Guide to building a salary scale for the company

Building a salary scale is one of the key tasks, ensuring sustainable development and competitiveness of businesses in today’s labor market. A scientifically and reasonably designed salary scale not only helps businesses attract and retain talented people but also optimize costs and improve labor productivity. This article by Long Phan will provide customers with detailed instructions on the process of building the latest salary scale.

What is a salary scale?

The salary scale is a system of salary levels arranged in ascending order, corresponding to the value and requirements of each job position as well as the capacity and experience of the employee. Each salary level includes a specific salary range, clearly defining the minimum and maximum salary that employees in that position can receive. Building a scientific and transparent salary scale is the foundation for businesses to operate effectively, motivate employees and promote sustainable development.

Article 93 of the Labor Code 2019 specifically regulates the construction of salary scales, payroll and labor norms, which is an important legal basis that businesses need to comply with in the process of building a salary scale.

Principles for building a salary scale

To build an effective salary scale, meet the business’s goals and ensure the rights of employees. Article 93 of the Labor Code 2019 has regulations on the construction of salary scales, payroll and labor norms as follows:

1. The employer must develop a salary scale, salary table and labor norms as a basis for recruiting, using employees, negotiating salaries according to the job or title stated in the labor contract and paying salary for workers.
2. The labor level must be an average level that can be achieved by the majority of workers without having to extend normal working hours and must be applied on a trial basis before being officially issued.
3. Employers must consult with the representative organization of employees at the facility for places where there is an organization representing employees at the facility when developing salary scales, payroll and labor norms.

Salary scales, salary tables and labor levels must be publicly announced at the workplace before implementation.

Thus, when building a salary scale, businesses need to pay attention to the following issues:

• The salary scale must be built based on the provisions of labor law, especially regulations on regional minimum wages, working hours, rest breaks and social insurance regimes.
• The salary scale needs to ensure internal fairness, pay wages commensurate with the value of work and the capacity of employees. At the same time, the salary scale also needs to compete with the labor market to attract and retain talent.
• All information about the salary scale, salary calculation, allowances, bonuses… needs to be public, transparent and easy to understand for employees. This helps build trust and transparency in the labor relationship.
• The salary scale needs to be consistent with the development strategy, scale, business lines and financial situation of the enterprise.
• The salary scale needs to be flexible to easily adjust when there are changes in legal regulations, socio-economic conditions or business needs.

Steps to build a salary scale for the company

Below are the basic steps for your business to build a reasonable salary scale:

Step 1: Set up the salary scale and payroll system

Enterprises need to build a system of salary scales and payrolls to ensure that the lowest salary for each job or title is not lower than the regional minimum salary according to legal regulations.

According to regulations in Article 91 of the Labor Code 2019, the minimum wage is the lowest rate paid to workers doing simple jobs under normal working conditions. This level is set to ensure the minimum living needs of workers and their families, and is consistent with the socio-economic situation.

The regional minimum wage is determined according to:

• Geographical region;
• The form is determined by month or by hour.

Factors affecting the adjustment of the minimum wage include:

• Minimum living standards of workers and families;
• Correlation between minimum wage and market salary;
• Consumer price index, economic growth;
• Labor supply and demand relationship, labor productivity;
• Ability to pay off the business.

Every year, the Government will announce new regional minimum wages. Therefore, businesses need to update, amend and supplement salary scales to meet the latest regulations.

Step 2: Consult with the employee representative organization at the enterprise

If the enterprise has a representative organization for workers at the facility, consultation is mandatory when developing salary scales and payroll. This is stipulated in Article 41 Decree 145/2020/ND-CP, including the following processes:

• Send documents: Employers need to send documents detailing the expected content to the employee representative organization for consultation.
• Collect opinions: The employee representative organization will collect opinions from the employees they represent and prepare a written response to send back to the employer. In case the content is related to the rights of female workers, it is necessary to ensure that their opinions are fully collected.
• Dialogue: The employer organizes a dialogue to discuss and receive opinions. The dialogue needs to be recorded in minutes, signed by representatives of the participating parties, in accordance with Clause 4, Article 39 of Decree 145/2020/ND-CP.
• Disclosure of content: Within 3 working days after the dialogue, businesses must disclose the main contents at the workplace. The employee representative organization (if any) disseminates it to all employees.

If the enterprise does not have a representative organization for workers at the facility, it is not required to consult with the superior trade union.

Step 3: Publicize the salary scale at the workplace

Before applying, businesses need to publicize the content of the salary scale at the workplace according to regulations in Clause 3, Article 93 of the Labor Code 2019. This helps ensure transparency and creates trust between employers and employees.

Step 4: Store records and related documents

Enterprises need to fully store salary scale records and related documents, including:

• Minutes of consultation (if any);
• Decision to issue salary scale;
• Documents publicizing salary scales at the workplace.

Although the law does not require businesses to submit salary scales to the Department of Labor, War Invalids and Social Affairs, storing this document is necessary to be ready for presentation when requested by competent authorities.

Is it mandatory to maintain and update the Pay Scale periodically?

Although the law does not require businesses to maintain and update their payroll periodically, doing so brings many practical benefits, helping businesses adapt to changes in the labor market and improve operational efficiency. Specifically:

• The labor market is always changing, updating salary scales helps businesses maintain competitiveness in attracting and retaining talent.
• A salary scale suitable to the actual situation helps businesses optimize personnel costs, improve labor productivity and business efficiency.
• Updating the salary scale helps businesses maintain fairness in pay, motivate employees and build a healthy working environment.
• A clear and transparent salary scale helps minimize the risk of labor disputes related to salaries and bonuses, creating stability in labor relations.

Article 91 of the Labor Code 2019, Clause 4, Article 50 of Decree 145/2020/ND-CP on adjusting regional minimum wages. Enterprises need to monitor and update salary scales to comply with new legal regulations.

Consulting on building salary scales

Consulting services for building standard salary scales for companies in Long Phan

With a team of experienced experts and extensive knowledge of labor law, Long Phan is proud to be a professional and reputable consulting service provider. We are committed to providing customers with optimal solutions, in accordance with the law and the specific operations of each business.

Long Phan’s services include:

• In-depth consulting on labor, wages, and social insurance.
• Analyze and evaluate work scientifically and objectively.
• Design a salary structure suitable to the scale, industry and development strategy of the business.
• Salary survey, collection and analysis of market data accurately and comprehensively.
• Build a detailed salary schedule, ensuring internal fairness, market competitiveness and in accordance with the capacity and experience of employees.
• Drafting salary and bonus regulations, internal regulations related to salary and welfare regimes.
• Support businesses to deploy and apply salary scales effectively and in compliance with the law.
• Answer questions and support businesses in the process of using salary scales.

Building a salary scale is an important factor, contributing to the success and sustainable development of the business. For advice and support in building a professional and effective salary scale, please contact Long Phan via the hotline 0906735386. We are always ready to accompany customers on the path of development!