Method of recording product-based wages in lobor contracts

1. Legal Basis 

Pursuant to Article 94 of the Labor Code 2019, wages may be paid based on time, product, or piecework. 

Article 98 of the Labor Code 2019 provides for wage payment rates for overtime work, night work, work on days off, public holidays, and Tet holidays as follows: 

“1. The employee who performs overtime work shall be paid based on the wage unit or wage actually paid for his/her current job, specifically as follows: 

a/ At least equal to 150%, on normal workdays; 

b/ At least equal to 200%, on weekly days off; 

c/ At least equal to 300%, on public holidays and paid leave days, excluding the wage for public holidays and paid leave days for employees who receive daily wages. 

2. The employee who performs night work shall be paid with anadditionalamount at least equal to 30% of the wage calculated based on the wage unit or wage actually paid for a job performed during normal workdays. 

3. The employee who performs overtime work at night shall, in addition to the payments specified in Clauses 1 and 2 of this Article, be paid with an additional amount equal to 20% of the wage calculated based on the wage unit or wage for a job performed during daytime of normal workdays or of weekends or public holidays.”

In addition, employers are responsible for ensuring that wages are not lower than the statutory minimum wage as prescribed in Article 90 of the Labor Code. 

Accordingly, when determining wages or paying wages, employers are required to rely on the above provisions as the legal basis for determining wage levels and implementing wage payment to employees. 

2. Practical Requirements of Enterprises 

Many enterprises choose to apply a “lump-sum” wage, which includes overtime wages, night work wages, and wages for work on days off. In our opinion, this practice arises from the enterprises’ desire to adopt a simplified wage calculation method and to avoid having to calculate multiple wage rates applicable to different specific working circumstances. However, we are of the view that such simplification may entail potential legal risks if it is not implemented carefully and prudently. 

From a legal perspective, there are several important points to be noted when applying a lump-sum wage method as mentioned above, as follows: 

  • The law does not prohibit enterprises from stipulating a lump-sum wage that includes wages for overtime work, night work, and work on days off, provided that the total actual wage received by the employee is not lower than the statutory minimum levels (≥150%, ≥200%, ≥130% … as prescribed in Article 98 of the Labor Code) and is not lower than the regional minimum wage. 
  • However, if this method is applied (Method 2 as set out below), enterprises must have sufficient evidentiary grounds demonstrating such wage payment, such as labor contracts, timesheets, payrolls, internal wage regulations, and bonus policies, which clearly show that the lump-sum wage is not lower than the statutory wage in all applicable cases. If such evidence is not persuasive, the enterprise may be deemed to have committed an act of improper wage payment and may be subject to administrative penalties in accordance with Decree No. 12/2022/ND-CP. 

3. Recommendations for Enterprises When Paying Piece-Rate Wages 

When applying product-based wages, enterprises may consider adopting one of the following two methods: 

Method 1: Clearly specifying in the labor contract or its appendix the piece-rate wage calculation for each specific case:  

  • Normal working hours = 100% 
  • Overtime on normal working days = ≥150% 
  • Work on weekly days off = ≥200% 
  • Night work = ≥130% 
  • Overtime at night = ≥195% + 20%… 

This method facilitates proof in the event of inspection, as enterprises only need to present the labor contract, appendices, wage payment regulations, timesheets, payrolls, and payment vouchers. 

Method 2: Recording a single “lump-sum” wage applicable to all cases: 

The labor contract records only one lump-sum product-based wage (for example: VND 25,000 per product) and clearly states that such wage already includes all additional payments as prescribed in Article 98 of the Labor Code. 

It should be noted that when applying this method, enterprises must exercise particular diligence and maintain documentary evidence demonstrating that the lump-sum wage always satisfies all statutory wage requirements applicable to any possible scenario. Based on our experience, it is necessary to prepare an internal wage calculation table clearly evidencing that the lump-sum wage paid by the enterprise is always higher than the statutory minimum wage in all cases, to be retained in internal records together with other documents similar to those required under method 1. 

However, in our experience, method 1 is recommended for enterprises, as in the event of disputes or inspections by labor authorities, it provides a more solid and transparent basis for proof. 

With the contents shared in this article, Apolat Legal hopes to assist Readers in understanding and obtaining useful information regarding the application of product-based wage regulations in Viet Nam. Should Readers require further discussion or information, please contact Apolat Legal via email at: info@apolatlegal.com. 


Disclaimers:

This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email cs@apolatlegal.vn.

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to Employment and contact our team of lawyers in Vietnam via email info@apolatlegal.com.



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