Difference between Statutory Pay Rate (“SPR”) and Statutory Minimum Wage (“SMW”) in Vietnam

I. What is Statutory Pay Rate (also called basic Salary)?

The statutory pay rate shall be used as the basis for:

a) Determining the levels of salaries in payrolls, allowances and other benefits as per the law with regard to individuals as defined in Article 2 of this Decree (24/2023/NĐ-CP);

b) Determining the levels of subsistence allowances as per the law;

c) Determining contributions and benefits concerning the statutory pay rate.

From July 01, 2023, the statutory pay rate is VND 1.800.000 per month.

II. What is Statutory Minimum Wage?

The statutory minimum wage per month is the minimum wage used as the basis for any agreement between employers and employees on monthly salary and payment thereof. The job- or position-based salary of an employee who ensures the monthly normal working hours and has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per month.

The statutory minimum wage per hour is the minimum wage used as the basis for any agreement between employers and employees on hourly salary and payment thereof. The job- or position-based salary paid for every working hour to an employee who has fulfilled his/her labor productivity norms or tasks as agreed shall not be lower than the statutory minimum wages per hour.

From July 01, 2022, the statutory minimum wage is as following table

Region	Statutory minimum wages per month  (Unit: VND/month)	Statutory minimum wages per hour  (Unit: VND/hour)
Region I	4.680.000	22.500
Region II	4.160.000	20.000
Region III	3.640.000	17.500
Region IV	3.250.000	15.600

List Of Subregions To Which Statutory Minimum Wages In Vietnam: Click Here

III. Impact of change in SPR on business

The basic Salary (Statutory Pay Rate) applies to calculating salaries for individuals working in the state sector, including cadres, civil servants, public employees, and employees working under labor contracts for state agencies and the armed forces.

However, the employers and employees in the private sector will also be impacted by this change as SPR is used to calculate:

1. The capped salary for the contribution of social insurance and health insurance premiums by both employers and employees;

2. The capped contribution of trade union dues contributed by employees; and the trade union fees contributed by employers.

In particular: (i) the capped salary used to calculate social and health insurance premiums is set at 20 times the SPR; (ii) the total trade union fees contributed by an employer must be 2% of the employer’s salary fund used for the contribution of social insurance; and (iii) the capped contribution of monthly trade union dues paid by employees is 1% of the employer’s salary fund used for the contribution of social insurance.

IV. Conclusion

Companies should therefore recalculate their compulsory insurance premiums and trade union dues and fees in light of the new basic salary to ensure regularory compliance and the rights of their employees.

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