You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

December 28, 2017

New Decree on Minimum Wage Increases in Vietnam

Subscribe to Updates

On December 7, 2017, the government issued Decree No. 141/2017/ND-CP stipulating new minimum wage requirements for employees working under labor contracts (Decree 141). Under the provisions of Decree 141, which will apply from January 1, 2018, the monthly minimum wage will be increased by VND 180,000 to 230,000 (USD 7.92 to 10.13), depending on the region.

Levels of Increase  

Decree 141 determines four minimum wage rates in Vietnam for four different regions (cumulatively covering the whole country). Each region is evaluated according to its socio-economic development, costs of living, and location. The specific level of minimum wage increase applied in each region is summarized in the table below:

As such, by January 1, 2018, the average minimum wage will increase by about 6.5 percent.
 

Adjusted Regions

As mentioned above, the minimum wages vary across four geographical regions. The number of regions remains unchanged in the new decree, but there are slight adjustments to the list of cities/provinces which each region covers.

Under Decree 141, Region I spans the urban areas of Hanoi and Ho Chi Minh City. Region II covers the rural areas of Hanoi and Ho Chi Minh City, in addition to the urban localities of Can Tho City, Da Nang City, and Hai Phong City. Region III comprises the provincial cities of Bac Ninh Province, Bac Giang Province, Hai Duong Province, and Vinh Phuc Province, while Region IV covers the remaining localities. Some cities/provinces are moved up from Region II to Region I, from Region III to Region II, and from Region IV to Region III, while some others are moved down a level.

Reasons and Impacts

According to the Ministry of Labor, Invalids and Social Affairs, the level of minimum wage increase was calculated based on the necessary compensation for daily living expenses in 2017 to ensure that employees meet their minimum needs. Once Decree 141 comes into effect, the new minimum wages should help meet about 92-96% of the minimum living demands of employees and their families, depending on the region.

The above-mentioned adjustment plan was given taking into account the impacts of minimum wage increase on various matters such as jobs, unemployment, difficulties in manufacturing and trading, conditions of enterprises, minimum living requirements of employees and their dependents, etc. In particular, the adjustment plan was also affected by the new provisions which expand the range of employees who are subject to the statutory social insurance contribution (according to which employees with a labor contract of one month or more must participate in the social insurance scheme, as opposed to those with a contract of three months and more as presently), and the new salary will be used as the basis for payment of statutory insurance contributions.

As a result, the raise will meet basic living costs and certainly improve the living standards of employees and their families. However, on the other hand, the expenditures of enterprises will increase, as they must not only adjust the monthly salary of their workers, but must also increase their statutory insurance contributions.

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

March 27, 2024
Cambodia’s Ministry of Labor and Vocational Training issued the Notification on the Compensation for Terminating an Employment Contract on March 21, 2024, clarifying the compensation due to employees upon the termination of their employment contracts. The notification outlines different requirements depending on the nature of the termination and the type of employment contract, as laid out below. Termination without Valid Reason and in Absence of Serious Misconduct If an employment contract has been terminated by an employer without a valid reason and the employee did not commit any serious misconduct as defined under the relevant article of the Labor Law, the employer must compensate the employee as follows: Fixed-Duration Contract: Wages that have not yet been paid; Unused and unpaid annual leave through the termination date; Severance payment equal to at least 5% of the wages paid to the employee during the length of the contract; and Damages for being laid off before the expiration date of the fixed-duration contract, at least equal to the wages the employee would have received had he or she completed the original contracted term of employment. Unspecified-Duration Contract: Wages that have not yet been paid; Unused and unpaid annual leave through the termination date; Compensation in lieu of notice if the employer did not give prior notice in accordance with the Labor Law; Seniority indemnity for the semester that the employee is terminated and total seniority back payments that have not been paid; and Damages for being laid off, in an amount equal to the seniority payment received during the employment contract. Termination in Cases of Serious Misconduct Employees who commit any serious misconduct as defined under the Labor Law (regardless of whether they are under a fixed-duration or unspecified-duration contract) are entitled only to the following compensation: Wages that have not yet
Read More
March 18, 2024
Lawyers from Tilleke & Gibbins’ labor and employment team have contributed a new Vietnam chapter to Thomson Reuters Practical Law’s Employment and Employee Benefits Global Guide. The guide provides a high-level comparative overview of employment laws and regulations across various jurisdictions around the world. Tilleke & Gibbins also contributed the Myanmar chapter of the guide. The Vietnam chapter covers a wide range of typical employment matters, such as limitations on working hours, paid leave requirements, minimum wage, and health and safety obligations. In addition, the guide provides insight on a number of topics of special interest to foreign investors doing business in Vietnam, including the following: Mandatory contents of a labor contract; Visas and permits required for expatriate employees; Employers’ obligations for protecting employees’ privacy and personal data; Procedural requirements for the dismissal of an employee; Employer and parent company liability. To view the latest version of Employment and Employee Benefits, please visit the Practical Law website and enroll in the free Practical Law trial to gain full access.
Read More
February 28, 2024
The Myanmar Investment Commission (MIC) has announced the opening of the trial period for MIC-permitted or MIC-endorsed companies to reenter investment data for using the Myanmar Investment Online (MyInO) system. The trial period is open until June 30, 2024. The MyInO system allows for the submission and recordal of applications for investment under the Myanmar Investment Law. With the implementation of phase 2 from September 1, 2023, applications for the appointment or resignation of foreign experts and employees within MIC-permitted or MIC-endorsed companies can now be submitted manually or through the Investment Monitoring System available on MyInO. To initiate the application process in MyInO, applicants are required to create an account on the platform. Subsequently, companies holding an MIC permit or endorsement must reenter all investment-related data since the obtaining of the relevant permits/endorsements, in compliance with the announcement. Following this data update, applications can be filed through MyInO. After this trial period, the submission of applications for appointments will be available online. The benefit of using MyInO to submit a foreign expert or employee appointment or resignation application is that the application can be submitted within 30 days of the foreign expert’s arrival in Myanmar. In contrast, hard copy applications must be submitted within seven working days of arrival. According to the Myanmar Investment Law, a foreign expert is one who qualifies as a senior manager, technical or operational expert, or advisor in permitted or endorsed companies within Myanmar. For assistance with completing the investment data reentry process or filing applications for appointment or resignation of foreign experts or employees, or for further details on any aspect of the Investment Monitoring System under MyInO, please contact Tilleke & Gibbins at [email protected].
Read More
February 9, 2024
Tilleke & Gibbins employment specialists in Myanmar have contributed an updated Employment and Employee Benefits in Myanmar overview for Thomson Reuters Practical Law, an online publication that provides an overview of employment and employee benefits in jurisdictions worldwide. The Myanmar overview was written by members of Tilleke & Gibbins’ Yangon office, including Yuwadee Thean-ngarm, director; Nwe Oo, senior associate; and Kyaw Min Tun, associate. The chapter covers a wide range of key employment topics, including employment status, background checks, regulation of the employment relationship, minimum wage, working hours and holidays, illness and injury of employees, discrimination and harassment, termination of employment, resolution of employer-employee disputes, redundancy/layoffs, employee representation and consultation, business transfer and insolvency, employee relocation, health and safety obligations, taxation of employment income, intellectual property issues, and more. Practical Law, one of the many legal reference resources from Thomson Reuters, publishes a wide range of guides for hundreds of jurisdictions and practice areas. The Employment and Employee Benefits Global Guide covers 44 jurisdictions around the world, with Tilleke & Gibbins also providing the Vietnam chapter of the guide. To view the latest version of the Employment and Employee Benefits in Myanmar overview, please visit the Practical Law website and enroll in the free Practical Law trial to gain full access.
Read More