WAGES AND SALARY POLICY FOR EMPLOYEES UNDER THE COVID 19 SITUATION
The current Covid-19 pandemic has caused an inevitable decline in Vietnam’s economy. The laborers in Vietnam have been seriously affected by the pandemic, some lost their jobs and others are unable to find new ones. Many employees are also faced with a reduction in their wages and salary.
Together with the Labor Code 2019, the Government has promptly issued a variety of legal documents guiding financial support for the grieved people during the pandemic.
This writing shall clarify current policies regarding the support as said for the employees and guarantees of their wages and salary.
2. Legal provisions under the Labor Code 2019 on wages and salary of employees
2.1. Wages paid under agreed employment contracts
According to Article 13 of the Labor Code 2019, an employment contract is an agreement between an employee and an employer on a paid job, salary, working conditions, and the rights and obligations of each party involved in the labor relations. In the performance of the employment contract, the employer shall, in respect to the employment contract, pay the employees with the full amount of wages and salary except for cases stipulated in Part 2.2 as there below shown. Moreover, the monthly salary shall be paid on the agreed-upon dates in the employment contract to the employee.
In case of late salary payment, the employee has the right to unilaterally terminate the employment contract without providing prior notice.
2.2. Cases wherein wages and salary can vary against those written in the employment contract
a) Under consent of both parties:
In case both parties agree to adjust the wages or salary of the employees, they shall make the annex of the employment contract in accordance with Article 22 of the Labor Code.
b) Reassignment of an employee against the employment contract:
In the event of unprecedented difficulties such as natural disasters, fire, major pandemic, implementation of preventive and remedial measures for occupational accidents or diseases, electricity and water supply failures, or for reasons of business and production demands, the employer may temporarily assign an employee to perform a work which is not prescribed in the employment contract for an accumulated period of up to 60 working days within 01 year.
In that case, pursuant to Article 29 of the Labor Code, if the new salary is lower than the previous salary, the previous salary shall be maintained for 30 working days. The new salary shall be of at least 85% of the previous salary and not lower than the minimum wages.
c) Suspension pays in Suspension case of the employment contract:
According to Article 99 of the Labor Code, in cases wherein the employment contract is suspended as listed as follows, the employee shall receive suspension pay instead of wage or salary:
(i) If the suspension is at the employer’s fault, the employee shall be paid the full salary as stated in the employment contract;
(ii) If the suspension is at the employee’s fault, the employee shall not receive the salary. If this leads to suspension of work of other employees in the same unit, they shall be paid an amount not smaller than the statutory minimum wages;
(iii) In case the suspension is caused by an electricity or water supply issue that is not at the employer’s fault, or by a natural disaster, fire, major epidemic, hostility, relocation requested by a competent authority, or for economic reasons, both parties shall negotiate the salary as follows:
– If the suspension does not exceed 14 working days, the salary shall not fall below the statutory minimum wages;
– If the suspension is longer than 14 working days, the salary shall be negotiated by both parties, and the salary for the first 14 days shall not fall below the statutory minimum wages.
Thus, in case an employee stops working due to quarantine, social distancing or blockade at the request of a competent authority, the employee’s salary during the work stoppage will be paid according to the following principles as previously stated.
d) Severance allowance for employees:
In some cases, wherein the labor contract is terminated as prescribed in law, according to Article 46 of the Labor Code, the employer shall be responsible for paying severance allowance to the employee who has worked regularly for a period of at least 12 months.
Each year of work will be worth half a month’s salary, except for the cases in which the employee is entitled to receive retirement pension or the cases in which the employee is not present at work without acceptable excuses for at least 05 consecutive working days.
e) Redundancy allowance for employees:
Pursuant to Article 47 of the Labor Code, in case of changes in structure and technology or changes due to economic reasons that occur, the employer shall allow the employee to resigns and pay employees working for at least 12 months the redundancy allowance.
Each year of work will be worth 01 month’s salary and the total redundancy allowance shall not be lower than the amount of 02 month’s salary.
2.3. Deferred salary payment due to Covid-19
The principle of paying wages to employees is implemented in accordance with the provisions of Article 94 of the Labor Code 2019, specifically, the employer must pay wages directly, fully and on time to the employees. Thus, enterprises are obliged to pay wages on time to employees. In case of force majeure, the enterprise can defer the payment of salary but not exceeding 30 days.
In addition, if the enterprise pays the employee’s salary 15 days or later, the enterprise shall compensate the employee an amount at least equal to the interest on the amount of the deferred payment calculated at the interest rate on mobilizing deposits with a term of 1 month announced by the bank where the employer opens a salary account for the employee at the time of salary payment.
2.4. Enterprises shall not reduce wages when employees are under mode of work from home during the epidemic, unless otherwise agreed by the two parties.
In particular, Article 95.1 of the Labor Code 2019 on the payment of wages to employees stipulates that “The employer pays the employee based on the agreed salary, labor productivity and quality of work performance.” Thus, the payment of wages to employees is based on the agreed salary, productivity and quality of work performance, not on the working location. Therefore, if the employee’s productivity and work quality are equal or better than the productivity and quality when working on site, the company shall not reduce the employee’s salary but pay the employee’s salary in full as agreed.
2.5. Financial support policies for employees
Many workers have lost their jobs as a result of Covid 19. The government’s support is critical in assisting workers in overcoming their difficulties. The followings are the authorities’ latest policies put forth in an attempt to provide financial assistance to people negatively affected by Covid 19:
– Resolution No. 42/NQ-CP (Resolution 42) dated April 9, 2020 and Resolution No. 154/NQ-CP dated October 10, 2020: Applied to those who suffer from a dramatical decrease in income and have difficulty in living at subsistence level; to those who are laid off or cannot find a job due to Covid-19 pandemic and thus having difficulties in maintaining sufficiency; to certain groups of beneficiaries of incentives and social security policies during the pandemic.
There are 6 groups of people subject to receive support in cash due to the negative impact of Covid-19 include:
(i) Employees working under the labor contract regime who must suspend the performance of their labor contracts or take unpaid leave from work for 1 month or more facing difficulties due to the COVID-19 pandemic, shall be supported at the level of VND1,800 000 /person/month.
(ii) Individual business households with a tax declaration turnover of less than VND100 million /year and temporarily suspending business from April 1, 2020 shall be supported with VND 1,000,000/household/month, in effect from April to June, 2020 and paid once in full.
(iii) Employees whose labor contracts are terminated and are not eligible for unemployment benefits shall be supported with VND 1,000,000/person/month, in effect from April to June 2020 and paid once in full.
(iv) People with meritorious services to the revolution who are enjoying a monthly preferential allowance shall receive additional support of VND 500,000/person/month, in effect from April to June 2020 and paid once in full.
(v) Social security beneficiaries who are receiving monthly social allowances shall receive an additional support of VND 500,000/person/month, in effect from April to June 2020 and paid once in full.
(vi) Poor households and pro-poor households according to the national poverty line on the list until December 31, 2019 shall be supported at VND 250,000 /person/month, in effect from April to June 2020 and paid once in full.
– In addition, The Prime Minister has issued Decision No. 15/2020/QD-TTg and Decision 32/2020/QD-TTg stipulating conditions and procedures to support people affected by Covid 19.
Provisions under the Labor Code 2019 and supplementing policies issued by the Government support employees in overcoming and adapting to the current pandemic situation. The State expects that people who suffer financial difficulties due to Covid-19 pandemic can settle down soon.