Circular No. 08/2005/TT-BLDTBXH guiding the implementation of Decree No. 27/2004/NĐ-CP dated December 14, 2004 of the Government on salary, bonus, and responsibility system for members of the Board of Directors, General Director, and Director of state-owned enterprises.

CIRCULAR

Guidelines for Implementing Decree No. 27/2004/NĐ-CP

dated December 14, 2004 of the Government on salary systems, bonuses, and responsibility regimes for members of the Board of Directors, General Directors, and Directors of state-owned enterprises

 salary systems, bonuses, and responsibility regimes for members of the Board of Directors, General Directors, and Directors of state-owned enterprises

Implementation of Decree No. 207/2004/NĐ-CP dated December 14, 2004 of the Government on salary systems, bonuses, and responsibility regimes for members of the Board of Directors, General Directors, and Directors of state-owned enterprises, the Ministry of Labor, Invalids and Social Affairs provides guidelines as follows:

I. SCOPE AND APPLICABLE ENTITIES.

The scope and applicable entities for the salary system, bonuses, and responsibility regime for members of the Board of Directors, General Directors, and Directors of companies under Articles 1 and 2 of Decree No. 207/2004/NĐ-CP are specified as follows:

The scope of application includes state-owned enterprises operating under the Law on State-Owned Enterprises, including:

Article 1. Scope of Application:

a) State-owned enterprises:

+ State-owned corporations established through self-investment and formation (corporations following the parent company - subsidiary model);

- State-owned corporations:

+ State-owned corporations established under the Law on State-Owned Enterprises in 1995 and State-owned corporations established by the State's decision to invest and establish under the Law on State-Owned Enterprises in 2003;

- Independent state-owned enterprises.

+ State-owned investment and business corporations;

b) Independent accounting member enterprises of state-owned corporations established by the State's decision to invest and form.

These state-owned corporations and enterprises mentioned above are referred to collectively as enterprises.

a) Members of the Board of Directors, including specialized members and non-specialized members of the Board of Directors;

Thông tư này áp dụng đối với tổ chức, cá nhân có liên quan đến hoạt động kinh doanh đối tượng thủy sản nuôi chủ lực trên lãnh thổ Việt Nam.:

b) General Directors and Directors (excluding General Directors and Directors working under contracts).

II. SALARY REGIME.

The salary regime for members of the Board of Directors, General Directors, and Directors of enterprises under Article 3 of Decree No. 207/2004/NĐ-CP is specified as follows:

1. Members of the Board of Directors, General Directors, and Directors are assigned position salaries according to the enterprise category and enjoy allowances as prescribed in Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government and the Circular guiding this issued by the Ministry of Labor, Invalids and Social Affairs, specifically:

a) Specialized members of the Board of Directors are assigned position salaries according to the specialized Board of Directors' salary scale;

b) General Directors and Directors of enterprises are assigned position salaries according to the General Director, Director, Deputy General Director, Deputy Director, Chief Accountant salary scale;

c) Non-specialized members of the Board of Directors are assigned salaries based on the tasks assigned and positions held and enjoy job responsibility allowances according to the enterprise category;

2. Salaries and allowances for members of the Board of Directors, General Directors, and Directors are paid based on the company's profit and labor productivity according to the principle that increased profit and labor productivity result in increased salaries and allowances; decreased profit and labor productivity result in decreased salaries and allowances, but not less than the base salary calculated based on the position coefficient according to the enterprise category, allowance (if any), and the general minimum wage (as stipulated in Decree No. 203/2004/NĐ-CP dated December 14, 2004 of the Government, the general minimum wage from October 1, 2004 is 290,000 VND/month);

3. The salary fund for members of the Board of Directors (including the salary of specialized members and job responsibility allowances for non-specialized members of the Board of Directors), General Directors, and Directors of enterprises is determined annually, with a maximum advance payment of 80% of the planned salary fund (the planned salary fund is determined according to point 1, Section III of this Circular). The remaining portion of the salary (at least 20% of the planned salary fund) is paid at the end of the year based on the degree of completion of production and business plans.

The salary fund for members of the Board of Directors, General Directors, and Directors of enterprises is not included in the unit price of the enterprise's salary but is accounted for in cost or business expenses.

III. DETERMINATION OF THE SALARY FUND.

The salary fund for members of the Board of Directors, General Directors, and Directors of enterprises under Article 4 of Decree No. 207/2004/NĐ-CP is specified as follows:

1. Determination of the planned salary fund:

a) For enterprises with profits:

- The planned salary fund is calculated using the following formula:

khql

V_{= [ L} x (H_ql cv_pc+ H_kct) + (L_pctn x H_{] x TL}) mincty_{x 12 months} : Planned salary fund;

Where:

+ V_{= [ L} : Number of specialized members of the Board of Directors, General Directors, and Directors, including specialized members of the Board of Directors, General Directors, and Directors (including Directors of independent accounting member units of the enterprise) counted based on actual figures at the time of determining the planned salary fund;

+ L_ql : Average salary coefficient, calculated based on the current salary coefficient of specialized members of the Board of Directors, General Directors, and Directors (including Directors of independent accounting member units of the enterprise);

+ H_pc : Average allowance coefficient, calculated based on various allowances and levels of enjoyment of specialized members of the Board of Directors, General Directors, and Directors (including Directors of independent accounting member units of the enterprise), including: regional allowance; attraction allowance; hazardous and dangerous work allowance and safety reward system (if any);

+ H_kct : Number of non-specialized members of the Board of Directors, counted based on actual figures at the time of determining the planned salary fund;

+ L_pctn : Job responsibility allowance coefficient for non-specialized members of the Board of Directors, calculated according to Circular No. 03/2005/TT-BLĐTBXH dated January 5, 2005 of the Ministry of Labor, Invalids and Social Affairs;

- H_{] x TL} : Minimum wage level chosen by the enterprise to calculate the unit price of wages according to Circular No. 07/2005/TT-BLĐTBXH dated January 5, 2005 of the Ministry of Labor, Invalids and Social Affairs. For enterprises with multiple minimum wage levels to calculate the unit price of wages, the highest minimum wage level can be selected.

+ TL_{x 12 months} Adjusted planned salary fund:

- When the enterprise meets all conditions stipulated below, the planned salary fund will be adjusted according to the following formula:

khqlđc

V_{x (1 + K} = V_{= [ L}đcql_{: Adjusted planned salary fund (this fund is referred to as the planned salary fund);})

Where:

+ V_{x (1 + K} : Additional adjustment coefficient for the planned salary fund, maximum not exceeding twice, the enterprise selects a specific coefficient, but must ensure the following conditions:

+ V_{= [ L} : Number of specialized members of the Board of Directors, General Directors, and Directors, including specialized members of the Board of Directors, General Directors, and Directors (including Directors of independent accounting member units of the enterprise) counted based on actual figures at the time of determining the planned salary fund;

+ signing and implementing Agreements_{: Adjusted planned salary fund (this fund is referred to as the planned salary fund);} * Pay taxes to the state budget as prescribed by tax laws and implementing regulations;

* The increase rate of average salary must be lower than the increase rate of average labor productivity.

* The rate of increase (in percentage terms) of average wages must be lower than the rate of increase (in percentage terms) of average labor productivity.

The average salary increase is calculated based on the number of full-time members of the Board of Directors, General Director, and Director (including the Director of independent accounting units of the company); the average productivity increase is calculated according to the entire company's regulations stipulated in Circular No. 09/2005/TT-BLDTBXH dated January 5, 2005, issued by the Ministry of Labor, Invalids, and Social Affairs. In cases where the company has multiple salary rates based on different criteria, the calculation is based on total revenue.

* Must have profit. The planned profit must not be lower than the actual profit of the previous year, except in special cases (the State intervenes to stabilize the market; increases depreciation to recover capital quickly, for technological innovation, and expansion of production and business activities; new investment).

b) For companies without profit or with losses:

The planned salary fund is calculated using the following formula:

V_{= [ L} x (H_ql cv_pc+ H_kct) + (L_pctn x H_{] x TL}) mincty_{Maximum Downhill Gradient} : Planned salary fund; (1)

Where:

- V_{= [ L} : Number of specialized members of the Board of Directors, General Directors, and Directors, including specialized members of the Board of Directors, General Directors, and Directors (including Directors of independent accounting member units of the enterprise) counted based on actual figures at the time of determining the planned salary fund;

- L_ql, H_pc, H_kct, L_pctn,H_{] x TL} determined as specified in paragraph a, point 1, Section III of this Circular;

- TL_{Maximum Downhill Gradient} : Minimum wage level.

c) Reviewing the planned salary fund:

After determining the planned salary fund, the company must report to the competent ministry or the People's Committee of the province or centrally governed city for review before implementation.

Specifically, for companies classified as special category and those engaged in public service activities such as the Civil Aviation Management Center and Airports Clusters, they must report to the state management agency as follows:

- For companies classified as special category established under Decision No. 91/TTg dated May 7, 1994, issued by the Prime Minister, they must report to the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Finance for review before implementation;

- For other special category companies and those engaged in public service activities such as the Civil Aviation Management Center and Airports Clusters, they must report to the competent ministry or the People's Committee of the province or centrally governed city to forward to the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Finance for review before implementation.

d) Advance monthly salary:

Based on the results of the previous year's production and business tasks, the ability to complete the planned year's tasks, when reviewing the planned salary fund, the competent ministries or the People's Committees of the provinces or centrally governed cities will specifically determine the advance monthly salary amount, but it shall not exceed 80% of the planned salary fund of the Board of Directors' members, General Director, and Director of the company under their management.

2. Determining the actual salary fund:

a) For companies with actual profits and average labor productivity equal to or higher than the plan the actual salary fund equals the planned salary fund that has been reviewed;

b) For companies with actual profits and average labor productivity lower than the plan the actual salary fund must be adjusted according to the following formula:

V_thqlđc = V_{= [ L} - V_p - V (VND/year): is the total investment capital allocated annually for the usable area of social housing for rent, ensuring the preservation of capital, calculated according to the following formula:_w

Where:

- V_thqlđc : Actual salary fund after adjustment;

- V_{= [ L} : Reviewed planned salary fund;

- V_p : Salary fund adjusted according to profit, calculated according to the following formula:

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_the

   V_p = [ (V_{= [ L} - V (VND/year): is the total investment capital allocated annually for the usable area of social housing for rent, ensuring the preservation of capital, calculated according to the following formula:_cđ)x (1 - --------- )] x 0,5 (2)

"5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_kh

Where:

+ V_{= [ L} : Reviewed planned salary fund;

+ V_cđ : Salary fund according to regulations, calculated according to formula (1) specified in paragraph b, point 1, Section III of this Circular;

+ "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_the, "5. The pre-tax weighted average cost of capital i (%) is determined according to the formula below:_kh: Actual profit and planned profit of the company;

- V_w : Salary fund adjusted according to productivity, calculated according to the following formula:

- Electronic Information Portal_the

      V_w = (V_{= [ L} - V (VND/year): is the total investment capital allocated annually for the usable area of social housing for rent, ensuring the preservation of capital, calculated according to the following formula:_p) x (1 - ---------)

- Electronic Information Portal_kh

Where:

+ V_{= [ L} : Reviewed planned salary fund;

+ V_p : Salary fund adjusted according to profit, calculated according to formula (2);

+ - Electronic Information Portal_the, - Electronic Information Portal_kh: Actual average productivity and planned average productivity of the company, determined according to the provisions of Circular No. 09/2005/TT-BLDTBXH dated January 5, 2005, issued by the Ministry of Labor, Invalids, and Social Affairs. In cases where the company has multiple salary rates based on different criteria, the calculation is based on total revenue.

c) For companies with actual profit lower than the plan and average actual productivity equal to or higher than the plan the actual salary fund must be adjusted according to the following formula:

V_thqlđc = V_{= [ L} - V_p

Where:

- V_thqlđc : Actual salary fund after adjustment;

- V_{= [ L} : Reviewed planned salary fund;

- V_p : Salary fund adjusted according to profit, calculated according to formula (2).

d) For companies with actual average productivity lower than the plan and actual profit equal to or higher than the plan the actual salary fund must be adjusted according to the following formula:

V_thqlđc = V_{= [ L} - V_w

Where:

- V_thqlđc : Actual salary fund after adjustment;

- V_{= [ L} : Reviewed planned salary fund;

- V_w : Salary fund adjusted according to productivity, calculated according to the following formula:

- Electronic Information Portal_the

V_w = V_{= [ L} x (1 - ---------)

- Electronic Information Portal_kh

Where:

+ V_{= [ L} : Reviewed planned salary fund;

+ - Electronic Information Portal_the, - Electronic Information Portal_kh: Actual average productivity and planned average productivity of the company, determined according to the provisions of Circular No. 09/2005/TT-BLDTBXH dated January 5, 2005, issued by the Ministry of Labor, Invalids, and Social Affairs. In cases where the company has multiple salary rates based on different criteria, the calculation is based on total revenue.

The actual salary fund after adjustment according to paragraphs b, c, and d above shall not be lower than the salary fund according to regulations, calculated according to formula (1) specified in paragraph b, point 1, Section III of this Circular.

đ) For loss-making companies the actual salary fund equals the salary fund according to regulations, calculated according to formula (1) specified in paragraph b, point 1, Section III of this Circular.

Based on the actual salary fund received and the advanced salary fund, the Chairman of the Board of Directors, General Director, and Director determine the remaining salary fund to be received. If expenses exceed the actual salary fund received, the excess salary paid must be repaid within the same year.

3. Wage Payment Regulations:

a) The Chairman of the Board of Directors is responsible for directing the specialized department to develop wage payment regulations as a basis for paying salaries to Board of Directors' members, General Director, and Director based on the degree of completion of planned production and business tasks and the responsibilities of each member;

b) When developing wage payment regulations, opinions of the Company Trade Union Executive Board must be consulted. These regulations must ensure fairness, democracy, transparency, and openness, while registering with the competent state authority for review of the salary fund according to the分级管理权限。

IV. INCENTIVE PAY SYSTEM.

The incentive pay system for Board of Directors' members, General Director, and Director of the company is detailed as follows according to Article 5 of Decree No. 207/2004/NĐ-CP:

1. The annual incentive fund for Board of Directors' members, General Director, and Director of the company includes:

a) The bonus fund is extracted from the management board's bonus fund of the company in accordance with Decree No. 199/2004/NĐ-CP dated December 3, 2004, issued by the Government on the Financial Management Regulations for State-owned Enterprises and the Management of State Capital Invested in Other Enterprises, and other guiding documents issued by the Ministry of Finance.

b) The annual bonus fund is derived from the award fund according to the bonus regulations of the company stipulated in Point 6, Section III, Circular No. 07/2005/TT-BLDTBXH dated January 5, 2005, of the Ministry of Labor, Invalids, and Social Affairs.

For the directors of independent accounting subsidiaries of the State-owned Corporation established by the State's decision to invest, the annual bonus fund is extracted from the management board's bonus fund and the award fund of their respective companies.

2. Based on the annual bonus fund and the degree of completion of production and business plans, the representative of the owner or the competent ministry, provincial People's Committee, or municipal People's Committee directly under the Central Government shall specifically determine the ratio of bonuses, not exceeding 60% of the annual bonus fund, to be awarded at the end of the year to members of the Board of Directors, General Managers, and Company Directors under their management.

3. The remaining portion of the annual bonus fund (at least 40% of the annual bonus fund) shall be used to extract bonuses after the term ends (referred to as the term bonus fund), based on the degree of completion of the total profit plan for the entire term, specifically:

- In the case where the actual total profit does not fall below the planned total profit for the entire term, the full term bonus fund will be enjoyed.

- In the case where the actual total profit is lower than the planned total profit, for every 1% decrease in actual total profit compared to the planned total profit, 0.5% of the term bonus fund must be deducted.

The term for determining the bonus fund for members of the Board of Directors, General Managers, and Directors is calculated according to the term of the Chairman of the Board of Directors (for companies with a Board of Directors) or the General Manager or Director (for companies without a Board of Directors). If the start date of the term is before January 1, 2005, it shall be calculated from January 1, 2005.

4. The Chairman of the Board of Directors bases the bonus fund received and the bonus regulations to award bonuses to members of the Board of Directors, General Managers, and Company Directors.

5. The Chairman of the Board of Directors is responsible for directing specialized departments to develop bonus regulations as a basis for awarding bonuses to members of the Board of Directors, General Managers, and Directors based on the degree of completion of production and business plans and the responsibilities of each member.

When developing bonus regulations, opinions of the company's Trade Union Executive Committee must be consulted. These regulations must ensure fairness, democracy, transparency, and openness, while registering with the competent state authority for review of the salary fund according to the分级管理权限。

V. RESPONSIBILITY REGIME.

The responsibility regime for members of the Board of Directors, General Managers, and Directors of companies is specified as follows in Article 6 of Decree No. 207/2004/NĐ-CP:

1. The Chairman of the Board of Directors and members of the Board of Directors, General Managers, and Directors of companies who fulfill their rights, obligations, and responsibilities as prescribed by the Law on State-Owned Enterprises shall enjoy the salary and bonus system stipulated in Sections III and IV of this Circular.

2. In cases where the following situations occur but do not reach the level of criminal prosecution, they shall be handled regarding salaries and bonuses as follows:

a) Failure to ensure wages and other benefits for workers in the company, failure to fully perform responsibilities regarding labor organization and wage management as prescribed by labor laws, or causing violations in capital management, asset management, accounting systems, auditing systems, and other systems prescribed by the state, then they shall not be entitled to additional adjustment factors for the planned wage fund in that year; they shall not receive year-end bonuses and shall not enjoy the portion of the year's bonus in the term bonus fund.

b) Making investment project decisions that are ineffective, unable to recover invested capital, unable to repay debts; causing the company to incur losses (except for special cases stipulated in Subpoint a, Point 1, Section III of this Circular), causing loss of state capital, then they shall be handled as follows:

- Postponing the time for increasing salary grades by at least 12 months (for those still eligible for a salary grade increase).

- Only entitled to the wage fund calculated according to formula (1) stipulated in Subpoint b, Point 1, Section III of this Circular; shall not receive year-end bonuses and shall not enjoy the term bonus fund.

c) Causing the company to incur losses for two consecutive years or failing to achieve the profit rate on capital for two consecutive years or having alternating profits and losses, unable to rectify, except for cases stipulated in Point a, Clause 3, Article 25 of the Law on State-Owned Enterprises such as losses or reduced profit rates on state capital investment approved by the competent authority; losses or reduced profit rates on state capital investment due to objective reasons explained and accepted by the competent authority; new investments for expanding production or technological innovation, then they shall be handled as follows:

- Reducing one salary grade (for those currently at Grade 2, they will be downgraded to Grade 1, and those currently at Grade 1 will be downgraded to Grade 2 of the next lower rank within the company).

- Only entitled to the wage fund calculated according to formula (1) stipulated in Subpoint b, Point 1, Section III of this Circular during those years; shall not receive year-end bonuses and shall not enjoy the term bonus fund.

VI. IMPLEMENTATION ORGANIZATION.

1. Responsibilities of the Chairman of the Board of Directors, General Managers, and Directors of companies are specified as follows in Article 7 of Decree No. 207/2004/NĐ-CP:

a) Each year in January, build the planned wage fund for members of the Board of Directors, General Managers, and Directors, submit for approval by the representative of the owner or the competent state management agency as stipulated in Subpoint c, Point 1, Section III of this Circular before implementation (Form 1)Form 1After being reviewed, the company must submit to the Provincial Tax Department where the company's headquarters is located a plan for the salary fund of the Board of Directors members, General Director, and Company Director as the basis for determining taxable income;

b) Determine the actual salary fund and bonus fund of the company in accordance with this Circular;

c) Decide on the planned salary fund, advance payment of salaries, bonus fund, and decide on the refund of excess salary and bonus payments beyond the state regulations for the Directors of independent accounting units of the company; direct the specialized departments to establish salary and bonus regulations for the Board of Directors members, General Director, and Company Director;

d) In March each year, report to the Ministry managing the industry or the People's Committee of the province/city directly under the Central Government on the implementation of salaries and bonuses in the previous year, and send to the local Department of Labor, Invalids, and Social Affairs (for companies managed by the People's Committee of the province/city directly under the Central Government) according to table form number 1. For special-class companies and companies implementing public service activities as defined in point c, clause 1, section III of this Circular, they shall also report to the Ministry of Labor, Invalids, and Social Affairs.

2. Responsibilities of State management agencies are specified as follows pursuant to Article 8 of Decree No. 207/2004/NĐ-CP:

a) The Ministry managing the industry, the People's Committee of the province/city directly under the Central Government:

- In February each year, review the planned salary fund; decide on advance payment of the salary fund and bonus fund, and decide on the refund of excess salary and bonus payments according to state regulations for the Board of Directors members, General Director, and Company Director of companies under their management;

- Guide and inspect companies under their management to implement in accordance with the provisions of this Circular. For companies under the management of the provincial/city People's Committee, the Department of Labor, Invalids, and Social Affairs has the responsibility to coordinate with relevant agencies to assist the provincial/city People's Committee in reviewing the planned salary fund, guiding, and inspecting the implementation of the provisions of this Circular;

- In the first quarter of each year, coordinate with the Ministry of Labor, Invalids, and Social Affairs, and the Ministry of Finance to review the planned salary fund of the Board of Directors members, General Director, and Company Director of special-class companies and companies implementing public service activities as defined in point c, clause 1, section III of this Circular;

- In March each year, report to the Ministry of Labor, Invalids, and Social Affairs on the situation of establishing and reviewing the planned salary fund for the current year and the implementation of salaries and bonuses in the previous year for the Board of Directors members, General Director, and Company Director of companies under their management according to form number 2.

b) Ministry of Labor, Invalids, and Social Affairs:

- Coordinate with the Ministries managing the industry, the People's Committees of the provinces/cities directly under the Central Government to guide, organize training, and supervise the implementation of the provisions of this Circular;

- In the first quarter of each year, review the planned salary fund of the Board of Directors members, General Director, and Company Director of special-class companies and companies implementing public service activities as defined in point c, clause 1, section III of this Circular after exchanging opinions with the Ministry of Finance;

- Take the lead, coordinate with the Ministry of Finance and related ministries and sectors to propose to the Government the salary and bonus system for General Directors, Directors, Deputy General Directors, Deputy Directors, and Chief Accountants working under contracts; Guide the implementation of position allowances and bonus systems for representatives of state capital in other enterprises;

VII. IMPLEMENTATION PROVISIONS.

1. Based on the guidance content of this Circular, the Ministries managing the industry, the People's Committees of the provinces/cities directly under the Central Government shall instruct companies under their management to implement the salary and bonus system and responsibility system for the Board of Directors members, General Director, and Company Director in accordance with state regulations;

2. For the Development Support Fund and Vietnam Deposit Insurance Corporation, which are currently applying the salary system for state-owned enterprises as stipulated in Decision No. 17/2000/QĐ-TTg dated February 3, 2000, and Decision No. 88/2001/QĐ-TTg dated June 5, 2001 of the Prime Minister, apply the provisions of this Circular to determine salaries, bonuses, and responsibility systems for Board of Directors members or Management Board members, General Director, and Director;

3. For projects using state budget funds; state credit investment development funds; state-guaranteed credit; and development investment funds of the company or companies implementing public service activities, select the additional adjustment factor specified in point a, clause 1, section III of this Circular to calculate the planned salary fund of the Board of Directors members, General Director, and Director, but ensure project volume, quality, and progress; public service products and services; do not increase the budget estimate value, fulfill all tax obligations to the state budget, social insurance, and health insurance for employees, and ensure labor productivity increases and profits in accordance with state regulations;

4. State-owned enterprises operating under the Law on Enterprises and other economic entities may apply the provisions of this Circular;

5. This Circular takes effect 15 days from the date of publication in the Official Gazette. The provisions of this Circular shall be implemented from January 1, 2005.

Any difficulties encountered during implementation should be reported by the ministries, provincial people's committees, and state-owned enterprises to the Ministry of Labor, Invalids, and Social Affairs for consideration and resolution./.