Decree No. 53/2016/ND-CP on labor, wages, remuneration, and bonuses for companies with controlling state shares or contributions

DECREE

PROVISIONS ON LABOUR, WAGES, FEES, AND BONUSES FOR JOINT STOCK COMPANIES WITH STATE CAPITAL CONTRIBUTIONS

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

Pursuant to the Labor Code dated June 18, 2012;

Pursuant to the Enterprise Law dated November 26, 2014;

BASED ON THE LAW ON MANAGEMENT AND USE OF STATE CAPITAL INVESTED IN BUSINESS OPERATIONS OF ENTERPRISES ON NOVEMBER 26, 2014;

Decree No. 07/2021/NĐ-CP

At the proposal of ISSUES THIS DECREE ON PROVISIONS REGARDING LABOUR, WAGES, FEES, AND BONUSES FOR JOINT STOCK COMPANIES WITH STATE CAPITAL CONTRIBUTIONSBASED ON Decree No. 34/2018/NĐ-CP dated March 8, 2018 of the Government on the establishment, organization, and operation of the Credit Guarantee Fund for Small and Medium-sized Enterprises (hereinafter referred to as Decree No. 34/2018/NĐ-CP);with a company having shares,capital contributionamount directly under the Central Governmentdominant shareholdings of the State.

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This Decree stipulates certain contents on labour, wages, fees, and bonuses for the State-owned representative to participate and vote at meetings of the Board of Directors, Shareholders' Meeting of joint stock companies where the State holds more than 50% of the charter capital, and meetings of the Board of Members of limited liability companies with two or more members where the State's contribution exceeds 50% of the charter capital (hereinafter referred to collectively as the company).

Article 2. Applicability

1. The person authorized in writing by the State asset management agency to exercise the rights and responsibilities of the State owner representative regarding the State investment capital in the company (hereinafter referred to as the State capital representative).

2. Ministries, ministerial-level agencies, government-affiliated agencies, provincial People's Committees under central cities, or organizations established according to the provisions of law assigned by the Government to exercise the rights and responsibilities of the State owner representative regarding the State investment capital in the company (hereinafter referred to collectively as the State asset management agency).

3. Other agencies, organizations, and individuals related to the implementation of the provisions of this Decree.

Article 3. Principles of Labour, Wage, Fee, and Bonus Management

1. Labour policies and wages for the company are decided by the company based on the provisions of law and the company's articles of association.

2. Wages and bonuses for employees, wages and fees for members of the Board of Members or the Board of Directors, General Director, Director, Deputy General Director, Deputy Director, Head of Supervisory Board, Supervisor, and Chief Accountant (hereinafter referred to collectively as the company managers) are linked to productivity and business efficiency of the company.

3. Labour, wage, fee, and bonus management for the company is carried out through the State asset management agency and the State capital representative in accordance with the provisions of law.

Article 4. On Labour

1. The company must develop an annual labor plan as a basis for recruitment and utilization of labor.

2. The labour plan is developed based on the production and business plan, advanced labour norms, organizational structure, and streamlined indirect labour structure.

3. The annual labour plan is approved by the Board of Directors or the Board of Members before implementation; recruitment, placement, and use of labour are conducted openly and transparently in accordance with the provisions of law and the recruitment and employment regulations, and the company's articles of association.

4. In cases where recruitment exceeds the need for use, leading to surplus and termination of labour contracts, thereby increasing company costs, the recruiter shall be responsible to the Board of Directors or the Board of Members of the company.

Article 5. On Employee Wages

1. The planned wage fund for employees is determined based on the planned number of employees and the average planned wage level as stipulated in Clause 2 of this Article.

2. The average planned wage level is determined based on the wage level in the labour contract, the average actual wage level achieved according to the production and business results of the previous year, and linked to the planned production and business targets of the company as follows:

a) For companies with profits, the average planned wage level is determined based on the average actual wage level achieved according to the production and business results of the previous year, linked to the planned increase/decrease in labour productivity compared to the previous year, ensuring that the average wage increase must be lower than the average increase in labour productivity.

b) For companies without profit or loss (except for objective cases stipulated in Article 7 of this Decree), the average planned wage level is determined based on the average wage level in the labour contract and the wage for holidays, festivals, paid leave days, and additional night shift and overtime wages as prescribed by the Labour Code.

3. Based on the planned wage fund, the company determines the unit wage rate to manage production and business activities and advance wages to employees according to actual conditions.

4. The actual wage fund is determined based on the planned wage fund and the degree of achievement of production and business targets.

5. The company establishes a wage payment system and distributes wages to employees linked to their contributions and the effectiveness of their work performance.

Article 6. Regarding salaries and remuneration for company managers

1. The planned salary fund for dedicated company managers shall be determined based on the number of dedicated company managers and the average planned salary level according to Clauses 2 and 3 of this Article.

2. The average planned salary level for dedicated company managers who are state capital representatives shall be determined based on the actual average salary level of the previous year, linked to the preservation and development of enterprise capital, ensuring employee salaries and income, fulfilling all obligations and responsibilities towards employees and the state as prescribed by law, production and business plan targets, and guaranteeing a maximum not exceeding VND 36 million/month (referred to as the basic salary, when the Government adjusts the basic salary, it shall be implemented according to the new regulations of the Government) for companies with a planned profit under VND 50 billion. In cases where companies have a planned profit of VND 50 billion or more, the additional salary adjustment factor shall be applied as follows:

a) The maximum additional adjustment factor is 0.5 for companies with profits from 50 billion to less than 100 billion VND.

b) The maximum additional adjustment factor is 1.0 for companies in the banking, finance, telecommunications sector with profits from VND 100 billion to less than VND 500 billion, companies in the oil and gas exploration and processing, mining, electricity, trade, service sector with profits from VND 100 billion to less than VND 300 billion, and companies in other sectors with profits from VND 100 billion to less than VND 200 billion.

c) The maximum additional adjustment factor is 1.5 for companies in the banking, finance, telecommunications sector with profits from VND 500 billion to less than VND 1 trillion, companies in the oil and gas exploration and processing, mining, electricity, trade, service sector with profits from VND 300 billion to less than VND 700 billion, and companies in other sectors with profits from VND 200 billion to less than VND 500 billion.

d) The maximum additional adjustment factor is 2.0 for companies in the banking, finance, telecommunications sector with profits from VND 1 trillion to less than VND 1.5 trillion, companies in the oil and gas exploration and processing, mining, electricity, trade, service sector with profits from VND 700 billion to less than VND 1 trillion, and companies in other sectors with profits from VND 500 billion to less than VND 700 billion.

đ) The maximum additional adjustment factor is 2.5 for companies in the banking, finance, telecommunications sector with profits of VND 1.5 trillion or more, companies in the oil and gas exploration and processing, mining, electricity, trade, service sector with profits of VND 1 trillion or more, and companies in other sectors with profits of VND 700 billion or more.

For cases where companies have a scale and profit significantly larger than the limits specified above or due to the nature of operations in certain special sectors requiring encouragement of managerial labor, they may be considered and applied at a higher rate not exceeding 10% more than the additional salary increase factor stipulated in Clause 2 of this Article.

3. The average planned salary level for dedicated company managers who are not state capital representatives shall be determined based on job positions, ensuring a reasonable balance with the salaries of similar positions in the market and the salaries of state capital representatives at the company.

4. The actual salary fund for dedicated company managers shall be based on the planned salary fund, the indicators stipulated in Clauses 2 and 3 of this Article, and the degree of completion of profit plans, wherein if the actual profit exceeds the planned profit, for every 1% excess profit, the dedicated company manager shall be entitled to an additional 2% salary, but not exceeding 20% of the average planned salary level.

5. The remuneration fund for non-dedicated company managers shall be determined based on the number of non-dedicated company managers, actual working time, and a maximum remuneration level equal to 20% of the salary of dedicated company managers.

6. Based on the actual salary and remuneration funds, the company shall pay salaries and remuneration to company managers according to the company's salary and remuneration regulations.

Article 7. Objective Factors in Determining Wages and Fees

The company excludes objective factors affecting labor productivity and profit when determining the wage fund for employees and company managers, including:

1. State adjustment of prices (for products and services priced by the state), corporate income tax incentives, increase or decrease in state capital, policy mechanism adjustments, or requests for the company to relocate or reduce production and business sites directly impacting the company's labor productivity and profit targets.

2. The company's investment expansion in production and business according to plans, accelerated depreciation approved by competent authorities, and implementation of social welfare programs as prescribed by the Government.

3. Natural disasters, fires, epidemics, wars, and other unforeseeable and uncontrollable objective reasons.

Article 8. Regarding Bonuses and Welfare

Based on annual profits after fulfilling obligations to the state, contributions from shareholders as stipulated by the state and the Company Charter, the company determines bonuses and welfare for employees and company managers as follows:

1. The maximum bonus and welfare fund for employees shall not exceed three months' average actual wages if actual profits equal planned profits. If actual profits exceed planned profits, an additional bonus and welfare fund equal to 20% of the excess profits over planned profits may be allocated, but not exceeding three months' average actual wages.

2. The maximum bonus fund for company managers shall not exceed one and a half months' average actual wages if actual profits equal or exceed planned profits. If actual profits are lower than planned profits, the maximum bonus shall not exceed one month's average actual wages.

3. Based on the bonus and welfare fund specified in Clause 1 of this Article, the company decides on the allocation of the bonus fund for employees and the welfare fund. The employee bonus fund shall not be used to pay bonuses to company managers (except for bonuses prescribed by laws on commendation and rewards). The welfare fund is used for constructing or repairing welfare facilities, funding welfare activities for employees, including company managers.

Article 9. Responsibilities of the State Capital Representative

1. Participate in providing opinions with the Board of Directors, Board of Members to decide on labor, wages, fees, and bonuses as stipulated in this Decree.

2. Report to the state capital ownership representative agency for approval on the plan for labor utilization, scheme for determining the wage fund, and bonus fund for employees, and the wage and fee fund, bonus fund for company managers before participating in opinions with the Board of Directors, Board of Members.

3. Report to the state capital ownership representative agency on the implementation of wages, fees, and bonuses from the previous year and the annual plan after the Board of Members, Board of Directors, or the Shareholders' Meeting of the company has approved them.

4. Annually, evaluate the results of monitoring labor, wages, fees, and bonuses at the company as the basis for paying responsibility allowances, fees, bonuses, and reward and disciplinary systems as prescribed. In cases where tasks are not completed, clearly define the responsibility system, causes, and propose solutions.

Article 10. Responsibilities of the State Capital Representative Authority

1. Assign tasks in writing to the State Capital Representative regarding labor management, wages, remuneration, and bonuses for the company in accordance with the contents stipulated in this Decree.

2. Receive and review reports from the State Capital Representative on labor matters, wages, remuneration, and bonuses of the company to provide opinions. In cases where it is necessary to apply an additional wage adjustment coefficient higher than the framework prescribed in Clause 2, Article 6 of this Decree, seek the opinion of the Ministry of Labor, Invalids and Social Affairs before directing the State Capital Representative.

3. Annually evaluate the performance of the State Capital Representative in fulfilling their tasks as a basis for determining the level of wages, remuneration, allowances, and bonuses they are entitled to and apply appropriate sanctions.

4. Take the lead and coordinate with the Ministry of Labor, Invalids and Social Affairs to supervise the implementation of labor management regulations, wages, remuneration, and bonuses for companies assigned to represent State capital according to the provisions of the law.

5. Aggregate and report annually on the labor situation, wages, remuneration, and bonuses of companies to the Ministry of Labor, Invalids and Social Affairs for overall compilation and supervision.

Article 11. Responsibilities of the Ministry of Labor, Invalids and Social Affairs

1. Take the lead and coordinate with relevant ministries and sectors to guide the implementation of labor, wages, remuneration, and bonuses in accordance with the provisions of this Decree.

2. Coordinate with the State Capital Representative Authority to supervise the implementation of labor management regulations, wages, remuneration, and bonuses for companies.

3. Participate in providing opinions with the State Capital Representative Authority in cases where applying an additional wage adjustment coefficient higher than the framework prescribed in Clause 2, Article 6 of this Decree.

4. Aggregate and assess the labor situation, wages, remuneration, and bonuses of companies and report to the Prime Minister as prescribed.

Article 12. Effective Date

1. This Decree takes effect from August 1, 2016.

2. The Board of Directors or Chairman of the parent company of state-owned economic groups, state-owned holding companies, and parent companies in groups of parent-child companies where the State holds 100% of the charter capital shall base on the contents stipulated in this Decree to direct and assign tasks to the State Capital Representatives of enterprises to organize labor management, wages, remuneration, and bonuses at companies with controlling shares or contributions of the parent company.

3. The State Capital Representative at the parent company of state-owned economic groups, state-owned holding companies, and parent companies in groups of parent-child companies where the State holds controlling shares or contributions shall participate in providing opinions for the Board of Directors or Board of Members to decide on the application of the provisions of this Decree to manage labor, wages, remuneration, and bonuses at companies with controlling shares or contributions of the parent company.

4. 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./.