Which Day Of The Month Your Salary Will Be Paid?

1. What is salary?

From an economic perspective, salaries are a material expression of the value of labor power, which is the amount of money the employer must pay to the employee as agreed in the previous contract.

From the employer’s perspective, salary is one of the input costs of the production process, but from the employee’s perspective, this is considered a remuneration corresponding to the effort: their mind, energy, and physical strength.

Wages, in many ways, are the sum of all parties’ contributions. As a result, the Law, which serves as the third party, has issued valuable provisions to govern this concept.

Wages are income, remuneration, or whatever name or measure may be expressed in cash, published determined by an agreement between the two parties: the employee and the employer, or by the laws of the country itself, according to Article 1 of International Labor Organization Convention No. 95, issued in 1949. They are paid to the employee by the employer in accordance with the signed labor contract.

According to Vietnamese law, article 90 of the Labor Code 2019 states: “Salary is the amount of money that the employer must pay to the employee in order for the employee to perform the job.” Salary consists of payment for specific jobs or titles, as well as salary allowances and other benefits.

It’s worth noting that, under current law, there are two scenarios in which the parties enter into a functional agreement relationship:

• The employee has an employment relationship
• The employee has no employment relationship

Therefore, wages only arise when there is an employment relationship between the parties.

2. How is the salary payment principle regulated?

As stated in article 94 of the Labor Code 2019, the current Law establishes the principle of salary payment. The following are the contents of this principle:

Employees are entitled to receive wages directly, thoroughly, and on time according to the responsibilities and obligations of the employer. In cases where it is not possible to receive wages directly, it is allowed to pay salaries to individuals legally authorized by the employee.

The employer cannot restrict or interfere with the employee’s exclusive right to self-determination of salary expenditure. Specifically, the payer is also not allowed to force the payee to spend on buying services and goods as specified by any supplier.

In fact, in addition to the salaries that are paid according to the time of year agreement, there is also a concept of “13th-month salary.” That amount is considered a bonus and welfare at the end of the year according to the policies and agreements in the labor contract of each business unit. That proves that the 13th-month salary is not classified as salary by the Law but in the section on bonuses in Clause 1, Article 104, Labor Code No. 45/2019/QH14 promulgated by the National Assembly.

This amount is calculated in the following way:

• If the employee has worked for the full 12 months from January 1 to December 31 (solar calendar), the 13th-month salary = total average wage for the month excluding travel allowance
• If the employee works less than 12 calendar months by the end of December 31, the 13th-month salary = (Total average wage in the month + allowances/allowances if any)/12 months * the number of months multiplied by actual employees during the year

3. What is the salary payment term?

3.1. For pay period

Vietnamese Law stipulates the time limit for salary payment as follows:

• Wages are paid after the hour, day, or week of work or lumped together for no more than 15 days if the two parties agree on how to receive hourly, daily, or weekly wages.
• Salaries are paid semi-monthly or monthly according to the fixed time with an agreed cycle if the compensation is paid monthly.
• Salary is paid according to the agreement of the two parties if the salary is according to the product or the contract. However, if the work takes place for many months, an advance must be made according to the actual volume of work done every month.
• No later than 30 days’ salary if faced with force majeure reasons, having tried all remedies but the employer still cannot pay salary on time. In the case of 15 days’ late payment of wages, the employee is entitled to compensation from the payer at least equal to the delinquent payment amount calculated at the interest rate on mobilizing deposits with a term of 1 month according to the policy at the People’s Bank. The employer has opened an account for the employee.

3.2. For pension payment terms

When participating in insurance contributions, employees will be entitled to a pension (retirement regime) following the Law at retirement age.

This amount is paid on a fixed date every month, depending on your area. In particular, in some places, the two-month pension is paid in a lump sum.

4. Standard forms of pay

Vietnam is applying the following four forms of salary payment:

• Time-based pay means wages are calculated based on the number of hours worked and are usually fixed if the employee does not take unpaid leave
• Product-based pay means wages are calculated based on work performance, quality, and quantity of finished products made
• Pay by package means that salary is only paid when the assigned work is completed with the right quality. Wages can be calculated over time per unit of finished product or sales, even as monthly gross profit
• Revenue-based salary means that the compensation received will be based on the sales target and each company unit’s salary and bonus policies