Vietnam minimum wage regions: how to find your zone

Vietnam minimum wage regions are four zones, called Region I to Region IV, and every employer must pay at least the monthly rate set for the zone where its workplace sits. Since 1 January 2016 the rates have been 3,500,000 dong for Region I, 3,100,000 for Region II, 2,700,000 for Region III and 2,400,000 for Region IV. Decree 122/2015/ND-CP sets them. To find your zone, look up your workplace address in the appendix to that decree.

Sources: Government Decree No. 122/2015/ND-CP, Article 3 and Article 6, dated 14 November 2015.

The four rates in 2016

The Government signed Decree 122/2015/ND-CP on 14 November 2015. It took effect on 1 January 2016 and replaced Decree 103/2014/ND-CP of 11 November 2014.

The rates are monthly. Here is what changed from 2015, when Decree 103/2014 applied.

• Region I: 3,500,000 dong, up from 3,100,000.
• Region II: 3,100,000 dong, up from 2,750,000.
• Region III: 2,700,000 dong, up from 2,400,000.
• Region IV: 2,400,000 dong, up from 2,150,000.

The rises run from 250,000 to 400,000 dong a month, depending on the zone. The average rise is 12.4 percent. The National Salary Council proposed the plan about two months before the decree was signed.

Sources: Decree No. 122/2015/ND-CP, Article 3; VietnamPlus (Vietnam News Agency), "Minimum wage to rise 12.4 pct on average from January 2016," 20 November 2015.

Who must follow the zones

The decree covers workers on labour contracts. That includes staff of companies under the Law on Enterprises. It also includes cooperatives, farms, households, individuals and other bodies that hire people under a labour contract.

It covers foreign employers too. Foreign agencies and organisations based in Vietnam, international organisations and foreigners who hire workers under contract must follow it. A treaty that Vietnam has joined can set a different rule.

Sources: Decree No. 122/2015/ND-CP, Articles 1 and 2.

How to find your zone

The decree does not describe the zones in words only. Article 3 names four regions, and the list of places in each one sits in an appendix at the end of the decree. The appendix is the official answer. Anything else is a summary.

Press reports at the time gave a rough picture. Urban areas of Hanoi and Ho Chi Minh City were reported as Region I. Rural districts of those two cities, plus the urban areas of Can Tho, Da Nang and Hai Phong, were reported as Region II. All remaining places fell into the lower zones. Treat that as a guide, not a ruling. Some localities do not fit a simple city or country rule.

A practical check has three steps.

1. Write down the exact address where the employee works, not the head office address.
2. Find the province, district and commune in the decree appendix.
3. Read the region number next to that place and use the matching rate.

Sources: Decree No. 122/2015/ND-CP, Article 3 and its appendix; VietnamPlus (Vietnam News Agency), 20 November 2015.

Branches and mixed areas

Article 4 covers the cases that cause the most confusion.

• An enterprise pays the rate for the place where it operates. A unit or branch in a different place pays the rate for its own place.
• If an industrial park, export processing zone, economic zone or hi-tech park spans places with different rates, the highest rate applies.
• If a place is renamed or split, its old rate applies for now until the Government issues new rules.
• If a new place is formed from areas with different rates, the highest of those rates applies.

So a company with a head office in Region I and a factory in Region III pays the factory staff the Region III minimum, unless the factory sits inside a park that crosses zones.

Sources: Decree No. 122/2015/ND-CP, Article 4.

The minimum is a floor, not a pay scale

The zone rate is the lowest pay an employer may offer. It applies to untrained workers doing the simplest jobs. Trained workers must receive at least 7 percent more than the rate for their zone. The decree counts holders of vocational certificates, college or university degrees and national vocational skill certificates as trained. It also counts workers trained in-house who passed an exam and were given a job that needs training.

Employers may not cut or drop the extra pay for overtime, night work, or heavy and hazardous work. They also may not drop other benefits the law requires. The employer and the grassroots trade union should agree on pay scales that keep fair gaps between untrained and trained staff, and between junior and senior staff.

The Ministry of Labour, War Invalids and Social Affairs leads on information, inspection and later proposals to adjust the rates.

Sources: Decree No. 122/2015/ND-CP, Articles 5 and 6.

What an employer should do now

Check each workplace against the appendix once, and write the result in your payroll file. Compare every contract with the zone rate and with the 7 percent rule for trained staff. Do this again whenever you open a branch, move a site or hire for a place in a new district. Because the rates are set by decree, they can change by a new decree, so keep the date of the rule you used.

Sources

Government of Vietnam, Decree No. 122/2015/ND-CP of 14 November 2015 on region-based minimum wages for employees working for enterprises, cooperatives and other employers, English text on english.luatvietnam.vn. VietnamPlus (Vietnam News Agency), "Minimum wage to rise 12.4 pct on average from January 2016," 20 November 2015.