Joint Circular No. 20/LB-TT guiding the management of salaries and bonuses in enterprises.

CIRCULAR

OF THE MINISTRY OF LABOR - INVALIDS AND SOCIAL AFFAIRS - FINANCE
for use
implement wage and bonus management
in enterprises

Implementing Decree No. 26/CP dated May 23, 1993 of the Government temporarily regulating the new wage system in enterprises. The Joint Ministry of Labor - War Invalids and Social Affairs - Finance guides the implementation of wage and bonus management in enterprises as follows:

2. Individuals who have registered as the principal investigator of a Research Project or Pilot Production Project and those participating in its implementation shall not participate in the Evaluation and Selection Council for that Research Project or Pilot Production Project (hereinafter referred to as the Council). In necessary cases, members of the Council may be staff members of the organization registering as the principal investigator of the Research Project or Pilot Production Project, but not more than one person and they cannot serve as Chairperson, Vice-Chairperson, or reviewing member.

1. All products and services must have labor norms and wage rates.

For important products, special products, and products priced by the State in state-owned enterprises, the wage rate shall be determined according to the regulations of the State.

For the remaining products, the wage rate shall be decided by the enterprise but must follow unified guidelines and be registered with the relevant state agency.

The wage rate is determined based on labor norms in accordance with Circular No. 26/LD-TT dated January 30, 1982 of the Ministry of Labor and the wage parameters stipulated in Decree No. 26/CP dated May 23, 1993 of the Government. The wages of the General Director, Deputy General Director, and Chief Accountant are not included in the wage rate.

When there are changes in labor norms and wages, the wage rate will be recalculated.

2. The wage fund includes:

- The wage fund calculated based on the wage rate and production results;

- The wage fund for the General Director, Deputy General Director, and Chief Accountant.

For enterprises that determine the wage rate based on units of product, there is also a supplementary wage fund for time not participating in production according to the State's regulations.

The total wage fund mentioned above is a legitimate cost in the product cost and circulation fee to pay for labor, and serves as the basis for determining the taxable profit of the enterprise.

3. The State does not provide budget support for enterprises implementing the new wage system. Wages must be paid based on production results and enterprises must ensure they fulfill their obligations to the State at least up to the current prescribed level (including corporate income tax); social insurance contributions must be made in accordance with the law.

4. The State manages the wage fund in conjunction with production results as follows:

- For profitable enterprises, based on the approved wage fund according to the wage rate, the enterprise forecasts its actual profit and may allocate part of the bonus fund from retained earnings into an internal wage rate to encourage production and business, but it cannot exceed 1.5 times the approved wage rate and must be settled with the State.

- For non-loss enterprises, the enterprise only pays wages corresponding to the degree of fulfillment of production and business tasks, bonuses (if any) can only be counted after fulfilling obligations to the State.

- For loss-making enterprises (except those with prices set by the State), the enterprise only pays wages corresponding to the degree of fulfillment of production and business tasks and must take measures to ensure that workers' income does not fall below the minimum wage set by the State.

5. For construction projects funded by the State, enterprises must review cost savings to have resources to implement the new wage system, the State will not supplement additional wage costs into the total investment capital for construction beyond the approved budgeted wage rate.

6. The wage fund of state-owned enterprises is formed from profits remaining after completing tax obligations and setting aside funds as required by the State, with a maximum not exceeding 50% of the actual wage fund of the enterprise.

7. Enterprises must register with the Labor and Finance agencies (and the tax authority) the following contents:

- Wage rate (according to Form No. 1) and detailed calculation method;

- Total number of employees currently employed, including those with signed labor contracts;

- Actual wage fund, bonus fund, and relatively high income with quality consideration (according to Form No. 2).

II. METHODS FOR DETERMINING THE WAGE RATE

1. Wage rate per unit of product (or converted product)

The wage rate per unit of product is determined by the sum of parameters a, b, and c below:

a. Wage per unit of product at various workstations and stages in the production process (individual or team) includes the following factors:

+ Job grade coefficient and wage level;

+ Labor norm (output norm, time norm);

+ Coefficient and level of various types of allowances as prescribed by the State (if applicable) including: regional allowance; hazardous and dangerous allowance; responsibility allowance; night shift allowance; attraction allowance; expensive allowance, and mobility allowance.

b. Time-based wages for main and auxiliary workers in other stages of the production process chain where product-based wages cannot be paid, allocated to the unit of product, including the following factors:

+ Job grade coefficient and wage level determined at each stage;

+ Time norm at each stage;

+ Coefficient and level of various types of allowances as point a (if applicable).

c. Wages of professional, technical, administrative, service staff, position wages, and position allowances of managerial staff allocated to the unit of product, including the following factors:

+ Average coefficient and wage level of professional, technical, administrative, and service staff, position wages;

+ Labor norm of professional, technical, administrative, and service staff;

+ Coefficient and level of various types of allowances as point a, including position allowance (if applicable).

2. Wage rate calculated based on total revenue minus total expenses:

The wage rate is determined by the following formula:

Where:

Kt1: is the wage rate

+ Planned V: Is the planned wage fund according to the enterprise's system (excluding the wages of the General Director, Deputy General Director, and Chief Accountant) calculated by multiplying the reasonable number of authorized employees by (x) the average wage according to the system, including coefficients and levels of various types of allowances as point a (if applicable).

+ Planned total revenue: Is the planned total revenue including all money received from the sale of products, goods, main and ancillary businesses as prescribed by the State.

Total planned cost: Is the total planned cost including all legitimate and reasonable expenses in the product cost and circulation fees (excluding wages) and amounts payable to the state budget according to current regulations of the State (excluding income tax).

3. Wage rate based on profit:

The wage rate is determined by the following formula:

Where:

Kt1; Planned V: As explained in formula (1).

+ Planned P: Is the planned profit determined according to current regulations of the State.

4. Wage rate based on revenue:

This method only applies to production and business enterprises that are unstable and cannot calculate the wage rate according to one of the three methods mentioned above.

The wage rate is determined by the following formula:

Where:

Kt1; Planned V; Planned total revenue as explained in formula (1).

III. DETERMINATION OF THE WAGE FUND FOR IMPLEMENTATION
AND THE BONUS FUND

1. Determination of the wage fund for implementation:

The wage fund for implementation includes (a + b)

a. The wage fund of the General Director, Deputy General Director, and Chief Accountant.

b) The wage fund for implementation determined according to the wage rate (as specified in Part II) and the results of production and business operations as follows:

The supplementary wage fund is the wage paid for time not participating in production under the wage system for workers (including basic salary and allowances) such as annual leave, personal leave, holidays, maternity leave, meetings, study, and social work...

Actual total revenue and actual total costs have excluded factors of increase or decrease due to objective reasons, decided by the competent authority.

+ Actual profit to determine the wage fund for implementation according to profit calculated by the following formula:

The actual total revenue mentioned must exclude factors of increase or decrease due to objective reasons.

2. The enterprise's wage fund.

The bonus fund (including that of the General Director, Deputy General Director, and Chief Accountant) is extracted from the remaining profit after paying income tax, penalties, debts... with a maximum of no more than 50% of the enterprise's wage fund for implementation. Apart from this bonus fund, the enterprise shall not use any other source to pay wages to workers and staff.

Bonus systems: savings on materials, product quality, initiatives, enterprises implement according to current regulations of the State.

IV. WAGES AND BONUSES FOR THE GENERAL DIRECTOR,
DEPUTY GENERAL DIRECTOR, CHIEF ACCOUNTANT

1. The wages of the General Director, Deputy General Director, and Chief Accountant are paid according to the position salary of the enterprise category as stipulated in Decree No. 26/CP dated May 23, 1993. Specific payment levels are as follows:

- For profitable enterprises, non-loss enterprises, and enterprises suffering losses when implementing economic and social policies prescribed by the State, the wages of these positions are paid at 100% of the position salary.

- For loss-making enterprises, the wages of these positions are paid proportionally according to the degree of fulfillment of obligations to the State.

2. Bonuses for the General Director, Deputy General Director, and Chief Accountant are determined based on the effectiveness of production and business operations and the fulfillment of obligations to the State, not exceeding 100% of the position salary of the respective position. Specifically, for enterprises suffering losses when implementing economic and social policies prescribed by the State, bonuses for these positions are determined based on the degree of reduction in losses. This bonus amount can be temporarily advanced monthly or quarterly concurrently with the bonuses of other workers and staff, depending on the specific conditions of the enterprise, but the temporary advance shall not exceed 50% of the position salary.

V. IMPLEMENTATION

1. The Ministry of Labor - Invalids and Social Affairs - Finance is responsible for guiding, inspecting, supervising, and auditing the management of wage rates, wages, and bonuses of ministries, sectors, and localities.

2. The management of wage rates is decentralized as follows:

+ For key products, special products, and products priced by the State (standard price or limit price), the Ministry of Labor - Invalids and Social Affairs - Finance coordinates with the main managing ministry to decide the wage rate.

+ For other products and services, depending on management requirements, ministries, sectors, and localities specify the list and decide the wage rate.

+ For other products and services, depending on management requirements, ministries, sectors, and localities specify the list and decide the wage rate.

+ For remaining products and services, the enterprise director decides the wage rate and registers it with the State.

The Ministry has the right to suspend implementation and require the establishment of a new wage rate for products and services delegated to enterprises if deemed unreasonable.

3. Heads of ministries, sectors, Chairmen of Provincial People's Committees, and Municipal People's Committees directly under the Central Government are responsible for guiding, inspecting, reviewing, and approving the wage rate for products and services delegated and reporting the results to the Ministry of Labor - Invalids and Social Affairs - Finance for monitoring and inspection.

4. The agency managing wage rates, wage funds, and bonus funds (Labor - Finance and Tax authorities) is responsible for receiving registration files, inspecting, reviewing... wage rates, wage funds, and bonus funds according to the provisions of this Circular.

5. The enterprise director is responsible for establishing wage and bonus regulations through contracts and collective labor agreements, ensuring income distribution to workers based on production and business efficiency.

6. The construction of the 1993 wage rate is divided into two stages: in the first quarter of 1993, the wage rate is built according to Decision 317/CT and related State guidelines; from the second quarter of 1993 onwards, it is constructed according to the provisions of this Circular.

This Circular takes effect from April 1, 1993, and all provisions contrary to this Circular are abolished.

LIST

PRODUCTS AND SERVICES SUBJECT TO STATE REVIEW AND DECISION
WAGE RATE

REGISTRATION OF WAGE UNIT PRICE

YEAR 199...

1. Name of Enterprise:...

2. Address: (1)...

3. Method for determining wage unit price (2)

- On unit product { } - On total revenue minus (-)

- Total expenses { } - On profit { }

- On revenue { }

4. Approved wage unit price for the planning year:

..............................................................

5. Authority deciding wage unit price (if any) (3):

..............................................................

We fully take responsibility that the wage unit price above is calculated in accordance with the production and business activities of the enterprise in compliance with the prescribed regulations and State guidance.

Day... month... year 199...

Enterprise director

Note:

1. Record according to the main office, place of registration for establishment of the enterprise.

2. Mark the corresponding box with the method used to calculate the wage unit price.

3. Clearly record the number of documents, date, month, year, and name of the authority deciding the wage unit price if it falls within the prescribed classification.

+ This form is made in five copies along with the explanation of the calculation data for the wage unit price (forms 3a, 3b, 3c) for each method sent to the Labor - Invalids and Social Affairs Department, Finance, Taxation, and the supervising agency (if under central management).

REPORT ON WAGE FUND AND INCENTIVE FUND

Plan (3)

Start date of lease (day/month/year)

Day... month... year 199...

Enterprise director

Note:

(2) Includes wages, incentives, and other income with wage characteristics averaged for each worker and staff member in the enterprise.

(3) The wage fund, incentive fund, and other income with wage characteristics are planned and registered together with the wage unit price registration.

- This form is prepared after settling the actual wage fund of the enterprise and submitted to the labor, finance, taxation agencies, and the supervising agency (if under central management) where the wage unit price was registered.

COMPREHENSIVE FORM FOR REVIEWING LABOR LEVELS AND WAGE UNIT PRICES

(For enterprises establishing wage unit prices according to method (1))

Planned output

Note:

- The wage unit price calculated on unit product (or converted product) is determined based on the parameters as stipulated at point 1, part III of this Circular.

 Ministries, sectors, Provincial People's Committees (city)

COMBINED TABLE

(For methods total revenue minus total expenditure; profit; revenue)

Review criteria

Note:

Form No. 3C

SUPPLEMENTARY WAGES UNDER REGULATIONS

(For enterprises calculating wage unit prices according to method (1))

Payments under regulations

Note:

Column 6 total is supplementary salary paid under the regulations for time not participating in production that is eligible for wages of workers (both principal and auxiliary).