Salary in a Labor Contract: Calculation & Allowances

Salary in a labor contract is the amount of money paid by the employer to the employee, reflecting the value of labor spent. Understanding regulations on wages and allowances helps protect workers’ rights and ensure compliance with labor laws. This article provides detailed information about the components of salary, how to calculate salary in different forms, and common allowances.

What does the salary include?

According to Article 90 of the Labor Code 2019, wages include:

Salary by job or title: This is the basic amount of money, determined based on the salary scale and payroll of the business.

Salary allowance: The amount compensates for factors such as working conditions, nature of work, or seniority.

Other additions: Includes amounts that have a specific amount of money determined and amounts that cannot determine a specific amount of money, associated with the work process and results.

>>> See more: Labor Contract Form – Latest & Standard Code.

Instructions on how to record salary and salary allowances in labor contracts

Pursuant to Clause 5, Article 3 of Circular 10/2020/TT-BLDTBXH, recording salary and salary allowances in the labor contract needs to comply with the following principles:

Salary by job or title: Record the salary calculated based on the time of the job or title according to the salary scale and salary table developed by the employer; For employees receiving wages based on products or salary, write the salary calculated by time to determine the unit price of the product or salary.

Salary allowances as agreed by both parties are as follows:

• Salary allowances to compensate for factors such as working conditions, complexity of work, living conditions, and level of labor attraction where the salary agreed in the labor contract has not been taken into account or is not fully calculated;
• Salary allowances are linked to the employee’s work history and performance results.

Other additions:

• Additional payments determine a specific amount of money along with the salary agreed upon in the labor contract and are paid regularly in each pay period;
• Additional payments whose specific amount cannot be determined along with the salary agreed in the labor contract, paid regularly or irregularly in each pay period associated with the working process and results of the employee’s work performance.
• For other regimes and benefits such as bonuses as prescribed in Article 104 of the Labor Code, initiative bonuses; mid-shift meal money; Subsidies for gasoline, telephone, transportation, housing, child care, and child care; Support when an employee has a relative who dies, an employee whose relative gets married, on the employee’s birthday, allowances for employees in difficult circumstances due to labor accidents, occupational diseases, and other support and allowances are recorded in a separate section in the labor contract.

Salary payment form:

• The employer and employee agree on the form of payment based on time, product or piece of work.
• Salaries are paid in cash or through the employee’s personal account opened at the bank.

Salary payment term:

• Employees who are paid by the hour, day, or week are paid after the hour, day, or week of work or are paid in lump sum as agreed upon by both parties but must not exceed 15 days and must be paid in one lump sum.
• Employees who receive a monthly salary are paid once a month or once every half a month. The time of salary payment is agreed upon by both parties and must be set at a cyclical time.
• Employees who receive wages based on products or pieces of work are paid according to the agreement of both parties; If the work must be done for many months, the monthly salary will be advanced according to the amount of work done during the month.
• In case due to force majeure the employer has tried all remedies but cannot pay wages on time, the delay must not exceed 30 days; If salary is paid late for 15 days or more, the employer must compensate the employee with an amount at least equal to the interest on the late payment amount calculated according to the 1-month term deposit interest rate announced by the bank where the employer opens the employee’s salary account at the time of salary payment.

Salary payment principles

Article 94 of the Labor Code 2019 stipulates the following salary payment principles:

• Employers must pay wages directly, fully and on time to employees. In case the employee cannot receive salary directly, the employer can pay salary to the person legally authorized by the employee.
• Employers may not restrict or interfere with employees’ right to decide on salary spending.
• Do not force employees to spend their salary on purchasing goods or using services from the employer or other units designated by the employer.

How to calculate wages for employees

Article 96 of the Labor Code 2019 and Article 54 of Decree 145/2020/ND-CP calculate salary as follows:

Pay by time

Wages are calculated according to the number of hours, days, weeks or months worked by the employee. The salary calculation formula is as follows:

• Monthly salary = (Salary + allowance) / Standard working day x Actual working days.
• Weekly salary = Monthly salary x 12 months / 52 weeks.
• Daily salary = Monthly salary / Number of normal working days in the month.
• Hourly wage = Daily wage / Number of hours worked per day.

Pay based on product

Wages are calculated based on the number of products or amount of work the employee has completed. The salary calculation formula is as follows:

• Salary = Product unit price x Number of completed products.
• Product unit price = Salary / Number of specified products.

Pay a fixed salary

Wages are calculated according to the number of work contracts that the employee has signed with the employer. The salary calculation formula is as follows:

• Salary = Unit price x Number of completed contracts.
• Unit price = Salary / Specified number of contracts.

Pay overtime

Employees who work overtime are paid according to the salary unit price or actual salary paid according to the job. Overtime wages are determined as follows:

• Weekdays: at least 150% of salary.
• Weekly rest day: at least 200% of salary.
• Holidays: at least 300% of salary excluding holidays and paid days off for employees receiving daily wages.
• Working at night (from 10:00 p.m. the previous day to 6:00 a.m. the next day): additional payment equal to at least 30% of the normal working day’s salary. At the same time, employees who work overtime at night will be paid an additional 20% of their salary according to the salary unit price, or the salary according to normal daytime work.

>>> See more: Company Terminates Labor Contract Before Expiration: What Should You Note?

Reputable salary consulting service for employees at Long Phan Consulting Company

At Long Phan Consulting Company, we provide professional consulting services on salary-related issues, including:

• Consulting on salaries and allowances that employees are entitled to;
• Instructions on how to record salary in the labor contract;
• Consulting on building salary scales and payroll in accordance with legal regulations;
• Review, amend and supplement labor contracts, including salaries;
• Consulting on drafting labor contracts, ensuring the rights of both parties;
• Consulting on salary payment principles;
• Consulting on resolving salary disputes;
• Consulting on issues related to social insurance, health insurance, unemployment insurance;
• Consulting and answering other issues related to Salary in a labor contract.

Frequently asked questions about salary in a labor contract

Below are frequently asked questions about salary in a labor contract that customers can refer to:

What is the regional minimum wage and how does it affect salary in a labor contract?

The regional minimum wage is the lowest wage that employers must pay to employees working in normal working conditions, to ensure a minimum living standard for employees and their families. This salary is regulated by the Government and adjusted according to each geographical region. Employers are not allowed to pay employees less than the regional minimum wage.

If the company is late in paying wages, what rights do workers have?

If the company delays paying wages for 15 days or more, the employee has the right to request the employer to pay an additional amount of interest calculated on the late payment amount according to the 1-month deposit interest rate announced by the bank where the company opens the payroll account at the time of salary payment.

Do employees receive salary advances?

Employees are entitled to salary advances if there is an agreement with the employer. The advance amount and advance time are agreed upon by both parties.

How is overtime pay on holidays and Tet calculated?

Overtime pay on holidays and New Year is calculated at least equal to 300% of normal working day salary, not including holiday pay, New Year’s Day, and paid days off for employees receiving daily wages.

If there is a salary dispute, what should employees do?

If there is a dispute over wages, employees can file a complaint with the employer, a labor conciliator or sue in court.

How to calculate salary when working at night?

Employees who work at night (from 10 p.m. to 6 a.m.) are paid at least 30% more than the normal working day’s salary. If working overtime at night, employees will also be paid an additional 20% of their salary according to the salary unit price or salary based on daytime work.

Do probationary workers receive a salary?

Probationary workers still receive a salary. The probationary salary is agreed upon by both parties but must be at least equal to 85% of the salary of that job.

Conclude

Understanding the regulations on salary in a labor contract is very important to protect the rights of both employees and employers. If you have any questions or need further advice, please contact Long Phan Consulting Company via the hotline: 0906735386 for dedicated support.