JOINT CIRCULAR No. 12/LB-TT Circular guiding the transition from old salary scales to new ones for workers and officials in enterprises.

CIRCULAR

JOINT MINISTRY OF LABOR - INVALIDS AND SOCIAL AFFAIRS - FINANCE
d.1. Amount of taxable income in Vietnam:Implementing Decree No. 26/CP dated May 23, 1993 of the Government on the temporary regulations for the new wage system in enterprises, the Joint Ministry of Labor - Invalids and Social Affairs - Finance guides the implementation of enterprise ranking.
The purpose and requirements of enterprise ranking are:

 

I. OBJECTIVES AND REQUIREMENTS

- To rank position salaries for managerial staff in enterprises;

- To determine the level of position allowances for staff holding positions such as department heads, deputy department heads, and equivalent positions or lower.

- To reasonably arrange and utilize specialized and vocational staff based on the state-prescribed salary scale.

II. SCOPE AND APPLICABLE ENTITIES

Enterprises and units established by competent authorities of the State and granted operating licenses or temporarily allowed to operate include:

1. State-owned enterprises established according to Decree No. 388/HĐBT dated November 20, 1991 on the issuance of regulations for establishing and dissolving state-owned enterprises.

2. Economic service units operating under economic accounting mechanisms.

3. Enterprises belonging to other economic sectors.

III. PRINCIPLES FOR RANKING

1. Enterprise ranking is determined based on two groups of criteria: the complexity of management and the effectiveness of production and business operations, regardless of the economic and technical sector, type of production and business, and organizational level.

2. The ranking of enterprises includes one special category and four categories numbered from I to IV. Within the same ministry, industry, or locality, it is not necessary to have all categories of enterprises.

3. Enterprises ranked in the special category do not need to establish ranking criteria. The principal ministry proposes to the Ministry of Labor - Invalids and Social Affairs - Ministry of Finance for approval by the Prime Minister.

4. For enterprises ranked in Category I, the principal ministry proposes, after consensus with the Ministry of Finance, the decision is made by the Ministry of Labor - Invalids and Social Affairs.

5. Other enterprises (from Category II downwards) are decided by the principal ministry or provincial People's Committee.

Subordinate units of enterprises that require ranking will be guided by the principal ministry, applying the category of the enterprise from Category II downwards and must be lower than the category of the enterprise.

The review period for changing the enterprise category is three years, and the分级审批按照上述第3、4、5点的规定进行。

IV. CRITERIA FOR RANKING

The ranking criteria (Categories I to IV) and the weight of each group of criteria are specified as follows:

1. Management complexity accounts for 40%-45% of the total points, including specific criteria:

a. Production and business capital: This criterion must ensure at least 20% of the total points, determined according to two standards:

- Total capital assigned up to December 31, 1992, which is the current capital belonging to budgetary sources and self-supplemented sources. In cases where the enterprise has not been assigned capital by the State, the approved settlement figures of 1992 are taken.

- The proportion of capital participating in the production and business process.

b. Production technology level is evaluated at three levels: Manual, mechanical, semi-automatic; for business, it is the variety of goods traded.

c. Scope of operation is divided into three levels:

- Narrow (operating within the province, region).

- Medium (operating nationwide).

- Wide (operating both domestically and internationally).

Or consider the management hierarchy based on the number of subordinate units.

d. Number of employees calculated based on the number of regular employees on the payroll of the entire enterprise (excluding contractual employees).

2. Business production and operation effectiveness accounts for 55%-60% of the total points, including specific criteria:

a. Revenue realization: Includes revenue from product sales and main and auxiliary service businesses, calculated in Vietnamese currency as stipulated in the Law on Income Tax and Circular No. 351/HĐBT dated October 2, 1990 detailing the implementation of the Law on Income Tax.

b. Fulfillment of obligations to the State: This criterion must ensure at least 20% of the total points, including: tax payments (basic depreciation taxes, other payments as prescribed by the State).

c. Profit realization: Is the profit obtained by the enterprise after fulfilling its obligations to the State (excluding income tax).

d. Profit realization rate over assigned capital.

The business production and operation effectiveness criteria are based on the settled figures of the reporting year and the implementation of the planning year, up to the time of enterprise ranking application, with reference to the results of the previous two years.

For the time being in 1993, the settled figures of 1992 and the implementation of the 1993 plan up to the time of enterprise ranking are taken, with cross-referencing and reviewing the situation of the years 1990 and 1991.

Based on the above two groups of criteria, ministries and industries managing economic and technical sectors develop ranking standards for their respective economic and technical sectors for uniform application nationwide, and may adjust some criteria according to specific conditions.

V. STEPS TO CONSTRUCT
RANKING STANDARDS

1. Classify and select criteria

- Ministries and industries conduct statistics and classification of enterprises under their management according to economic and technical sectors.

- Based on their administrative functions according to the sector, select appropriate criteria suitable for enterprises in the economic and technical sector to build ranking standards.

Example: The Machinery Industry selects the following criteria:

- Capital;

- Production technology level;

- Management hierarchy.

The Commerce Industry selects the following criteria:

- Capital;

- Types of goods traded;

- Scope of operation;

- Statistics of actual performance corresponding to the ranking criteria of enterprises.

2. Determine the weight of points and points for each criterion.

- Determining the weight of points and the number of points for each criterion is regulated by the principal ministry or industry, consistent with the characteristics of the economic and technical sector, ensuring reasonable correlation in enterprise ranking.

- The maximum total points for the two groups of criteria is set at 100 points.

- For criteria that need to be divided into multiple levels (such as the production and business technology level criterion), the weight of points and points for each specific level must be determined.

Example: Determining the weight and points for each criterion for enterprises in the mechanical industry may be as follows:

3. Determining the Scale of Points for Each Specific Criterion and the Standard Scoring Table for Ranking.

a. Determining the Scale of Points for Each Specific Criterion: The scale of points for four categories is determined based on the maximum of each criterion.

Example: The scoring scale according to the criteria for enterprises in the Mechanical Industry:

b. Standard Scoring Table for Ranking Enterprises

This table is compiled based on the scales of points for specific criteria established above.

Example: Standard Scoring Table for Ranking Enterprises in the Mechanical Industry:

According to the above scoring table, enterprises with less than 20 points will not be ranked. Depending on specific conditions, ministries and sectors in charge will determine salaries for General Directors according to the principle that they should not exceed the salary level of Deputy General Directors of Grade IV.

VI. IMPLEMENTATION

1. The Minister managing the economic and technical sector shall uniformly issue enterprise ranking standards after reaching an agreement with the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance.

2. Based on the issued enterprise ranking standards, ministries and local sectors shall rank enterprises under their management and compile the ranking results of enterprises by economic and technical sector to report to the joint ministries at year-end.

- For Class I enterprises, the proposal is made by the main managing ministry, sector, or locality, and after consensus with the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs, it is decided.

- For Class I enterprises, the proposal is made by the main managing ministry, sector, or locality, and submitted to the joint ministries of Labor, Invalids and Social Affairs and Finance for review, then reported to the Prime Minister for decision.

The content of the proposal for ranking Class I and Special Class enterprises includes:

- Analysis of the characteristics and business operation situation of the enterprise (data from three years).

- Evaluation of ranking criteria, clearly stating the position of the enterprise and the specific points of each criterion. For the Special Class, there is no need to evaluate ranking criteria.

- The proposed enterprise class.

3. While waiting for the enterprise ranking, management officials of the enterprise (including the Chief Accountant) temporarily receive salaries according to the 1/4/1993 system. For heads of departments and equivalent positions, temporary leadership position allowances are not applied. After the enterprise ranking, the difference in leadership position salary and allowance compared to the received salary will be backpaid from 1/4/1993.

After the ranking, for the Chief Accountant who has been appointed in accordance with Circular No. 64 TT/LB dated December 12, 1990 of the joint ministries of Finance and Labor, Invalids and Social Affairs, the salary will be equivalent to that of a Deputy General Director. In cases where the appointment does not comply with the provisions of the aforementioned circular, the salary will be for professional duties and leadership position allowance according to the enterprise class like a Department Head.

4. For higher-level enterprises that do not implement ranking, the joint ministries of Labor, Invalids and Social Affairs and Finance together with the main managing ministry will base on specific circumstances to adjust the salary for management officials.

This Circular takes effect from April 1, 1993. Previous regulations on ranking workshops, industrial associations, companies, and corporations are abolished.

During implementation, if there are difficulties, ministries, sectors, and localities are requested to reflect them to the joint ministries of Labor, Invalids and Social Affairs and Finance for consideration and resolution.