Decree No. 207/2004/ND-CP on salary, bonus, and responsibility regimes for members of the Board of Directors, General Director, and Director of state-owned companies

DECREE OF THE GOVERNMENT

Regulations on salary, bonus, and responsibility system for members of the Board of Directors, General Director, and Company Directors of state-owned enterprises

The regulations on salary, bonus, and responsibility system stipulated in this Decree apply to:

State-owned corporations; 

THE GOVERNMENT

Pursuant to the Law on Organization of the Government dated December 25, 2001;

Pursuant to the Labor Code on June 23, 1994; Law Amending and Supplementing Certain Articles of the Labor Code on April 2, 2002;

Pursuant to the State Enterprise Law dated November 26, 2003;

At the proposal of the Minister of Labor, Invalids and Social Affairs, 

DECREE:

Article 1. Independent state-owned companies.

1. State-owned enterprises:

1. Full-time members of the Board of Directors; non-full-time members of the Board of Directors.

2. General Director, Director (excluding those working under contracts).

2. Independent accounting subsidiaries of State-owned corporations established by the State's decision to invest and establish.

The above-mentioned state-owned corporations shall be referred to as enterprises.

Article 2. Applicability:

Salary System:

1. Full-time members of the Board of Directors, General Director, and Director shall be assigned position-based salaries; non-full-time members of the Board of Directors shall receive job responsibility allowances as prescribed in Decree No. 205/2004/NĐ-CP dated December 14, 2004, of the Government on the wage scale, pay table, and allowance system in state-owned companies.

Article 3. 2. Salaries and allowances for members of the Board of Directors, General Director, and Director shall be paid based on the company's profit and labor productivity according to the principle that increased profit and productivity lead to increased salaries and allowances, while decreased profit and productivity result in reduced salaries and allowances, but not lower than the base salary calculated based on the company's wage coefficient, allowance (if applicable), and the general minimum wage.

3. The salary fund for members of the Board of Directors (including the salaries of full-time members and the job responsibility allowances of non-full-time members of the Board of Directors), General Director, and Director of the company shall be determined annually, with a maximum advance payment of 80% of the planned salary fund each month. The remaining amount will be settled at the end of the year based on the level of task completion. This salary fund does not fall within the unit price of the company's wages but is accounted for in production costs or business expenses.

The salary fund for members of the Board of Directors, General Director, and Director of the company:

1. When ensuring the conditions stipulated in Article 4 of Decree No. 206/2004/NĐ-CP dated December 14, 2004, of the Government on labor management, salary, and income in state-owned companies, the company may choose an adjustment factor not exceeding twice the planned salary fund calculated based on the company's wage coefficient, allowance (if applicable), and the minimum wage chosen by the company.

Article 4. In cases where the company's production and business plan does not yield profit or results in losses, the planned salary fund shall only be calculated based on the company's wage coefficient, allowance (if applicable), and the general minimum wage.

2. The planned salary fund must be reviewed by the owner's representative or the competent state agency before implementation.

For special-class companies and companies engaged in public welfare activities with significant positions in the national economy, the planned salary fund shall be reviewed and reported by the Ministry of Labor, Invalids, and Social Affairs and the Ministry of Finance.

3. The actual salary fund shall be determined based on the degree of achievement of profit targets and labor productivity, and the payment of salaries to members of the Board of Directors, General Director, and Director shall be carried out according to the company's salary regulation.

Bonus System: The Prime Minister.

1. The annual bonus fund for members of the Board of Directors, General Director, and Director of the company includes:

Article 5. a) The bonus fund for the company's management board as prescribed in Decree No. 199/2004/NĐ-CP dated December 3, 2004, of the Government on financial management regulations for state-owned companies and state capital investment in other enterprises;

b) The bonus fund from the company's commendation fund as prescribed in Clause 1, Article 6 of Decree No. 206/2004/NĐ-CP dated December 14, 2004, of the Government on labor management, salary, and income in state-owned companies.

2. The annual bonus fund prescribed in Clause 1 of this Article shall be allocated a maximum of 60% for year-end bonuses, with the remainder used for bonuses after the term ends.

3. At the end of the term, if the total realized profit is not lower than the total planned profit for the entire term, members of the Board of Directors, General Director, and Director of the company shall enjoy the remaining bonus as prescribed in Clause 2 of this Article; if the total realized profit is lower than the total planned profit for the entire term, for every 1% decrease in realized profit, 0.5% of the remaining bonus shall be deducted.

4. Bonuses for members of the Board of Directors, General Director, and Director shall be implemented according to the company's bonus regulation.

Responsibility System:

1. The Chairman of the Board of Directors and members of the Board of Directors, General Director, and Director of the company who fulfill their rights, obligations, and responsibilities as prescribed in the Law on State-Owned Enterprises shall enjoy the salary and bonus systems stipulated in Articles 3, 4, and 5 of this Decree.

Article 6. 2. If any of the following situations occur but do not reach the level of criminal prosecution, they shall not be promoted in rank or demoted in rank, shall not receive adjusted salary, and shall not be entitled to bonuses:

a) Causing the company to incur losses or losing state capital;

b) Making ineffective investment decisions, failing to recover invested capital, or failing to repay debts;

c) Failing to ensure wages and other benefits for employees in accordance with labor laws;

d) Causing violations in capital management, asset management, accounting, auditing, and other systems prescribed by the state;

e) Incurred losses for two consecutive years or failed to achieve the profit rate on capital for two consecutive years or alternated between profits and losses but were unable to rectify the situation (except as provided in point a, Clause 3, Article 25 of the Law on State-Owned Enterprises).

The Chairman of the Board of Directors, General Director, and Director of the company are responsible for:

1. By the first quarter of each year, to develop the planned salary fund in accordance with Article 4 of this Decree, submit it for review by the owner's representative or the competent state agency before implementation, and simultaneously send it to the local tax authority as the basis for tax calculation.

Article 7. For special-class companies and companies engaged in public welfare activities with significant positions in the national economy, the planned salary fund must be reported to the Ministry of Labor, Invalids, and Social Affairs and the Ministry of Finance.

1. In the first quarter of each year, establish the planned salary fund in accordance with Article 4 of this Decree, submit it for review by the owner's representative or the competent state management agency before implementation, and at the same time send it to the local tax authority as the basis for calculating taxes.

For special-class companies and companies engaged in public welfare activities that play a significant role in the national economy, they must report their planned salary fund to the Ministry of Labor, Invalids and Social Affairs and the Ministry of Finance.

2. Determine the planned payroll fund, advance payment of salaries, bonus fund, and decide on the repayment of excess salary and bonus amounts beyond the state regulations for the General Director of independent accounting member companies; establish the salary regulation and bonus regulation.

3. In the first quarter of each year, report to the representative of the owner or the state management agency and the provincial Department of Labor, Invalids and Social Affairs the previous year's salaries and bonuses of the Board of Directors, General Manager, and General Director of the company.

Article 8. State management agencies have the responsibility:

1. Ministries managing industries, provincial people's committees under the central government:

a) Review the planned payroll fund; determine advance payment of salaries, bonus fund, and decide on the repayment of excess salary and bonus amounts beyond the state regulations for the Board of Directors, General Manager, and General Director of the companies under their management;

b) Coordinate with the Ministry of Labor, Invalids and Social Affairs, and the Ministry of Finance to review the planned payroll fund for special category companies and companies performing public service activities that hold significant positions in the national economy;

c) In the first quarter of each year, report to the Ministry of Labor, Invalids and Social Affairs the previous year's salaries and bonuses of the members of the Board of Directors, General Manager, and General Director of the company.

2. The Ministry of Labor, Invalids and Social Affairs:

a) Guide the method of establishing the planned payroll fund; determine the actual payroll fund, annual bonus fund, and the end of the term;

b) Take the lead, coordinate with the Ministry of Finance to submit to the Government for the establishment of salary and bonus systems for General Managers, Directors, Deputy General Managers, Deputy Directors, and Chief Accountants working under contracts; guide the implementation of responsibility allowances and bonus systems for representatives of state-owned company capital in other enterprises, and review the planned payroll fund of Board of Directors members, General Manager, and General Director of special category companies and companies performing public service activities that hold significant positions in the national economy;

c) Inspect and supervise the implementation of the provisions of this Decree.

Article 9. Effective Date:

1. This Decree shall take effect fifteen days after its publication in the Official Gazette.

2. The provisions of this Decree shall be implemented from January 1, 2005.

Article 10. The Ministry of Labor, Invalids and Social Affairs takes the lead, coordinates with relevant ministries and sectors to be responsible for guiding the implementation of this Decree.

Article 11. The Ministers, Heads of Ministries equivalent to ministries, Heads of government agencies, and Chairmen of provincial people's committees directly under the central government shall be responsible for implementing this Decree./.