An enterprise shall choose the suitable form of payment depending on labor demands and the nature of work. Enterprises can choose to pay by piecework-based wage to improve their productivity. So, what is the piecework-based wage?
1. What is the piecework-based wage?
The Labor Code 2019 and guiding documents have no specific definition of piecework-based wage”, but this term is mentioned in many provisions and regulations on forms of payment.
Accordingly, the piecework-based wage is the form of payment based on the quantity, quality, and completion time, applied by the employer to calculate and pay for the employee.
Pursuant to Clause 1, Article 96, Labor Code 2019, the employer and employee shall reach an agreement on the form of wage payment: Based on time, product or piecework.
Therefore, the employer can pay the piecework-based wage with consent from the employees.
The employee can receive the piecework-based wage based on the completion level. And the employee receives the maximum and full wage payment in accordance with law provisions. This is a fair wage payment and represents the employee's productivity.
2. Forms of piecework-based wage
In accordance with Clause 1, Article 54, Decree No. 145/2020/ND-CP, based on the characteristics of jobs and production and business conditions, employers and employees shall reach an agreement on the form of piecework-based wage.
Within that, the actual wage payment is based on time, product or piecework in labor contracts.
The following formula is an example:
Piecework-based wage level
% of work completion
VND 6 million x 80% = VND 4.8 million
3. What are the forms of piecework-based wage?
The principles of piecework-based wage payment are prescribed in Article 94, Labor Code 2019, the employer shall pay wages directly, fully, and timely to employees. In case the employee cannot receive wages directly, a person lawfully authorized by the employee may receive wages.
Pursuant to Clause 2, Article 94, Labor Code 2019, and Clause 2, Article 54, Decree 145/2020/ND-CP, the piecework-based wage shall be paid in the forms as follows:
- In cash
- Via employees’ personal bank accounts
In case wages are paid via personal bank accounts, employers shall pay charges related to account opening and bank transfer.
Note: Wages must be paid by Vietnam dong. Wage can be paid by foreign currencies for foreigners working in Vietnam.
4. Must the employee receiving piecework-based wage pay social insurance?
In accordance with Clause 1, Article 2, Law on Social insurance 2014, persons working under definite-term labor contracts with a term of 01 months and more shall be covered by compulsory social insurance.
It can be seen that the term of the contract between the employee and the employer decides whether to be covered by compulsory social insurance or not.
The monthly salaries on which social insurance premiums are defined in accordance with Clause 26, Article1, Circular No. 06/2021/TT-BLDTBXH as follows:
The monthly salaries = the salaries + salary allowances + other additional amounts
Within that, in accordance with the guidance at Point a, Clause 5, Article 3, Circular No.10/2020/TT-BLDTBXH, job- or title-based wage means the wage calculated according to the time of that job or title under wage scales and wage tables. For an employee enjoying a product- or piecework-based wage, it is the time-based wage level used to determine product unit cost or piecework-based wage.
Here is the answer to the question: What is the piecework-based wage?