Decree No. 86/2007/ND-CP on management of labor and wages in a limited liability company with one member wholly owned by the State

DECREE

Regulations on labor management and wages in a limited liability company with sole state ownership of 100% charter capital

 by the State owning 100% of the charter capital

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THE GOVERNMENT

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

Based on the Labor Code dated June 23, 1994; Law Amending and Supplementing Certain Provisions of the Labor Code dated April 2, 2002;

Based on the Enterprise Law dated November 28, 2005.

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

DECREE

Article 1. The scope of regulation of this Decree is limited liability companies with sole state ownership of 100% of the charter capital.

Article 2. The subjects to which this Decree applies include:

1. Laborers working under labor contracts as prescribed by the Labor Code.

2. Member of the Board of Members (for companies organized under the Board of Members model) or Chairman of the Company (for companies organized under the Chairman of the Company model); Supervisor; General Director, Director, Deputy General Director, Deputy Director, Chief Accountant (excluding those working under contracts);

Article 3. Wage grading and wage allowances

Workers employed under labor contracts, members of the Board of Members or Chairman of the Company, Supervisors, General Directors, Directors, Deputy General Directors, Deputy Directors, and Chief Accountants shall be graded according to the wage scales and wage allowances stipulated in Decree No. 205/2004/NĐ-CP dated December 14, 2004 of the Government, wherein: Full-time Supervisors shall be graded according to their professional qualifications and receive job position allowances equivalent to that of a Department Head; non-full-time members of the Board of Members or non-full-time Chairmen of the Company and non-full-time Supervisors shall receive work responsibility allowances.

Article 4. Labor management and wage management for Deputy General Directors, Deputy Directors, Chief Accountants, and workers employed under labor contracts.

1. On labor management

a) Based on the volume, quality, requirements, and production and business tasks, each year the company determines its labor usage plan and registers with the owner before implementation;

b) The company directly recruits workers according to its recruitment regulations and signs labor contracts in accordance with the provisions of labor laws;

c) Each year, the company has the responsibility to evaluate its labor usage plan and resolve employment issues for workers without jobs in accordance with the provisions of labor laws.

2. On wage management

a) The company may apply a minimum wage higher than the general minimum wage set by the Government as the basis for calculating unit wage prices, but must ensure the following conditions:

- Paying taxes to the state budget in accordance with the law;

- The average wage increase must be lower than the average productivity increase;

- Planned profit must not be lower than the actual profit of the previous year, except in special cases as prescribed by the Government.

b) The unit wage price is established by the company based on advanced labor norms, wage parameters consistent with the conditions stipulated in point a, Clause 2, Article 4 of this Decree, and must have the approval of the owner before implementation;

For limited liability companies with special ranking or Economic Groups, the unit wage price must be registered with the Ministry of Labor, Invalids and Social Affairs, and the Ministry of Finance.

c) The actual wage fund is determined based on the degree of completion of production and business plans, labor productivity, realized profits, and paying wages to workers according to the company's wage regulations.

3. On bonuses

a) The bonus fund from the company's award fund is determined according to the Government's regulations;

b) Bonuses for Deputy General Directors, Deputy Directors, Chief Accountants, Supervisors, and workers are implemented according to the company's bonus regulations.

Article 5. Management of wages, bonuses, and accountability systems for members of the Board of Members or Chairman of the Company, General Directors, Directors, and Supervisors

1. On wage management

a) Wages and allowances for members of the Board of Members or Chairman of the Company, General Directors, Directors, and Supervisors are paid based on the company's profit and labor productivity performance according to the principle: if profit and labor productivity increase, wages and allowances increase; if profit and labor productivity decrease, wages and allowances decrease, but not less than the wage calculated based on the company's grade coefficient, allowance (if any), and the general minimum wage;

b) The wage fund of members of the Board of Members or Chairman of the Company, General Directors, Directors, and Supervisors (including work responsibility allowances for non-full-time members of the Board of Members or non-full-time Chairmen of the Company and non-full-time Supervisors) is determined annually, with a maximum advance payment of 80% of the planned wage fund, the remainder being paid at the end of the year based on the degree of task completion. This wage fund does not fall within the company's unit wage price but is recorded in the cost of goods sold or operating expenses and reflected as a separate item in the company's annual financial report;

c) The planned wage fund of members of the Board of Members or Chairman of the Company, General Directors, Directors, and Supervisors is calculated based on the wage coefficient, allowance (if any), the minimum wage for unit wage price calculation, and an additional adjustment factor chosen by the company not exceeding twice the planned wage fund, but must meet the conditions stipulated in point a, Clause 2, Article 4 of this Decree;

In case the company implements a production and business plan resulting in losses or no profit, the planned wage fund will only be calculated based on the company's grade coefficient, allowance (if any), and the minimum wage.

d) The planned wage fund is established by the company and submitted to the owner for review before implementation. For limited liability companies with special ranking or Economic Groups, the planned wage fund must be registered with the Ministry of Labor, Invalids and Social Affairs, and the Ministry of Finance;

đ) The actual wage fund is determined based on the degree of achievement of profit targets and labor productivity. The company pays wages to members of the Board of Members or Chairman of the Company, General Directors, Directors, and Supervisors according to the company's wage regulations.

2. Regarding bonuses

a) The annual bonus fund for members of the Board of Directors or the Chairman of the company, General Director, Director includes: the management board bonus fund of the company as prescribed by the Prime Minister and the bonus fund from the company's award fund as stipulated in point b, Clause 3, Article 4 of this Decree;

b) The bonus fund specified in point a, Clause 2 of this Article shall be allocated annually up to a maximum of 60% for year-end bonuses. The remaining portion of the bonus fund will be used for bonuses after the completion of the term;

c) After the completion of the term, if the total actual profit does not fall below the total planned profit for the entire term, the members of the Board of Directors or the Chairman of the company, General Director, Director shall receive the remaining portion of the bonus fund; if the total actual profit is lower than the total planned profit for the entire term, for every 1% decrease in the total actual profit, there must be a corresponding 1% reduction in the remaining portion of the bonus fund;

d) The bonuses of members of the Board of Directors or the Chairman of the company, General Director, Director shall be implemented according to the company's bonus regulations;

3. Remuneration system linked to salary and bonuses

a) Members of the Board of Directors or the Chairman of the company, General Director, Director who fulfill their rights, obligations, and responsibilities as prescribed by the Enterprise Law and the Company Charter shall be entitled to the salaries and bonuses stipulated in Clause 1 and Clause 2 of this Article;

b) When members of the Board of Directors or the Chairman of the company, General Director, Director cause any of the following situations but have not reached the level of criminal liability, they shall not be promoted in rank or may be demoted, shall not receive salary adjustments based on coefficients, and shall not be eligible for bonuses:

- Causing the company to incur losses or causing state capital to be lost;

- Causing the company to be unable to pay its due debts;

- Making investment project decisions that are ineffective, failing to recover invested capital, or failing to repay debts;

- Failing to ensure employee wages and other benefits at the company or causing the company to establish incorrect wage scales contrary to labor laws;

- Causing violations in capital management, asset management, accounting systems, auditing, and other systems prescribed by the State;

- Causing losses for two consecutive years or failing to achieve the profit rate on capital for two consecutive years or alternating between losses and profits without being able to rectify the situation (except in special cases where the State intervenes to stabilize the market; increases depreciation to quickly recover capital, modernize technology, expand production and business; invest anew);

Article 6. Responsibilities of the company:

1. Develop a profit plan as the basis for determining the wage scale and the wage fund;

2. In the first quarter of each year, develop the wage scale and report to the owner for comments before the Board of Directors or the Chairman of the company makes a decision; develop and submit the wage fund plan for members of the Board of Directors or the Chairman of the company, General Director, Director, and Auditor for the owner's review;

3. Determine the actual wage fund and the company's bonus fund; establish wage and bonus regulations in accordance with the law, ensuring democracy, fairness, transparency, and encouraging employees to contribute their talents, professional skills, and high productivity to enhance the company's production and business efficiency;

4. In the first quarter of each year, report to the owner the implementation of wages and income of the previous year at the company;

Article 7. Responsibilities of the owner:

1. Guide, inspect, and supervise the implementation of labor policies and wage systems at companies under their management;

2. At the beginning of each year, accept, review, and provide comments on the wage scale of the company; review the planned wage fund, decide on temporary wage and bonus advances, and determine the repayment of excess wage and bonus amounts beyond the national regulations for members of the Board of Directors or the Chairman of the company, General Director, Director, and Auditor;

3. In the second quarter of each year, compile and report to the Ministry of Labor, Invalids, and Social Affairs on the implementation of labor and wages of the previous year at companies under their management;

Article 8. The Ministry of Labor, Invalids, and Social Affairs is responsible for guiding the implementation of this Decree;

Article 9. This Decree shall take effect fifteen days after its publication in the Official Gazette.

Article 10. The Ministers, Heads of ministerial-level agencies, Heads of government-affiliated agencies, Chairmen of provincial People's Committees directly under the Central Government, and organizations that are owners of single-member limited liability companies as stipulated in Article 1 of this Decree are responsible for implementing this Decree./.