Circular No. 12/2003/TT-BLDTBXH guides the implementation of certain provisions of Government Decree No. 114/2002/NĐ-CP dated December 31, 2002 on wages for workers employed in state-owned enterprises.

CIRCULAR

Guidelines for Implementing Certain Provisions of Decree No. 114/2002/NĐ-CP dated December 31, 2002 of the Government on Wages for Workers in State-Owned Enterprises

Implementing Decree No. 114/2002/NĐ-CP dated December 31, 2002 of the Government detailing and guiding the implementation of certain provisions of the Labor Code on wages, after exchanging opinions with relevant ministries and sectors, the Ministry of Labor, Invalids, and Social Affairs provides guidelines on wages for workers in state-owned enterprises as follows:

I. OBJECTS AND SCOPE OF APPLICATION

The subjects and scope of application of the wage regulations stipulated in this Circular are workers who work under labor contracts in the following organizations:

1. Enterprises established and operating under the Law on State-Owned Enterprises;

2. Joint-stock companies with 100% state-owned charter capital;

3. Enterprises of political organizations, political-social organizations; economic organizations belonging to armed forces;

4. Joint-stock companies with over 50% total capital owned by the state; joint-stock companies comprising shareholders that are state-owned enterprises;

5. State Corporations and state-owned enterprises transitioning to operate under the parent company-subcompany model;

6. Organizations, units, not assigned personnel quotas by the state within administrative agencies, public service units of the state, Party, mass organizations, Associations permitted to organize production and business activities.

The above enterprises, companies, organizations, and units are collectively referred to as state-owned enterprises.

II. MINIMUM WAGE

The minimum wage level as stipulated in Article 4 of Decree No. 114/2002/NĐ-CP is specified as follows:

1. Applying the general minimum wage from January 1, 2003 at 290,000 VND/month according to Decree No. 03/2003/NĐ-CP dated January 15, 2003 of the Government to calculate wage rates, wage allowances, unit wage prices, wage during work stoppages, holidays, annual leave, social insurance, health insurance, and other benefits as prescribed by labor laws.

When the state adjusts the general minimum wage, it shall be implemented according to the new regulations.

2. Based on labor productivity, business efficiency, enterprises continue to apply adjustment factors to increase the minimum wage to calculate unit wage prices and pay wages to workers as stipulated in Decree No. 28/CP dated March 28, 1997 and Decree No. 03/2001/NĐ-CP dated January 11, 2001 of the Government on reforming wage and income management in state-owned enterprises until new regulations are issued.

III. PAY GRADES AND WAGE ALLOWANCES

According to Clause 4, Article 5 of Decree No. 114/2002/NĐ-CP, enterprises continue to apply pay grades, wage scales, and wage allowances as prescribed in Decree No. 25/CP, Decree No. 26/CP dated May 23, 1993 of the Government temporarily regulating new wage systems for civil servants, administrative and public service officials, armed forces, in enterprises, and supplementary guidance documents attached as Appendix 1 to this Circular until new regulations are issued.

IV. LABOR QUOTAS

Labor quotas as stipulated in Clause 2, 3, Article 5 of Decree No. 114/2002/NĐ-CP are specified as follows:

1. Enterprises have the responsibility to establish a system of labor quotas to determine labor plans, organize and utilize labor, set unit wage prices, and pay wages to workers. Establishing labor quotas must comply with the principles stipulated in Clause 2, Article 5 of Decree No. 114/2002/NĐ-CP.

2. Establishing labor quotas in enterprises is carried out as follows:

a. Enterprises establish a Labor Quota Council to organize the establishment or review, adjust, and supplement the labor quota system applicable in the enterprise. The Council consists of the Enterprise Director, some members with sufficient professional expertise selected by the Director, and representatives of the grassroots trade union committee.

b. Based on actual production organization and labor organization, enterprises select methods to establish labor quotas as specified in Point 1, Appendix 2 attached to this Circular.

c. Annually, enterprises organize evaluations of the implementation of labor quotas to modify and supplement them to align with production organization and labor organization. If the implemented labor quota is lower than 5% or higher than 15% compared to the allocated quota, the enterprise must review and adjust within three months (this provision replaces the adjustment regulation in Point 2, Section A, Part IV of Circular No. 14/LĐTBXH-TT dated April 10, 1997 guiding the method of establishing labor quotas for state-owned enterprises and at item a, Point 2.2, Section 2, Part II of Circular No. 09/2002/TT-BLĐTBXH dated June 11, 2002 guiding the implementation of labor management mechanisms, wages, and income for joint-stock companies with 100% state-owned charter capital issued by the Ministry of Labor, Invalids, and Social Affairs).

d. Enterprises report new applied labor quotas to the Board of Directors or the Ownership Authority for monitoring.

3. When establishing, adjusting, or supplementing labor quotas, enterprises must seek opinions from the grassroots trade union committee and publicly announce them within the enterprise.

V. WAGE PAYMENT REGIME

1. Wage payment forms:

Wage payment forms as stipulated in Article 7 of Decree No. 114/2002/NĐ-CP are specified as follows:

a. Time-based wages (monthly, weekly, daily, or hourly), applicable to those engaged in management, professional, technical, and vocational work; those working in production lines, machinery, equipment, and jobs where time-based wages are more effective than other wage forms.

b. Piece-rate wages, applicable to individuals or groups of workers based on the quantity and quality of products completed.

c. Contracted wages, applicable to individuals or groups of workers based on the volume, quality of work, and completion time.

Based on the aforementioned forms of wage payment, enterprises select a form of wage payment that is suitable for the nature of work and production and business conditions, linking wages to work results, ensuring incentives for workers to improve efficiency and labor productivity. The selection or change of wage payment forms must be reflected in the labor contract and collective labor agreement.

2/ Overtime wage payment:

Overtime wage payment when employees work overtime according to Clause 1, 2, and 3, Article 10, Decree No. 114/2002/NĐ-CP is specified as follows:

a) For time-based wage earners, if they work overtime beyond standard hours, the enterprise must pay overtime wages calculated as follows:

Where:

- The actual hourly wage is determined based on the actual monthly wage of the employee working overtime (excluding overtime wages, additional wages for night shifts, bonuses, and other income not constituting wages) divided by the actual number of hours worked in the month (excluding overtime hours), but not exceeding 208 hours for normal working conditions or 156 hours for particularly arduous, toxic, and dangerous working conditions. In the case of daily wages, the actual hourly wage is determined based on the actual wage of the day of work (excluding overtime wages, additional wages for night shifts, bonuses, and other income not constituting wages) divided by the actual number of hours worked in the day (excluding overtime hours), but not exceeding 8 hours for normal working conditions or 6 hours for particularly arduous, toxic, and dangerous working conditions;

- The rate of 150% applies to overtime hours on regular days;

- The rate of 200% applies to overtime hours on weekly rest days as stipulated in Article 72 of the Labor Code;

- The rate of 300% applies to overtime hours on holidays and rest days with full pay (this 300% already includes the wage paid for the time off with full pay as stipulated in Articles 73, 74, 75, and 78 of the Labor Code);

- The duration of overtime work is regulated in Decree No. 109/2002/NĐ-CP dated December 27, 2002, of the Government amending and supplementing certain articles of Decree No. 195/CP dated December 31, 1994, of the Government detailing and guiding the implementation of certain provisions of the Labor Code regarding working hours and rest periods.

If overtime work is arranged for compensatory rest, the enterprise only needs to pay the difference of 50% of the actual hourly wage for regular days; 100%, for weekly rest days; and 200%, for holidays and rest days with full pay.

Example 1. The actual monthly wage and other income of Mr. A (working under normal working conditions with the actual number of working days equal to the number of working days chosen by the enterprise, which is 24 days/month) is 1,013,600 VND (including bonus of 150,000 VND; additional wage for night shifts of 57,600 VND; midday meal allowance of 180,000 VND; travel support of 50,000 VND):

- The actual monthly wage (including basic wage and wage allowances) is:

1,013,600 VND - (150,000 VND + 57,600 VND + 180,000 VND + 50,000 VND) = 576,000 VND.

- The actual hourly wage is:

576,000 VND ÷ (24 days × 8 hours) = 3,000 VND.

- The overtime wage for 1 hour on a regular day is:

3,000 VND × 150% × 1 hour = 4,500 VND.

If Mr. A is arranged for compensatory rest for overtime work, the enterprise only needs to pay the difference compared to his current job wage, for 1 hour: 1,500 VND (4,500 VND - 3,000 VND).

Example 2. The actual hourly wage of Mr. A as in Example 1, if he works 1 hour on a weekly rest day, he will be paid 6,000 VND (3,000 VND × 200% × 1 hour). If Mr. A is arranged for compensatory rest for overtime work, the enterprise only needs to pay the difference compared to his current job wage on a regular day, for 1 hour: 3,000 VND (6,000 VND - 3,000 VND);

Example 3. The actual hourly wage of Mr. A as in Example 1, if he works 1 hour on a holiday or rest day with full pay, he will be paid 9,000 VND (3,000 VND × 300% × 1 hour). If Mr. A is arranged for compensatory rest for overtime work, the enterprise only needs to pay the difference compared to his current job wage on a regular day, for 1 hour: 6,000 VND (9,000 VND - 3,000 VND).

b) For piece-rate workers, if outside standard hours, the enterprise requires additional production volume or workload beyond the quota or unexpected work not included in the annual production and business plan, and the enterprise needs to work overtime, then the unit price of wages for additional products or work is paid at 150% of the unit price of wages for products produced within standard hours, if working overtime on regular days; 200%, if working overtime on weekly rest days; and 300%, if working overtime on holidays or rest days with full pay.

Example 4. The unit price of product B produced within standard hours is 1,000 VND/unit. If the enterprise requires additional production beyond the quota and standard hours, the unit price of wages for additional products is paid as follows:

- 1,500 VND/unit, if the product is produced on a regular day (1,000 VND × 150%);

- 2,000 VND/unit, if the product is produced on a weekly rest day (1,000 VND × 200%);

- 3,000 VND/unit, if the product is produced on a holiday or rest day with full pay (1,000 VND × 300%).

3/ Night shift wage payment:

The wage of employees working night shifts according to Clause 4, Article 10, Decree No. 114/2002/NĐ-CP is specified as follows:

a) For time-based wage earners, if they work night shifts, the enterprise must pay night shift wages calculated as follows:

Where:

- The actual hourly wage is calculated as stated in point a, item 2 above;

- Level 130% includes the actual hourly wage for daytime work and 30% of the actual hourly wage for nighttime work;

- The nighttime working hours, as stipulated in Article 6 of Decree No. 195/CP dated December 31, 1994 of the Government, are from 10 PM of the previous day to 6 AM of the following day for provinces and cities north of Thua Thien-Hue; from 9 PM of the previous day to 5 AM of the following day for provinces and cities south of Da Nang.

Example 5. If the actual wage for one hour of daytime work is 2,000 dong, then if the worker works at night, the actual wage for one hour of nighttime work will be:

2,000 dong x 130% x 1 hour = 2,600 dong.

b) For workers paid by piece rate:

Example 6. If the unit price of wages for product C made during standard daytime hours is 1,000 dong, then the unit price of wages for that product when made during nighttime is 1,300 dong (1,000 dong x 130%), and this is based on the quantity of products made during nighttime to pay wages according to actual performance.

c) In cases where workers work overtime during nighttime, the overtime wage is calculated as follows:

- For workers paid by time:

Example 7. A worker working one hour during nighttime receives 2,600 dong (Example 5). If they work overtime during nighttime on a regular day, one hour would be paid as:

2,600 dong x 150% x 1 hour = 3,900 dong.

- For workers paid by piece rate:

Example 8. If the unit price of wages for product C made during nighttime is 1,300 dong (Example 6), then if product C is made during nighttime overtime on a regular day, the unit price of wages paid would be:

1,300 dong x 150% = 1,950 dong.

d) Overtime wages and nighttime work wages as specified in points 2 and 3 above are taken from the annual wage fund corresponding to the production and business plan. In cases where new quantities or volumes of work arise that were not included in the planned annual wage fund, enterprises need to supplement these overtime and nighttime work wages into the enterprise's wage fund and account them into cost or circulation fees.

The overtime wage rate of 150%, 200%, or 300%, and the nighttime work wage rate of 130% as specified in points 2 and 3 above are mandatory rates that enterprises must pay for overtime and nighttime work, while higher rates are subject to negotiation between employers and employees.

4/ Wage regulations:

According to Clause 4, Article 5 of Decree No. 114/2002/NĐ-CP, enterprises base their wage regulations on production and business indicators, unit wage prices, and actual wage funds to establish wage regulations for workers that ensure linking wages with productivity, quality, and business efficiency of each unit, department, and individual worker, encouraging talent, and opposing egalitarianism. Enterprises base their wage regulations on the guidance provided in Circular No. 4320/LDTBXH-TL dated December 29, 1998 of the Ministry of Labor, Invalids, and Social Affairs to apply within the enterprise.

VI. WAGE INCREMENT SYSTEM.

1/ Wage increment system:

The wage increment system as stipulated in Clause 2, Article 6 of Decree No. 114/2002/NĐ-CP is detailed as follows:

a) Annually, based on job requirements, production and business conditions, after consulting the opinions of the grassroots trade union committee, enterprises develop plans and organize wage increments for workers employed in the enterprise.

b) Criteria for wage increments for direct production and business workers are technical grade standards corresponding to the job undertaken; for professional and administrative staff, it is professional and administrative staff standards and years of service in the enterprise.

c) Conditions for annual wage increment review:

- Consistently completing assigned tasks in terms of quantity and quality as stipulated in the signed labor contract;

- Not during the period of disciplinary action under the Labor Code and the enterprise's internal labor regulations;

- For professional and administrative staff, having held the current wage grade in the enterprise for at least two years (24 months) for grades with an initial salary coefficient lower than 1.78, and at least three years (36 months) for grades with an initial salary coefficient of 1.78 or higher; for direct production and business workers, achieving results in technical grade examinations corresponding to the job undertaken.

d) Cases eligible for early wage increments and shortened wage increment periods:

During the period of holding the current grade as specified in sub-item c, if workers win awards in national or international professional and technical competitions organized by the enterprise or achieve the title of National Model Worker as stipulated in Decree No. 56/1998/NĐ-CP dated July 30, 1998 of the Government, they may be eligible for early wage increments as follows:

- Winners of first and second prizes in international competitions are eligible for two early wage increments;

- Winners of first prizes in national competitions and third prizes in international competitions, and those who achieve the title of National Model Worker as stipulated in Decree No. 56/1998/NĐ-CP dated July 30, 1998 of the Government, are eligible for one early wage increment;

- Winners of second prizes in national competitions can have their wage increment review period shortened by two-thirds;

- Winners of third prizes in national competitions can have their wage increment review period shortened by up to half.

The specific early wage increments and shortened wage increment review periods for workers are decided by the enterprise after consulting the opinions of the grassroots trade union committee.

e) Cases eligible for extended wage increment review periods:

During the period of holding the current grade, if workers are disciplined under point b, Clause 1, Article 84 of the Labor Code, the wage increment review period can be extended by no more than six months.

f) The enterprise must establish a Board to organize salary grade increases according to the plan. The Board consists of the enterprise's General Director, some members selected by the General Director, and a representative of the grassroots trade union committee.

The salary grade increase Board is responsible for announcing the salary grade increase plan; organizing examinations for direct production and business workers; reviewing annual salary grade increases for professional and technical staff.

g) The salary grade increase system for employees must be reflected in labor contracts and collective labor agreements.

2/ The salary rank increase system:

Annually, based on management requirements, the enterprise's salary grade increase Board is responsible for organizing examinations for professional and technical staff to increase their salary ranks according to Circular No. 04/1998/TT-BLDTBXH dated April 4, 1998, issued by the Ministry of Labor, Invalids and Social Affairs guiding the establishment of standards and examinations for increasing salary ranks of professional and technical staff in state-owned enterprises.

VII. IMPLEMENTATION ORGANIZATION

1/ The enterprise is responsible for:

- Evaluating and reviewing to develop and promulgate standards, quotas, and regulations applicable within the enterprise including:

+ Technical worker grade standards; job titles, professional and technical staff standards;

+ Labor quotas;

+ Salary and bonus payment regulations;

+ Regulations on salary grade and rank increases;

- Reviewing, amending, and supplementing internal labor rules, collective labor agreements, and labor contracts to align with the aforementioned provisions;

- Directly disseminating promptly to employees national policies and systems regarding labor, salaries, income; enterprise regulations concerning technical worker grade standards; job titles, professional and technical staff standards; labor quotas; salary and bonus payment regulations; regulations on salary grade and rank increases;

- Strengthening the labor and salary administration machinery and staff in the enterprise to ensure full compliance with labor laws.

2/ Ministries, ministerial-level agencies, agencies under the Government, People's Committees of provinces and centrally governed cities shall instruct relevant agencies to be responsible for:

- Guiding enterprises under their management to implement national policies and systems regarding labor, salaries, income;

- Inspecting and auditing the implementation of policies and systems for employees in enterprises under their management.

VIII. IMPLEMENTATION PROVISIONS

This Circular takes effect fifteen days after its publication in the Official Gazette.

Repeal Circular No. 10/LĐTBXH-TT dated April 19, 1995, guiding certain provisions of Decree No. 197/CP dated December 31, 1994, of the Government on salaries and Circular No. 05/LĐTBXH-TT dated March 22, 1995, guiding salary grade increases for workers and staff in enterprises under the Ministry of Labor, Invalids and Social Affairs.