. 

Speaking in other ways, in accordance with Clause 2, Article 95 of the Labor Code 2019, wages written in labor contracts and wages paid to employees shall be calculated in Vietnam dong.

Therefore, the fine shall be imposed for any employer that forces his/her employees to receive products instead of money for failing to pay or paying inadequate wages to the worker compared to that agreed in the labor contract.

Pursuant to Article 17, Decree No. 12/2022/ND-CP, fines shall be imposed on any employer for this act as follows:

Number of workers

Fine for the employers who are individuals

Fine for the employers who are organizations

Between 01 and 10 employees

+ VND 5 - 10 million

+ VND 10 - 20 million

Between 11 and 50 employees

+ VND 10 - 20 million

+ VND 20 - 40 million

Between 51 and 100 employees

+ VND 20 - 30 million

+ VND 40 - 60 million

Between 101 and 300 employees

+ VND 30 - 40 million

+ VND 60 - 80 million

301 employees and more

+ VND 40 - 50 million

+ VND 80 - 100 million

Remedial measures Compelling the employer to pay full wages and the interest on the late payment or underpayment thereof to the employee, calculated according to the highest demand deposit interest rate of the state commercial banks announced at the time the penalties are imposed on the violations.

Is it legal for paying wages by product?

3. Pay bonuses by products: is it legal or not?

In accordance with the Article 104, Labor Code 2019, bonus is defined as follows:

1. Bonus is a sum of money or asset or other forms paid or given by the employer to the employee on the basis of production and business results and the employee’s work performance.

2. The employer shall decide on and publicize bonus regulations at the workplace after consulting the grassroots-level employees’ representative organization, if available.

In accordance with law provisions, bonus is not the compulsory policy of the company. The employer shall decide whether to pay bonuses for their employees or not based on the current situations of production, business, productivity as well as financial conditions of the enterprise.

The employer can choose the form of bonus by himself/herself. In particular, the employer can pay a bonus by cash or assets such as real estate, cars, housewares which are produced by them or other forms such as travels...

Although the employer must pay wages by money in accordance with laws by the Labor Code 2019 is so flexible when allows the employer to pay bonus by products.

This regulation not only can help every enterprise solve his/her own financial problems but also encourage employees to their valuable contributions to their work.

Here is the relevant information to the question: Is it legal for paying wages by product? 

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