JOINT CIRCULAR No. 16-TT-LB guiding the implementation of Decision No. 317-CT dated September 1, 1990 of the Chairman of the Council of Ministers on improving the management of salaries and bonuses in state-owned economic units.

JOINT CIRCULAR

OF THE MINISTRY OF LABOR - INVALIDS AND SOCIAL AFFAIRS - FINANCE NUMBER 16-TT-LB DATED NOVEMBER 5, 1990 GUIDING THE IMPLEMENTATION OF RESOLUTION NUMBER 317-CT DATED SEPTEMBER 1, 1990 OF THE CHAIRMAN OF THE STATE COUNCIL OF MINISTERS ON CORRECTING MANAGEMENT OF WAGES AND BONUSES IN STATE OWNED ENTERPRISES

Implementing Decision No. 317-CT dated September 1, 1990 of the Chairman of the State Council of Ministers on correcting management of wages and bonuses in state-owned enterprises, the Ministry of Labor - Invalids and Social Affairs and the Ministry of Finance provide guidance as follows:

1- Combating counterfeit goods is the responsibility of all ministries, sectors, People's Committees at all levels, political and social organizations, enterprises, business households, and the entire population.

1. All products and services must have labor norms and wage rates. The wage rate for major products shall be established by the unit and decided upon by the competent authority according to the level of authority delegated. For remaining products, by-products, and new products, the unit shall decide but must register with the state management agency for supervision and register with the bank to create cash flow for paying wages to workers and staff. Actual wages will depend on the production and business results of the unit.

2. The wage rate for products shall be determined based on economic and technical norms that have been identified as advanced and reasonable (the method for establishing labor norms for product units is guided in Circular No. 26-TT of the Ministry of Labor) and calculated according to the wage system prescribed by the State in Decree No. 235-HĐBT dated August 19, 1985 and Decision No. 202-HĐBT dated December 18, 1988 of the State Council of Ministers.

3. When there are changes in labor norms, wage systems, and various types of wage supplements, production conditions, working conditions, product quality, and product structure, the wage rate shall be reassessed.

4. The wage rate shall be adjusted according to fluctuations in market prices during each period.

5. The bonus fund of the unit shall be extracted from profits after fulfilling tax obligations and within the limits set by the State.

6. The wages and bonuses of the unit director must be based on production and business efficiency and shall not exceed three times the average wages and bonuses of workers and staff in the unit.

II. METHODS FOR DETERMINING WAGE RATES

1. The wage rate is calculated based on the wage cost of the product unit.

The wage cost of the product unit equals the total wage rate paid per product plus the total time-based wages and position-based wages of managerial personnel after adding the additional coefficients mentioned in point d to the wage supplements already calculated in points a, b, and c below.

Specifically:

a) Calculate the total wage rate paid per product at each work station or process stage in the production technology of the product (individual or team) including the following parameters:

+ Wage level according to job grade (normal wage or hazardous wage), special hazardous wage depending on the job.

+ Labor norm (output norm, time norm).

+ Coefficients of various types of wage supplements (depending on the job, target group, and degree of benefit according to State regulations) calculated on the basis of job grade wages, hazardous wage supplements, difficult and dangerous wage supplements, mobility wage supplements, night shift wage supplements, and price adjustment coefficients of quantified items in the minimum wage announced by the State Council of Ministers or by the Ministry of Labor - Invalids and Social Affairs (if authorized) for each period after consultation with relevant agencies such as the General Statistics Office, National Price Control Committee, Ministry of Finance, etc. For the immediate future, the price adjustment coefficient in the fourth quarter of 1990 is 50% (including electricity or oil lighting subsidies).

b) Calculate the total time-based wages for main and auxiliary workers at other stages in the production technology chain of the product unit where it is not possible to pay wages per product, including the following parameters:

+ The wage level according to job grade for each worker at each work stage;

+ The number of hours worked at each work stage;

+ Coefficients of various types of wage supplements as mentioned in point a above.

c) Calculate the position-based wages of managerial personnel including the following parameters:

+ Average position-based wage for all managerial personnel;

+ Management labor norm;

+ Coefficients of various types of wage supplements as mentioned in point a above.

d) Calculate the total of common additional coefficients:

+ Coefficients of various types of wage supplements not included in the product wage rate for workers, relatively stable wages for certain groups over time and varying degrees of benefit among individuals, calculated based on the comparison of the total amount of supplements (special seniority supplement, seniority supplement exceeding the limit, responsibility supplement attracting people to production bases) with the total job grade wage fund of the unit;

+ Coefficients of wages paid to workers during non-production or work periods but entitled to benefits under current regulations, calculated based on the comparison of the total amount of wages payable for the number of people and days entitled to benefits with the total job grade wage fund of the unit, including annual leave, personal leave with pay, maternity leave, menstrual hygiene leave, leave for meetings, and study.

2. The wage rate is calculated as a percentage of wages to total revenue.

The percentage of wages to total revenue is calculated using the formula:

Ktl = Vtl (1)

Ktl (1)

of revenue

Where: - Vtl is the wage fund of the unit.

a) In cases where the unit implements a product-based wage system, Vtl is the product wage fund and is calculated using the formula.

Vtl = ồvi. Qi

+ Vi is the wage rate for the product unit or service type i.

+ Qi is the output of product (or service) i for the planned period (compared with the previous actual period).

b) In cases where the unit applies staffing norms, Vtl is the staffing-based wage fund and is equal to the total number of reasonably staffed personnel (after the results of labor restructuring according to Decision No. 176-HĐBT dated October 9, 1989 of the State Council of Ministers) multiplied by the average wage according to the system (including the coefficients mentioned in point a of Section I of this circular if applicable).

- Revenue. It includes revenue from the sale of goods, business operations, primary and secondary services (if received in foreign currency, it shall be converted to Vietnamese currency at the exchange rate published by the bank) calculated according to the formula:

Revenue = Σ Qi Znni

+ Qi is the quantity of product (or service) type i.

+ Znni is the consumption price of product i determined by the State at the time of calculation (if the product is priced by the State). For products priced by the enterprise, Znni is the actual selling price or the agreed price with customers recorded in the contract at that time.

3- Hourly wage rate calculated as a percentage of revenue based on production and business results:

Calculated according to the formula:

Vtl, Revenue as explained in formula (1)

(2)

Revenue - Expenses (excluding wages).

Where:

- Vtl, Revenue as explained in formula (1)

- Expenses: Includes all reasonable expenses according to standards and current policies of the State, including taxes payable to the budget as prescribed and accounted for in cost, such as resource tax, capital tax, etc. (if applicable) plus other taxes payable to the budget such as income tax, special consumption tax, etc. (excluding profit tax).

For unstable products or services with many types and fluctuating prices, wages are determined based on production and business efficiency and not based on revenue.

III- BONUS

- The source of bonus funds is the remaining profit of the unit after fulfilling its obligations to pay taxes to the State budget, setting up development production funds and welfare funds according to current State regulations. The maximum bonus fund shall not exceed 50% of the actual wage fund of the unit.

- In addition to bonuses from the remaining profits of the unit, no other sources may be used to pay bonuses to workers and staff. Bonus systems such as savings bonuses, quality bonuses, innovation bonuses, etc., shall be implemented according to current State regulations.

- Based on State policies on wages and bonuses, the production and business results of the unit, the director of the enterprise shall establish wage and bonus regulations ensuring income distribution to each worker according to production and business efficiency, product quality, and labor productivity. The regulation must be approved by the Workers' Congress or the Enterprise Council and sent to higher management authorities, relevant labor and finance agencies for review before implementation, while serving as the basis for exercising management rights in the field of wages and bonuses. The director shall not arbitrarily pay wages or bonuses contrary to the regulations. The wage and bonus payment system serves as a legal basis for the State and workers to monitor the implementation of wage and bonus work by the director in the unit.

- Units that operate effectively and make profits (after accounting for all costs), fulfill their obligations to pay the State budget according to current regulations (including social insurance contributions), if there are legitimate and reasonable sources, may pilot internal distribution according to a multiple of new wage rates after the proposal for expanding the wage multiple is reviewed and approved by the Ministry of Labor, Invalids and Social Affairs, the main department, with the agreement of the Ministry of Finance.

IV- WAGES OF THE DIRECTOR

- The position salary of the director is decided by the competent authority in accordance with the enterprise classification standards and the wage scale stipulated in Decree No. 235-HĐBT dated August 19, 1985 of the Council of Ministers.

- The director's wages and bonuses are considered by the Enterprise Council (or the Workers' Congress) and proposed to the higher management authority for approval based on the completion of the obligation to preserve capital and the effectiveness of production and business operations of the unit. The total wages and bonuses shall not exceed three times the average actual wages and bonuses of cadres, workers, and staff in the unit at the same time.

V. IMPLEMENTATION

1- The director of a production and business unit is responsible for directing, establishing, and perfecting a reasonable quota system, calculating the hourly wage rate for products (or the ratio of wages to revenue or production and business results) for all products and services produced at the unit, and submitting them to the competent authority for examination and decision (submission documents according to form 2, 4, 5 or registering with the State management agency according to the following

- The Ministry of Labor, Invalids and Social Affairs together with the Ministry of Finance, the State Price Commission, and the main department organize the examination and decision on the wage cost of products (or the ratio (%) of wages to revenue or production and business results) for products and services regulated by the State, monopoly products, and important economic services (for now, the list of products and services is attached in Appendix Table 6). For other products whose pricing has been delegated, they have the right to suspend implementation and require the establishment of a new price if deemed unreasonable.

- The Minister of the main department and the People's Committees of provinces, cities, and centrally-administered municipalities. Based on the characteristics of production and business operations of units and management requirements, they decide on the wage cost for submission for approval; organize the examination and decision on the wage cost of products or the ratio (%) of wages to revenue or production and business results for traditional, relatively stable products or services under their management (each ministry, sector, and province/city will specify these types of products and services).

- For the remaining products or services, the ratio (%) of wages to revenue or production and business results is decided by the director after approval by the Workers' Congress (or the Enterprise Council). Specific wage cost indicators are chosen by the unit in line with its actual production and business conditions and according to guidance from higher management authorities (if applicable). The unit is responsible for registering with the main department or the People's Committees of provinces, cities, and centrally-administered municipalities according to the management hierarchy, and sending copies to the finance-labor-invalids and social affairs agencies for consolidation and monitoring.

2- On the basis of this Circular, ministries, sectors, provinces, cities, and special administrative regions shall organize specific guidance for production and business units in their respective fields and localities according to their own characteristics.

3- Labor - War Invalids and Social Affairs agencies and financial agencies must regularly monitor and analyze the effectiveness of this work, attaching importance to improving working methods so as to respect the autonomy of production and business establishments while effectively performing state management functions.

4- Every six months and annually, agencies of ministries and localities shall report to the Ministry of Labor - War Invalids and Social Affairs and the Ministry of Finance on the wage and bonus situation of units under their ministries and localities for reporting to the Council of Ministers.

5- This Circular shall take effect from September 1, 1990, replacing corresponding points in previous documents issued by ministries, sectors, and localities that are inconsistent with this Circular.

During the implementation of this Circular, production and business establishments encountering difficulties shall contact the Labor - War Invalids and Social Affairs - Financial agencies for resolution.

If necessary, the Ministry of Labor - War Invalids and Social Affairs and the Ministry of Finance will issue additional guiding documents on specific points within their respective functions.