On June the 12^th, the Vietnamese Government issued Decree 38/2022/ND-CP (“Decree 38”), which specifies minimum salaries across regions for employees with labor contracts; it is effective from July 1^st, 2022 and replaces Decree 90/2019/ND-CP, bringing in several labor regulatory as well as specific HR changes that must be taken into account by local businesses in order to ensure compliance with the updated regulations.

Decree 38 stipulates both the minimum monthly salary, as well as the minimum hourly salary for the 4 Regions, as follows:

Decree 38 also adds certain considerations, that can be of value to employers and must be addressed accordingly, as highlighted in the following passages:

Firstly, the requirement that the salaries of employees who have completed vocational training must be at least 7% higher than the standard minimum salary level based on region, has been removed.

Secondly, Decree 38 outlines the methodology to convert weekly/daily salaries into monthly/hourly salaries, for the purpose of understanding full compliance with minimum salary requirements.

Furthermore, due to the increase of the minimum salaries in all 4 regions, a new cap for unemployment Insurance will also be effective from July 1^st, 2022, and would be set forward as follows:

Finally, the 4 regions have been clearly defined in the Appendix to Decree 38 and certain changes have been made therein compared to the previous Decree 90, which employers must take into account for the purpose of verifying the region their business belongs to.

Decree 38 brings about additional regulatory rules that must be followed closely by domestic businesses. It is recommended to have a comprehensive review of current labor agreements in place, as well as to adjust accordingly (if needed) any company’s HR policies. Competent authorities encourage businesses to retain the agreements that are more favorable to employees than those noted in Decree 38.

At PHC Advisory, we are able to offer your business in Vietnam full support on relevant compliance matters, or any other issues your business may face in Vietnam.  If you would like to know more about how PHC Advisory can assist your business in applying for tax deadline extensions, as well as updates on the most recent tax and financial developments in Vietnam, please contact us at info@phcadvisory.com.