Circular No. 14/1997/TT-LDTBXH of the Ministry of Labor, Invalids and Social Affairs guiding the method for establishing labor norms for state-owned enterprises

CIRCULAR

The Ministry of Labor, Invalids and Social Affairs guides the method for establishing labor norms for state-owned enterprises.

Implementing Article 5 and Article 7 of Decree No. 28/CP dated April 28, 1997 of the Government on reforming salary and income management in state-owned enterprises. The Ministry of Labor - Invalids and Social Affairs guides the method for establishing labor norms for state-owned enterprises as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Labor norms in state-owned enterprises serve as the basis for planning labor, organizing, and utilizing labor in accordance with production technology processes and business tasks of the enterprise; they are also the foundation for establishing unit price of wages and paying wages linked to productivity, quality, and work results of workers.

2. Products and services in state-owned enterprises must have labor norms. When there are changes in production and business technology, labor norms must be adjusted accordingly.

3. Comprehensive labor norms for units of products (including converted products) and comprehensive staffing norms of the enterprise must be formed from basic operation norms (technological operations, service operations) from the staffing norms of each department and managerial labor.

4. When establishing comprehensive labor norms, enterprises must simultaneously determine the degree of labor complexity and the average job grade according to the weighted method.

5. Enterprises must organize the establishment of labor norms for application and registration with competent state authorities as prescribed.

II. OBJECTS AND SCOPE OF APPLICATION

1. Enterprises engaged in production and business activities under the Law on State-Owned Enterprises;

2. Enterprises engaged in public welfare activities under the Law on State-Owned Enterprises, Decree No. 56/CP dated October 2, 1996 of the Government, and Circular No. 01-BKH/DN of the Ministry of Planning and Investment detailing and guiding the implementation (including organizations and units operating in accordance with Decree No. 56/CP and Circular No. 01-BKH/DN mentioned above but without a decision to establish an enterprise);

3. Organizations and units permitted to engage in production and business activities, services belonging to administrative agencies, public institutions, armed forces, Party, mass organizations, and people's associations self-financing;

4. Joint-stock companies having more than 50% of total state capital or contributed by state-owned enterprises according to the Law on Enterprises and Decree No. 28/CP dated May 7, 1996 of the Government.

The above entities are collectively referred to as state-owned enterprises.

III. METHODS FOR ESTABLISHING LABOR NORMS

Based on technology, production process, labor organization, and types of goods produced and traded, enterprises choose one of the following two methods for establishing comprehensive labor norms:

A. METHOD FOR ESTABLISHING COMPREHENSIVE LABOR NORMS FOR UNIT PRODUCTS

This method applies to enterprises producing and trading goods that can be measured in physical units or converted physical units and is established as follows:

1. Principles:

a. The comprehensive labor norm for a unit product must be calculated based on reviewing, inspecting, and determining reasonable labor consumption to perform basic operations (technological operations, service operations).

During the calculation process, it must be based on technical parameters specified for the product, the production process of the product, equipment working conditions, combined with advanced experiences applicable widely, and requirements for adjusting production organization, labor organization, and management.

In cases where industry and inter-industry standards or levels for basic operations are available and consistent with the enterprise's production organization, technology, and process conditions, the comprehensive labor norm for a unit product must be calculated according to those industry or inter-industry standards or levels.

b. The comprehensive labor norm calculated for a unit product must follow the production process of that product (in construction projects, according to the design and construction drawings), without omitting or duplicating any stages of work. Labor consumption for producing by-products, major repairs, and modernization of equipment, major repairs of factories and construction projects, manufacturing and installation of equipment, and other similar works should not be included. These labor consumptions are calculated separately like for a unit product.

2. Calculation Method

a) The structure of comprehensive labor norms for unit products includes:

- Labor consumption level of main workers;

- Labor consumption level of auxiliary and service workers;

- Labor consumption level of managerial workers

The general formula is as follows:

d.1. Amount of taxable income in Vietnam:_sp = T_cn + T_pv + Tql

= T_sx + T_ql

Where:

- T_sp: comprehensive labor norm calculated for one unit product

- T_sx :T_cn + T_pv: production labor norm;

- T_cn : auxiliary and service labor norm (referred to as auxiliary)

- T_ql: managerial labor norm

The unit of measurement for comprehensive labor norms for unit products is hours-person per unit of physical product.

During the establishment of comprehensive labor norms for unit products, when encountering basic operation levels spanning multiple stages with different units of measurement compared to the final product unit, these dimensions must be standardized before calculating the norm for the unit product.

b) The method for establishing comprehensive labor norms for unit products has two approaches as follows:

Approach 1: Establish labor norms from structural components according to the general formula mentioned above, specifically:

- Calculating T_cn: by summing up the standard time (based on technical statistics and experience) of main workers performing basic operations according to the technological process and other tasks (not part of basic operations) to produce that product under determined organizational and technical conditions.

- If a basic operation is performed on various types of machinery and equipment, the weighted average method should be applied to calculate the time level for that basic operation.

- Calculating T_pv: by summing up the standard time for auxiliary labor in auxiliary workshops performing functions to support the production of that product. T_vp is calculated according to the service standard and the volume of service work specified for producing the product, or calculated as a percentage of T_cn, or calculated as a percentage of the auxiliary labor staffing ratio compared to main workers.

- If the enterprise produces multiple types of products, T_pv for each item: according to the level of auxiliary support (if applicable); according to the orders from main workshops (if applicable); according to the proportion of quantity (output, labor technology...) of each item in the total number of items.

Example: A production process has 20 auxiliary workers serving the production of 3 types of products (A, B, C) as follows:

Here, T_vp is allocated according to the proportion T_cn of each product in the total number of products (the proportion T_pv of product A is 520: 1,000 = 0.52; the proportion T_pv of product B is 0.34 and the proportion T_pv of product C is 0.14), therefore T_pv for each unit of product for each type of product is as follows:

8 hours x 20 people x 0.52

d.1. Amount of taxable income in Vietnam:_pv A = = 1.644 hours - person

50

8 hours x 20 people x 0.34

d.1. Amount of taxable income in Vietnam:_pvB = = 0.544 hours - person

100

8 hours x 20 people x 0.14

d.1. Amount of taxable income in Vietnam:_pvC = = 0.028 hours - person

800

- Calculating T_qlincludes the total time of managerial labor including the following subjects:

+ Board of Directors: Supervisory Board and the supporting staff of the Board of Directors (if any)

+ Corporate management officials and administrative machinery;

+ Specialized cadres responsible for Party and mass organizations.

d.1. Amount of taxable income in Vietnam:_ql of the above subjects is calculated based on the staffing quota of each type of subject or calculated according to the ratio (%) compared to the level of production labor (T_sx). The staffing quota or percentage of managerial labor is stipulated by the Ministry, People's Committee of Province, City under Central Government, or the Board of Directors (for enterprises established pursuant to Decision 91/TTg dated March 7, 1994). Specifically, the staffing quota of the Board of Directors, Supervisory Board, and the supporting staff of the Board of Directors is regulated by the charter.

For enterprises with dependent affiliated units, or both dependent and independent accounting units but only establish a combined labor level for the product unit, T_ql is directly included in the combined labor level.

For enterprises with dependent and independent accounting units and different combined labor levels for different products, T_ql is allocated to the affiliated units as prescribed by the Board of Directors (for enterprises with a Board of Directors) or by the enterprise director.

Method 2: Establishing standards based on the number of necessary workers.

Enterprises that have not yet had the conditions to establish labor standards according to method 1 may temporarily establish labor levels based on the number of necessary workers:

After clearly defining production tasks and balanced product plans, determining technical parameters and quantities of each type of product, it is necessary to adjust and improve production organization and labor organization according to advanced experiences for each production line or the entire enterprise. Based on this, calculate the maximum reasonable number of workers needed for each department and the entire enterprise, and convert this to the standard time quota. From there, distribute the total time quota according to the proportion of product volume of each type of item to determine the labor level for each type of product unit.

During the establishment of labor standards according to the two methods mentioned above, in addition to the standards based on the types of time mentioned above, there may be other factors directly affecting labor consumption that cannot be fully anticipated, so in some cases, the time for certain influencing factors can be calculated as adjustment coefficients or called unstable coefficients of the standard. When calculating these adjustment coefficients, it is necessary to clearly explain the influencing factors for calculating such coefficients.

B) METHOD OF ESTABLISHING COMBINED LABOR STANDARDS BASED ON STAFFING QUOTAS (ALSO KNOWN AS STAFFING STANDARDS)

1) Principle: When determining labor quotas based on production and business tasks, labor for producing products unrelated to assigned production and business tasks, major repairs and modernization of equipment, major repairs of factory buildings, construction projects, manufacturing and installation of equipment, and other similar activities shall not be included. Labor costs for these types of work are calculated separately as for individual products.

2) Method:

The method of establishing labor standards based on staffing quotas applies to enterprises that cannot establish labor standards for individual product units. Applying this method requires determining reasonable staffing quotas for each direct and indirect department of the entire enterprise.

The general formula is as follows:

L_db = L_yc + L_pv + L_bs + L_ql

Where:

L_db: is the staffing quota of the enterprise, the unit of measurement is person;

L_yc: is the direct production and business staffing quota;

L_pv : is the auxiliary and service staffing quota;

L_bs : is the supplementary staffing quota to implement rest days and hours according to labor laws for direct, auxiliary, and service workers

L_ql : is the management staffing quota

a) Calculating L_yc :

Is calculated based on the reasonable staffing quota for direct labor for each team, squad, workshop, branch, store, or equivalent organization within the enterprise's affiliated units. The staffing quota of each unit is determined based on the needs, workload, and labor organization, requiring the allocation of labor to meet job requirements and complete the production and business operation process.

b) Calculating L_pv:

Is calculated based on the workload of auxiliary and service activities for production and business, and calculated according to the technological process, thereby determining L_pv based on the staffing quota or ratio (%) compared to the direct labor staffing quota (L_yc)

)._bsc) Calculating L

: Supplementary staffing quota is calculated for two types of enterprises:

- Enterprises that do not operate on all statutory holidays and weekly rest days, the supplementary staffing quota is calculated as follows:

L_bs = (L_yc + L_pv) =

(365 - 60)

Number of statutory holidays and rest days according to labor laws include:

+ The average number of paid leave days per year for each full-time staff member;

+ The average number of paid personal leave days per year for each full-time staff member based on the statistics of the previous year;

+ Reduced working hours for particularly arduous, toxic, and dangerous jobs (converted to days) averaged annually for each full-time staff member;

+ Time for breastfeeding and female hygiene according to regulations (converted to days) averaged annually for each full-time staff member

- Enterprises must operate on holidays, Tet, and weekly rest days. The additional staffing quota shall be calculated as follows:

The method for determining Lql is similar to the method for determining T_ql:

as stipulated at point 2, section A, part III above, except that the unit of measurement for L_ql is person._ql IV. BUILDING AND REGISTERING LABOR STANDARDS

A. RESPONSIBILITIES OF ENTERPRISES

1. Regarding labor organization and wage management:

To fully implement the tasks and requirements of labor standard work, enterprises have the responsibility to consolidate and improve the organizational structure and personnel engaged in general labor and wage management, including labor standard work, ensuring they have the necessary conditions, responsibilities, qualifications, and capabilities to promptly develop labor standards, manage, and apply them according to the guidelines set forth in this circular.

2. Regarding the development of labor standards

The General Director (or Managing Director) of the enterprise is responsible for organizing and directing the development, management, and application of the labor standard system within the enterprise.

For enterprises that already have labor standards, they should adjust their production organization, labor organization, and review existing labor standards to make them appropriate based on the guidance provided in this circular.

To ensure the quality of labor standards before issuance and registration with the competent authority, enterprises must organize the trial application of newly developed or adjusted labor standards in some units, departments, and workers for an appropriate period depending on the complexity of the labor standards or specific conditions of the enterprise. Afterward, they should examine and adjust appropriately before widely implementing throughout the entire production and business chain or the entire enterprise.

- If the actual implemented labor standard is less than 95% of the assigned standard, it must be reviewed and adjusted downward.

- If the actual implemented labor standard exceeds 120% of the assigned standard, it must be reviewed and adjusted upward.

During the process of developing and trial-applying the labor standard system, representatives from the trade union at the same level must participate to ensure the objectivity and reasonableness of the labor standard development.

Annually, enterprises must evaluate the implementation of their labor standard system to continuously improve the quality of labor standards and strengthen labor standard management activities to serve effective production and business operations.

3. Regarding the registration of labor standards

a) For state-owned enterprises generally:

After developing labor standards, the enterprise reports to the Board of Directors (if applicable) or the superior management agency for consideration and registration with the competent authority as specified in section B, part IV below.

b) For enterprises classified as special:

After developing labor standards, the enterprise reports to the Board of Directors or the sectoral management body (for enterprises established under Decision 90/TTg dated March 7, 1994 of the Prime Minister classified as special) for consideration and registration with the Ministry of Labor, Invalids, and Social Affairs.

The registration of labor standards must be completed in the first quarter of the planning year.

4. Documents for registering labor standards include:

a. A letter requesting registration of labor standards;

b. The registered labor standard system and a description of the methods and steps for developing new labor standards if registering new labor standards.

c. The applied labor standard system, proposed adjustments, and a description of the adjustment process if registering adjusted labor standards.

All enterprises must fully register their labor standard systems with the competent authority. If new or adjusted labor standards are developed annually, they must be re-registered for the new or adjusted portions.

B. RESPONSIBILITIES OF STATE MANAGEMENT AUTHORITIES

1. Ministry of Labor, Invalids, and Social Affairs.

a) Accepting the registration of labor standard systems from enterprises classified as special under Decision 185/TTg dated March 28, 1996 of the Prime Minister.

b) Studying and supplementing methods for developing labor standards to suit current realities and the modernization of production and business technology;

c) Inspecting and supervising the development and implementation of labor standards and staffing quotas in enterprises in accordance with labor laws.

2. Sectoral Management Ministries:

a) Accepting the registration of labor standard systems from enterprises under their management;

b) Cooperating with the Ministry of Labor, Invalids, and Social Affairs to accept the registration of labor standard systems from enterprises established under Decision No. 90/TTg dated March 7, 1994 of the Prime Minister classified as special;

c) Summarizing the situation of labor standard registrations from enterprises under their management and reporting to the Ministry of Labor, Invalids, and Social Affairs no later than the second quarter each year;

d) Supervising the development and implementation of labor standards and labor utilization in enterprises under their management within their jurisdiction.

3. People's Committees of provinces and centrally-administered cities direct the Departments of Labor, Invalids, and Social Affairs:

a) Accepting the registration of labor standard systems from enterprises managed locally and joint-stock companies with more than 50% of total capital from the state or contributed by state-owned enterprises on the local territory;

b) Summarizing the situation of labor standard registrations from enterprises under their management and reporting to the Ministry of Labor, Invalids, and Social Affairs no later than the second quarter each year;

d) Inspecting and supervising the development, implementation, and staffing quotas in enterprises in accordance with labor laws.

1. Based on the content of this circular, the Board of Directors (for enterprises with a Board of Directors) and the General Director (Managing Director) of state-owned enterprises should adjust their production and business organizations, labor management, and wage management, develop labor standards, review and adjust the currently applied labor standard system, organize trial applications, supplements, improvements, and register with the competent authority as prescribed.

V. IMPLEMENTATION

1. Pursuant to the guidance contents set forth in this Circular, the Board of Directors (for enterprises with a Board of Directors), the Director (General Director) of state-owned enterprises shall rectify the organizational structure for production and business operations, labor management, and salary administration, undertake the establishment of labor norms, review and adjust the currently applied system of norms, organize trial implementation, supplement, perfect, and register with the competent authority in accordance with the regulations.

As for the year 1997, temporarily, the registration of labor norms at state agencies with competent authority shall not be implemented, but enterprises are required to organize, arrange, and rearrange labor based on reasonable average labor actually used in 1996, production and business plans for 1997, to use labor effectively. Enterprises shall determine the fixed number of employees to establish the unit cost of wages for 1997 in accordance with Circular No. 13/LDTBXH-TT dated April 10, 1975 of the Ministry of Labor - War Invalids and Social Affairs, while immediately carrying out tasks for building a system of labor norms to register at the beginning of 1998 in accordance with this Circular.

2. Ministries managing industries and sectors, provinces and centrally governed cities, departments of labor - war invalids and social affairs shall guide and urge enterprises under their jurisdiction to rectify labor norm work, build and register labor norms as prescribed, organize the acceptance of registrations, and report the situation of labor norm registrations to the Ministry of Labor - War Invalids and Social Affairs.

3. This Circular takes effect from January 1, 1997.

Previous documents that contradict the provisions of this Circular are hereby abolished.

In the course of implementation, if there are any difficulties, ministries, sectors, provincial people's committees, centrally governed city people's committees, and state-owned enterprises are requested to reflect them to the Ministry of Labor - War Invalids and Social Affairs for consideration and resolution.