How to Register a Salary Scale for a New Business in Vietnam

1. What is a Salary Scale? Regulations on Building Salary Scales

The salary scale must be built in accordance with the general principles and regulations set out in the following legal documents:

• Labor Code 2019 (effective from January 1, 2021)
• Decree No. 49/2013/ND-CP
• Decree No. 121/2018/ND-CP

These documents also provide the legal basis for businesses to build their own salary scales in line with the nature of the work and the specific characteristics of each enterprise.

1.1 What is a Salary Scale?

A salary scale is a structured system of salary groups, salary grades, and salary levels used as the basis for paying wages to employees. Depending on the complexity of the job and the capability of each employee, the business will calculate compensation according to the established salary scale.

1.2 Regulations on Building Salary Scales and Labor Norms

Under Article 93 of the Labor Code 2019, enterprises are required to build salary scales, payrolls, and labor norms. The salary scale serves as the basis for recruitment, employment, job or title agreements recorded in labor contracts, and wage payments to employees.

Labor norms must be set at an average level that allows the majority of employees to complete their work without having to extend normal working hours, and must be tested before being officially issued. The principles for building salary scales and payrolls must comply with Article 7 of Decree No. 49/2013/ND-CP.

Note: The salary scale, payroll, and labor norms must be publicly posted at the workplace before implementation. When building a salary scale, the enterprise must consult with the employee representative organization.

2. Detailed Guide to Salary Scale Registration

Enterprises must register their salary scale in the following cases:

• Newly established enterprises must submit a salary scale dossier to the Department of Labor, Invalids and Social Affairs at the district level where the enterprise is headquartered.
• Operating enterprises that change their salary structure must rebuild and re-register their salary scale.

Before applying for salary scale registration, the enterprise must prepare a complete registration dossier.

2.1 Salary Scale Application Dossier

There are two registration scenarios, each requiring a different dossier:

First-time salary scale application:

For enterprises registering a salary scale for the first time, the dossier must include the following documents:

1. – Power of attorney from the collective of employees to one representative (if the enterprise does not have a grassroots trade union), along with a list of the authorizing employees.
2. – Decision on the establishment of a salary scale review board.
3. – 02 copies of the salary scale and payroll.
4. – Salary allowances (if any).
5. – Detailed regulations describing each job title.
6. – Decision to promulgate the salary system.
7. – Minutes of the salary scale review board meeting.
8. – Minutes of agreement between the employee and the employer.
9. – Business registration certificate (notarized copy).
10. – Notice of the salary scale.
11. – Registration form for the salary scale and payroll system.

Salary scale registration dossier for enterprises adjusting or changing salaries:

1. – 01 copy of the previous salary scale and payroll (confirmed by the district or town Labor Department).
2. – 03 copies of the new salary scale and payroll.
3. – 03 copies of the salary allowance schedule (if any).

2.2 Salary Scale Registration Procedures

Enterprises registering a salary scale and payroll for the first time must first complete employer registration with the district administrative office before carrying out salary scale registration procedures. The declaration and salary scale must be submitted together.

The registration process is as follows:

Step 1: The enterprise builds its salary scale and payroll in accordance with government principles and submits them to the state labor management agency at the district level.

Step 2: The district-level state labor management agency receives the salary scale and payroll registration. If the agency finds that the enterprise’s salary scale violates government principles, it will notify the enterprise to amend and supplement the documents in line with regulations.

Enterprises (with 10 or more employees) must register their salary scale and submit the dossier in person or by post:

• Enterprises with 50 or fewer employees submit their dossier at the People’s Committee of the district, town, or provincial-level city where the business is located.
• Enterprises with more than 50 employees submit their dossier at the Provincial Department of Labor or the equivalent agency in centrally-administered cities.

Processing time is approximately 05-07 days from the date the Department of Labor, Invalids and Social Affairs receives a valid dossier and confirms the salary scale registration.

3. Penalties for Late Salary Scale Registration

Late registration or late submission of the corporate salary scale will be sanctioned in accordance with the law. Under Article 13 of Decree No. 88/2015/ND-CP, penalties are divided into two levels depending on the nature and severity of the violation:

– A warning or fine of VND 500,000 to VND 1,000,000 will be imposed on an employer who fails to submit the salary scale, payroll, and labor norms to the district-level state labor management agency as required.

– A fine of VND 2,000,000 to VND 5,000,000 will be imposed on an employer who commits any of the following acts:

• Failing to build salary scales, payrolls, labor norms, and bonus regulations as required by law;
• Failing to consult with the employee representative organization at the workplace when developing salary scales, payrolls, labor norms, and bonus regulations;
• Failing to publicly post the salary scales, payrolls, labor norms, and bonus regulations at the workplace;
• Failing to notify employees of the payment method at least 10 days before implementation.