JOINT CIRCULAR No. 15/LB-TT GUIDING THE SPECIAL RANKING FOR STATE OWNED ENTERPRISES AND SALARY GRADING FOR MANAGEMENT STAFF OF SUCH ENTERPRISES

JOINT CIRCULAR

OF THE MINISTRY OF LABOR - INVALIDS AND SOCIAL AFFAIRS - FINANCE NO. 15/LB-TT, JUNE 25, 1996 ON GUIDELINES FOR SPECIAL RATING OF STATE ENTERPRISES AND SALARIES FOR MANAGEMENT STAFF OF STATE ENTERPRISES RATED AS SPECIAL

Implementing Decree No. 26/CP dated May 23, 1993 of the Government on the temporary wage system in enterprises and Decision No. 185/TTg dated March 28, 1996 of the Prime Minister on special state enterprises, after exchanging opinions with relevant ministries and sectors, the Joint Ministry of Labor - Invalids and Social Affairs - Finance guides the special rating for state enterprises and salary setting for management staff of state enterprises rated as special as follows:

I. SPECIAL RATING FOR STATE ENTERPRISES

1- Conditions:

State enterprises eligible for special rating must meet one of the following three conditions:

a. State corporations established according to Decision No. 91/TTg dated March 7, 1994 of the Prime Minister on piloting the establishment of business groups;

b. State corporations established according to Decision No. 90/TTg dated March 7, 1994 of the Prime Minister on further restructuring state enterprises, having a statutory capital of 500 billion Vietnamese dong or more;

c. Independent state enterprises must satisfy all three conditions:

- Playing a significant role in the national economy;

- Having a statutory capital of 500 billion Vietnamese dong or more;

- The position of General Director appointed by the Prime Minister.

2- Format of application dossier for special rating:

Based on the conditions set out in Point 1, Section I, relevant ministries, sectors, provincial People's Committees, and municipal People's Committees directly under the central government shall conduct reviews and prepare dossiers to be submitted to the Joint Ministry of Labor - Invalids and Social Affairs - Finance for examination, which will then be reported to the Prime Minister for decision.

The procedures and dossier requirements are specified as follows:

a. For state corporations established according to Decision No. 91/TTg dated March 7, 1994 of the Prime Minister: when there is a Government Decision, it is not necessary to prepare a dossier but only to submit the establishment Decision to the Joint Ministry for reporting to the Prime Minister for special rating.

b. For state corporations established according to Decision No. 90/TTg dated March 7, 1994 of the Prime Minister and independent state enterprises:

- A letter of request from the ministry, sector, or provincial/municipal People's Committee directly under the central government sent to the Joint Ministry;

- The decree or decision establishing the enterprise, and the decree or decision approving the charter and operation regulations of the enterprise;

- The enterprise's operating capital (including fixed assets and working capital) re-evaluated according to Decision No. 1104 TC/TCDN dated October 17, 1995 of the Ministry of Finance on inspecting and reassessing capital and state assets at enterprises, and confirmed in writing by the system of the General Department for State Capital and Asset Management at Enterprises.

For independent state enterprises, the dossier should also include a detailed explanation of the enterprise's significant role in the national economy, reflected in the following aspects:

+ The enterprise's role in national economic and social development, stabilizing social life, ensuring national security and defense;

+ Scope and scale of the enterprise's operations (operating area; domestic and international scope);

+ Business efficiency: revenue, profit, tax payment...;

+ Employment and income of workers;

+ The Prime Minister's decision appointing the General Director.

The financial indicators mentioned above are calculated up to the time of submitting the application dossier and must be confirmed by the state capital and asset management agency at the enterprise.

II. TRANSFER AND SETTING OF SALARIES AND POSITION ALLOWANCES FOR MANAGEMENT STAFF OF STATE ENTERPRISES ALREADY RATED AS SPECIAL:

1- General principles:

- Management staff holding positions such as General Director, Deputy General Director, Chief Accountant shall be assigned salaries corresponding to their positions according to the management staff salary table prescribed in Decree No. 26/CP dated May 23, 1993 of the Government.

- Staff holding positions such as Head of Department, Deputy Head of Department, or equivalent shall be assigned professional and technical salaries and position allowances according to the special enterprise leadership position allowance table prescribed in Decree No. 26/CP dated May 23, 1993 of the Government.

- When ceasing to hold a position, they shall not receive salaries or position allowances of special enterprises and shall receive salaries and position allowances according to the work and position they undertake; they shall not retain the salary or position allowance level of special enterprises as a basis for transferring to another equivalent salary level.

2- Transfer and setting of salaries for General Directors, Deputy General Directors, and Chief Accountants:

When an enterprise has a decision of the Prime Minister to rate as special, the staff appointed to positions of General Director, Deputy General Director, and Chief Accountant shall be assigned salaries corresponding to their appointed positions according to the management staff salary table as follows:

a. If the current salary grade coefficient or the combined coefficient of professional and technical salary plus position allowance and retained differential coefficient (if any) is lower than the coefficient of the first grade, they shall be transferred to the first grade salary coefficient and the time for the next salary grade review shall be counted from the date of the decision to assign the special enterprise salary grade. In cases where the total salary coefficient (including salary grade coefficient plus position allowance and retained differential coefficient (if any)) currently received is lower than the first grade coefficient, but the difference is less than 70% of the difference between the first and second grade coefficients, the time for the next salary grade review shall be counted from the date of the previous salary assignment.

Example 1: Comrade A is appointed as Deputy General Director with a current salary grade coefficient of 5.15 (Grade 3/4 of Senior Specialist in an enterprise) and a position allowance of 0.5; the total current salary coefficient is 5.65 (5.15 + 0.5), and shall be transferred to Grade 1 corresponding to the Deputy General Director position with a salary coefficient of 6.03. The time for the next salary grade review shall be counted from the date of the decision to assign the Grade 1 salary coefficient of 6.03.

Example 2: Comrade B, formerly the Director of a Class 1 enterprise with a grade 2/2 salary level and a salary coefficient of 6.03 and a retention differential coefficient of 0.46 from June 1994. Upon being appointed as the Director of a State-owned Enterprise of Special Class, he was transferred to a grade 1 salary level specified for the Director position, with a salary coefficient of 6.72. The time for considering the next salary increase will be calculated from June 1994, because [(6.72 - 6.49) / (7.06 - 6.72)] x 100% = 68% < 70%

b. If the position salary coefficient or the professional and vocational salary coefficient plus the position allowance and the retention differential coefficient (if applicable) currently enjoyed equals the grade 1 salary coefficient, then transfer to grade 1 and the time for considering the next salary increase will be calculated from when the previous salary grade decision was made.

Example 3: Comrade C, formerly the Director of a Class I enterprise, with a grade 2/2 salary level and a salary coefficient of 6.03 from May 1995. Now appointed as Deputy General Manager of a State-owned Enterprise of Special Class, he is assigned a grade 1 salary level of the State-owned Enterprise of Special Class, with a salary coefficient of 6.03. The time for considering the next salary increase will be calculated from May 1995.

c. If the position salary coefficient or the professional and vocational salary coefficient plus the position allowance and the retention differential coefficient (if applicable) currently enjoyed is higher than the grade 1 salary coefficient but lower than the grade 2 salary coefficient, then assign to grade 1 and enjoy the retention differential coefficient. The time for considering the next salary increase will be calculated from when the previous salary grade decision was made. When promoted to grade 2, stop enjoying the retention differential coefficient.

Example 4: Comrade H, a Professor at a University, in January 1994 was assigned a salary coefficient of 5.6 (grade 9.9 scale for Associate Professor and Senior Lecturer) and had a position allowance of 0.6; the current total salary coefficient is 6.20 (5.6 + 0.6), now appointed as Deputy General Manager, he is transferred to grade 1, Deputy General Manager position, with a salary coefficient of 6.03 and enjoys a retention differential coefficient of 0.17 (because the current total salary coefficient is 6.2, which is higher than grade 1 Deputy General Manager's salary coefficient of 6.03, but lower than grade 2: 6.34). The time for considering the next salary increase will be calculated from January 1994.

d. If the position salary coefficient or the professional and vocational salary coefficient plus the position allowance and the retention differential coefficient (if applicable) currently enjoyed equals the grade 2 salary coefficient, then transfer to grade 2. In case the current total salary coefficient is higher than the grade 2 salary coefficient, still assign to the grade 2 salary coefficient and enjoy the retention differential coefficient.

Example 5: Comrade D is currently a Department Head with a salary coefficient of 6.67 (grade 6/7 scale for Senior Administrative and Professional Staff) and has a position allowance of 0.8; the current total salary coefficient is 7.47 (6.67 + 0.8), now appointed as General Manager, he is transferred to grade 2, General Manager position, with a salary coefficient of 7.06 and enjoys a retention differential coefficient of 0.31 (7.47 - 7.06).

Example 6: Comrade K is currently assigned a salary coefficient of 5.85 (grade 4/7 scale for Senior Administrative and Professional Staff) and has a position allowance of 0.7; the current total salary coefficient is 6.55 (5.85 + 0.7), now appointed as Deputy General Manager, he is transferred to grade 2, Deputy General Manager position, with a salary coefficient of 6.34 and enjoys a retention differential coefficient of 0.21 (6.55 - 6.34).

3- For the positions of Department Head, Deputy Department Head, and equivalent positions in a State-owned Enterprise of Special Class, the salary is set according to the professional and vocational scale and grade, and enjoy the position allowance issued together with Decree No. 26/CP dated May 23, 1993 of the Government "Provisional Regulations on the New Salary System in Enterprises."

The specific amount of the position allowance is as follows:

- For Department Heads and equivalent positions, the position allowance is 0.6 of the minimum wage.

- For Deputy Department Heads and equivalent positions, the position allowance is 0.5 of the minimum wage.

4- For the positions of Director, Deputy Director, Chief Accountant, Department Head, Deputy Department Head, and equivalent positions in member enterprises of State-owned Enterprises of Special Class, the classification of enterprises and salary assignment shall comply with the provisions of Circular Joint No. 21/LB-TT dated June 17, 1993 of the Joint Ministry of Labor - Invalids and Social Affairs - Finance.

III- IMPLEMENTATION

1- Based on the provisions of this Circular, it is requested that Ministries, sectors, Provincial People's Committees directly under the Central Government prepare files to propose the classification of enterprises as Special Class for State-owned Corporations and independent State-owned Enterprises meeting the prescribed conditions.

2- After being decided by the Prime Minister to classify the enterprise as Special Class, Ministries, sectors, Provincial People's Committees directly under the Central Government shall propose the salary assignment for leadership positions in Special Class enterprises, prepare lists according to the model stipulated in this Circular, and send a letter to the Ministry of Labor - Invalids and Social Affairs for review and agreement. Thereafter, the Ministries, sectors, and Provincial People's Committees directly under the Central Government shall issue decisions on salary assignment according to the current management hierarchy of cadres.

This Circular takes effect from March 28, 1996.

During implementation, if there are any difficulties, it is requested that Ministries, sectors, and localities report them to the Joint Ministry of Labor - Invalids and Social Affairs - Finance for examination and resolution./.