Decree No. 20/2020/NĐ-CP on Pilot Management of Labor, Wages, and Bonuses for Certain State-Owned Corporations and Companies

THE GOVERNMENT -------	SOCIALIST REPUBLIC OF VIET NAM Independence - Freedom - Happiness ---------------
Number: 20/2020/NĐ-CP	Hanoi, February 17, 2020

DECREE

TRIAL MANAGEMENT OF LABOR, WAGES, AND BONUSES FOR CERTAIN STATE ENTERPRISES

||| Pursuant to the Law on Organization of the Government dated June 19, 2015;

Based on the Labor Code dated June 18, 2012;

Based on the Enterprise Law dated November 26, 2014;

Pursuant to the Law on Management and Use of State Capital for Investment in Business Operations dated November 26, 2014;

Decree No. 07/2021/NĐ-CP

The Government issues this Decree to implement trial management of labor, wages, and bonuses for certain state enterprises.

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates the implementation of trials regarding labor management, wage scale construction; wages and bonuses for workers and General Directors, Deputy General Directors, Chief Accountants; remuneration, fees, and bonuses for Board Members, Management Board Members, Heads of Supervisory Boards, and Supervisors in 2020 at the following groups:

1. The Parent Company - Vietnam Post and Telecommunications Group Corporation.

2. The Parent Company - Vietnam Airlines Joint Stock Corporation.

3. The Parent Company - Vietnam Air Traffic Management Corporation.

The above parent companies are collectively referred to as the company.

Article 2. Applicability

1. Employees as defined by the Labor Code.

2. General Director, Deputy General Director, Chief Accountant.

3. Member of the Board of Members, Board of Management, Head of Supervisory Board, and Supervisor.

4. Representatives of State capital invested in companies, direct owners' representatives, and owner representative bodies as prescribed by the Law on Management and Use of State Capital Invested in Production and Business Activities of Enterprises.

5. Agencies, organizations, and individuals related to the implementation of the provisions of this Decree.

Article 3. Principles of labor management, wages, and bonuses

1. The recruitment policy and labor utilization, wages, and bonuses of the company are decided by the company based on legal regulations and the Charter of the company.

2. Wages and bonuses for workers, General Directors, Deputy General Directors, Chief Accountants, Board Members, Management Board Members, Heads of Supervisory Boards, and Supervisors shall be linked to labor productivity and business efficiency of the company.

3. The State manages labor, wages, fees, and bonuses for companies where the State holds 100% of the charter capital through regulations assigning tasks and responsibilities to owner representative bodies and direct owner representatives within the company; for joint-stock companies, owner representative bodies shall instruct State capital representatives in the company to participate and vote at Management Board meetings and Shareholders' Meetings based on the provisions of this Decree.

Article 4. Exclusion of Objective Factors

Companies must exclude objective factors (if any) directly affecting labor productivity, profits, and profit rates on capital as the basis for determining wages and bonuses according to this Decree, including:

1. State price adjustments (for products and services priced or regulated by the State); corporate income tax incentives; adjustments to mechanisms, policies, or requirements for companies to relocate or reduce production and business sites; increased depreciation to recover capital faster; increases or decreases in charter capital or State investment capital in the company.

2. Companies implementing social welfare tasks, market stabilization, supply-demand balance for the economy as decided by the Prime Minister; expanding production and business activities; investing in new products and services; complying with regulations of competent state agencies, Agreements, Treaties, or recommendations of international organizations to which Vietnam is a member.

3. Market impacts directly on basic input factors of the company; natural disasters, fires, epidemics, wars, and other force majeure causes.

Chapter II

LABOR MANAGEMENT AND WAGE SCALE CONSTRUCTION

Article 5. Labor Management

1. The company must develop a labor plan as the basis for recruiting labor.

2. The labor plan is developed based on the production and business plan, labor levels, organizational structure, and streamlined, rational indirect labor structure.

3. The labor plan must be approved by the Board of Members or the Board of Directors before implementation.

4. Recruitment of labor must be conducted openly and transparently in accordance with the law and the company's recruitment regulations and Articles of Association.

5. In cases where hiring exceeds labor needs, leading to surplus and termination of employment contracts, thereby increasing company costs, the General Director shall bear responsibility (including deductions from wages and bonuses) before the Board of Members or Management Board of the company.

Article 6. Construction of Wage Scales

Based on production organization, labor organization, and operational bylaws, the company establishes and enforces wage scales (including allowances) to implement legal regimes for workers, General Directors, Deputy General Directors, Chief Accountants, Board Members, Management Board Members, Heads of Supervisory Boards, and Supervisors, including:

1. Wage scales for workers.

2. Wage scale for the General Director, Deputy General Director, and Chief Accountant (hereinafter referred to as the Executive Board).

3. Wage scale for specialized members of the Board of Members, Board of Directors, Head of Supervisory Board, and Professional Supervisors.

Chapter III

SALARIES AND BONUSES OF WORKERS AND THE EXECUTIVE BOARD

Article 7. Unit Price of Contracted Salaries

1. Salaries of workers and the Executive Board are contracted based on the unit price of salaries (hereinafter referred to as the contracted unit price) as follows:

a) For the parent company - Vietnam Post and Telecommunications Group, the unit price quota as a percentage of total revenue minus total expenses excluding wages, is determined based on the average unit price of the 2018-2019 period and includes compensation for wage differences for high-tech product workers paid lower than the industry average wage level on the market, as listed in the High-Tech Product List issued by the Prime Minister or relevant ministries.

b) For the parent company - Vietnam Airlines Corporation, the unit price quota based on ton-kilometer performance with revenue, is determined based on the average unit price of the 2018-2019 period and includes compensation for wage differences for Vietnamese pilots paid lower than foreign pilots.

c) For the parent company - Vietnam Air Traffic Management Corporation, the unit price quota based on converted air traffic control kilometers, is determined based on the average unit price of the 2018-2019 period and safety bonuses (if any) calculated for the number of workers expected to be added in 2020 as required by competent state authorities for aviation security purposes.

2. The average unit price of the 2018-2019 period is calculated based on the actual annual wage fund and safety bonus (if any) of workers and the management board divided by the performance index for the unit price quota under Clause 1 of this Article during the 2018-2019 period.

3. When determining the contracted unit price according to Clause 1 of this Article, the company must ensure that the planned pre-tax profit for 2020 is not lower than the average realized profit of the 2018-2019 period.

4. The company decides to temporarily advance up to 85% of the contracted unit price to pay monthly salaries to workers and the Executive Board.

Article 8. Implementation of the wage fund

1. The implemented wage fund is determined based on the unit price quota multiplied by the actual performance index for the unit price quota according to Article 7 of this Decree, ensuring that the average wage increase is lower than the average labor productivity increase and realized profit is not lower than the average realized profit of the 2018-2019 period.

2. For companies with realized profits exceeding the average of the 2018-2019 period, additional amounts can be added to the wage fund (recorded as expenses) according to the principle of adding up to 2% of the wage fund for every 1% increase in profit, but not more than 20% of the excess profit and not more than two months' worth of wages.

3. If realized profits are lower than the average of the 2018-2019 period, the wage fund must be reduced according to one of the two methods chosen by the company: reducing by a percentage or based on the difference in profit value below the average of the 2018-2019 period. The maximum reduction does not exceed two months' worth of wages and ensures that the implemented wage fund is not lower than the wage fund calculated based on the average wage in employment contracts.

4. Based on the actual payroll fund and the advance salary paid to employees, the company determines the remaining payroll fund to be enjoyed. In cases where advances and expenditures exceed the actual payroll fund, repayment must be made from the payroll fund of the following consecutive year.Supplement

Article 9. Bonus Fund

1. Based on the profits realized after fulfilling obligations to the State and shareholders, and setting aside funds according to state regulations on profit distribution, the company may set aside a fund for employee bonuses and welfare benefits, not exceeding three months' actual salary if the realized profit is not lower than the plan; not exceeding three months' actual salary multiplied by the ratio (%) of realized profit compared to planned profit if the realized profit is lower than the plan.

2. Based on the bonus and welfare fund established under Clause 1 of this Article, the company decides to allocate it into a bonus fund and a welfare fund, with the bonus fund being used to reward employees and the Management Board; the welfare fund being used for constructing or repairing welfare facilities, and funding common welfare activities of the company (including Members of the Board of Members, Board of Directors, Head of the Supervisory Board, and Supervisors).

Article 10. Payment of Wages and Bonuses

Employees and the Management Board shall be paid wages and bonuses according to the company's regulations as follows:

1. The regulations on payment of wages and bonuses shall be issued by the Chairman of the Board of Members, the Board of Directors, ensuring democracy, transparency, and participation of the representative organization of the workforce at the workplace.

2. Salaries and bonuses paid to employees are based on job duties or positions and the results of work performance. Salaries and bonuses paid to the Management Board are based on their positions, linked to profits, return on equity, and the results of individual tasks; among which, salaries and bonuses paid to the General Director shall not exceed seven times the average salary and bonuses of employees. For the General Director hired under a labor contract, it shall be implemented according to the agreement in the labor contract.

3. The General Director evaluates and decides the level of salary and bonuses for employees; the Board of Members, Board of Directors evaluate and decide the level of salary and bonuses for the General Director, Deputy General Director, and Chief Accountant.

Chapter IV

WAGES, COMPENSATION, AND BONUSES OF BOARD OF MEMBERS, BOARD OF DIRECTORS, HEAD OF SUPERVISORY BOARD, AND SUPERVISORS

Article 11. Basic Salary Level

1. The basic salary level for Members of the Board of Members, Board of Directors, Head of Supervisory Board, and Professional Supervisors shall be stipulated as follows:

hTitle	Basic Salary Level (Unit: million VND/month)
	Type 1	Type 2
1. Chairman of the Board of Members, Board of Directors	70	60
2. Member of the Board of Members, Board of Directors; Head of Supervisory Board	60	50
3. Supervisor	50	40

2. The type of company specified in Clause 1 of this Article shall be determined as follows:

a) Type 1, applicable to companies meeting the following criteria: equity capital of 10,000 billion VND or more; revenue of 30,000 billion VND or more, and having 10 management units (subsidiaries or dependent entities) or employing a total workforce of 5,000 people or more.

b) Type 2, applicable to companies with planning indicators: charter capital under 10,000 billion VND; revenue under 30,000 billion VND and having less than 10 management units or total number of employees used under 5,000.

3. Companies shall base on planning indicators to determine the type of company and the basic salary level for Members of the Board of Members, Board of Directors, Head of Supervisory Board, and Professional Supervisors.

Article 12. Salary Level

1. The planned salary level for Members of the Board of Members, Board of Directors, Head of the Supervisory Board, and full-time Supervisors is determined based on the basic salary level linked to planned profit and the planned post-tax return on equity (hereinafter referred to as the return on equity) compared to the actual profit and return on equity of the previous year as follows:

a) If the planned profit and return rate are equal to or higher than the profit and return rate of the immediately preceding year, then the maximum planned salary level will be two times the basic salary level.

b) If the planned profit or return on equity is lower than the actual profit or return on equity of the previous year, the maximum planned salary level is calculated as two times the basic salary level multiplied by the percentage (%) of the planned profit or return on equity lower than the actual profit or return on equity of the previous year. If both the planned profit and return on equity are lower than the actual profit and return on equity of the previous year, the maximum planned salary level is calculated as two times the basic salary level multiplied by the percentage (%) of the planned profit compared to the actual profit of the previous year and multiplied by the planned return on equity compared to the return on equity of the previous year. After calculating the planned salary level based on profit and return on equity, it shall not be less than fifty percent of the basic salary level.

c) If there is no profit, the maximum planned salary level will be fifty percent of the basic salary level; if there is a loss, the maximum planned salary level will be thirty percent of the basic salary level.

2. The actual salary level is based on the planned salary level and the actual profit and return on equity compared to the plan according to the principle stipulated in Clause 1 of this Article. If the actual profit and return on equity exceed the planned profit and return on equity, additional salary (recorded as expense) will be calculated according to the principle of adding 2% salary for every 1% excess profit over the plan, but not exceeding two months' planned salary.

Article 13. Allowance Level

The remuneration of non-full-time Members of the Board of Members, Board of Directors, and Supervisors is calculated based on workload and time spent working, but shall not exceed twenty percent of the corresponding salary level of full-time Members of the Board of Members, Board of Directors, and Supervisors.

Article 14. Amount of Bonus

Based on the profits realized after fulfilling obligations to the State and setting aside funds according to state regulations on profit distribution, the company sets aside bonuses for Members of the Board of Members, Board of Directors, Head of the Supervisory Board, and Supervisors as follows:

1. For companies wholly owned by the State, bonuses are set aside according to the degree of completion of profit targets and company classification: not exceeding two months' salary and remuneration if the realized profit equals or exceeds the plan and the company is classified as A; not exceeding two months' salary and remuneration multiplied by the ratio (%) of realized profit compared to planned profit if the realized profit is lower than the plan and the company is classified as A or B; no bonuses are set aside if the company is classified as C or does not undergo classification.

The classification of companies is carried out according to the regulations of the Government and guidelines of the Ministry of Finance regarding the supervision of state investment capital in enterprises; financial supervision, evaluation of operational efficiency, and public disclosure of financial information of state-owned enterprises and enterprises with state capital.

2. For joint-stock companies, after fulfilling obligations to shareholders, bonuses are set aside according to the degree of completion of profit targets: not exceeding two months' salary and remuneration if the realized profit equals or exceeds the plan; not exceeding two months' salary and remuneration multiplied by the ratio (%) of realized profit compared to planned profit if the realized profit is lower than the plan.

Article 15. Payment of Salary, Remuneration, and Bonuses

1. Members of the Board of Members, Board of Directors, Head of Supervisory Board, and Supervisors shall be temporarily advanced monthly salaries and remunerations not exceeding 85% of the planned salary and remuneration levels.

2. The level of salary, remuneration, and bonuses received annually shall be determined based on the salary, remuneration, and bonus levels stipulated in this Decree and the degree of completion of tasks by each individual.

The representative body of the owner establishes evaluation criteria and evaluates the degree of completion of tasks, deciding the level of salary, remuneration, and bonuses to be received for the company to pay to each Member of the Board of Members, Board of Directors representing state capital, Head of the Supervisory Board, and Supervisors.

3. In cases where members of the Board of Members, Board of Directors, Head of Supervisory Board, and Supervisors have been temporarily advanced more than the amount of salary and remuneration they are entitled to, they must immediately repay the excess salary and remuneration within the year.

Chapter V

RESPONSIBILITY FOR IMPLEMENTATION

Article 16. Responsibilities of a company wholly owned by the State

1. The General Director shall be responsible for:

a) Determine and report to the Board of Members the unit price for contracting, salary regulations, and bonuses for employees and the Management Board, as well as the wage scale and pay grade.

b) Determine the planned wage fund for temporary advances to employees; submit to the Board of Members the labor plan, the actual wage fund implemented in the previous year for employees and the Management Board, and the salary and bonus levels for each individual in the Management Board.

c) Publicizing the salary, remuneration, and bonuses of the Management Board, members of the Board of Members, Head of Supervisory Board, and Supervisors in accordance with regulations.

2. The Chairman of the Board of Members shall be responsible for:

a) Seek opinions from the State capital representative agency on the pay grade of Board of Members members, Head of Supervisory Board, Supervisors, and the salary level for the Management Board under the salary regulation; issue the salary and bonus regulation for employees and the Management Board, as well as the wage scale and pay grade; report to the State capital representative agency for approval of the unit price for contracting.

b) Approve the labor plan and the actual wage fund implemented in the previous year for employees and the Management Board; approve the salary and bonus levels for each individual in the Management Board; determine and report to the State capital representative agency to exclude objective factors (if any), salary, remuneration, and bonuses for each Board of Members member, Head of Supervisory Board, and Supervisor.

c) By the end of 2020, summarizing the implementation of the pilot program as stipulated in this Decree, reporting to the representative body of the owner and the Ministry of Labor, Invalids, and Social Affairs.

3. The Head of Supervisory Board and Supervisors are responsible for assisting the State capital representative agency in checking and supervising the implementation by the Board of Members and General Director according to the provisions of the law and this Decree.

Article 17. Responsibilities of the State Capital Representative in Joint Stock Companies

1. Participate in providing opinions with the Board of Directors to specifically define the responsibilities of the Chairman of the Board of Directors, General Director, Head of Supervisory Board, and Supervisors regarding the implementation of labor management, salary, remuneration, and bonuses according to the provisions of Article 16 of this Decree.

2. Report and seek opinions from the State capital representative agency on the labor usage plan, unit price for contracting, and bonuses for employees and the Management Board; salaries, remuneration, and bonuses for Board of Directors members, Head of Supervisory Board, and Supervisors before participating in opinions and voting in the Board of Directors or the Shareholders' Meeting; report on the implementation situation after the Board of Directors or the Shareholders' Meeting approves.

3. Evaluate the results of monitoring the implementation of labor, salary, remuneration, and bonuses for the company. In case the tasks are not completed, clearly identify responsibility, causes, and propose solutions.

Article 18. Responsibilities of the State Capital Ownership Agency

1. Approve the unit price for contracting of companies wholly owned by the State or instruct the State capital representative in joint stock companies to approve the unit price for contracting after consulting the Ministry of Labor, Invalids and Social Affairs.

2. Approve (for companies wholly owned by the State) or instruct the State capital representative in joint stock companies (for joint stock companies) about the planned salary level, salary received, and bonuses for each Board of Members member, Board of Directors member representing State capital, Head of Supervisory Board, and Supervisors; simultaneously send the approval documents mentioned above to the Ministry of Labor, Invalids and Social Affairs for inspection and supervision.

3. By the end of 2020, summarize the pilot implementation according to this Decree and submit the results to the Ministry of Labor, Invalids and Social Affairs.

Article 19. Responsibilities of the Ministry of Labor, Invalids and Social Affairs

1. Guide the implementation of provisions on unit price quotas and wage funds for employees and the Executive Board as stipulated in Articles 7 and 8 of this Decree.

2. By the end of 2020, summarize the pilot implementation according to this Decree to report to the Prime Minister.

Chapter VI

IMPLEMENTING PROVISIONS

Article 20. Effective Date

1. This Decree takes effect from April 1, 2020.

2. The provisions on employee and Management Board salaries and bonuses; salaries, remuneration, and bonuses for Board of Members members, Board of Directors members, Head of Supervisory Board, and Supervisors in this Decree shall be implemented from January 1, 2020 to December 31, 2020.

Article 21. Organization of Implementation

1. Based on the provisions of this Decree, the Board of Members and Board of Directors of the parent company decide to pilot the management of subsidiaries owned by the parent company with at least 51% of the charter capital, ensuring that the salaries and bonuses of the Board of Members, Supervisors, and Board of Directors of subsidiaries do not exceed the maximum salary and bonus levels prescribed for the parent company.

2. Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial and centrally-administered city People's Committees, and related organizations and individuals are responsible for implementing this Decree./.

Place of Receipt: - Central Party Committee Secretariat; - Prime Minister, Deputy Prime Ministers; - Ministries, ministerial-level agencies, and agencies under the Government; - Provincial People's Councils, People's Committees of centrally governed cities; - Central Party Office and Party Committees; - General Secretary's Office; - President's Office; - Ethnic Council and Committees of the National Assembly; - National Assembly's Office; - Supreme People's Court; - Supreme People's Procuracy; - State Audit Agency; - National Financial Supervisory Commission; - Social Policy Bank; - Vietnam Development Bank; - Vietnam Fatherland Front Central Committee; - Central Agencies of Social Organizations; - VPCP: Deputy Chairman, all Vice Chairmen, Assistants to the Prime Minister, Director of the Government Portal, all Departments, Bureaus, subordinate units, Official Gazette; - File: VT, KTTH (2b).

PRIME MINISTER PRIME MINISTER Nguyen Xuan Phuc