DECREE

 ON PILOT MANAGEMENT OF LABOR, SALARY AND BONUS FOR SOME STATE-OWNED ECONOMIC GROUPS AND CORPORATIONS

Pursuant to the Law on Government Organization dated June 19, 2015;

Pursuant to the Labour Code dated June 18, 2012;

Pursuant to the Law on Enterprises dated November 26, 2014;

Pursuant to the Law on management and use of state capital invested in business operations of enterprises dated November 26, 2014;

At the request of the Minister of Labour, War Invalids and Social Affairs;

The Government hereby promulgates a Decree regarding the pilot management of labor, salary and bonus for some state-owned economic groups and corporations.

Chapter I

GENERAL PROVISIONS

Article 1. Scope 

This Decree deals with the pilot management of labor, design of pay scale and payroll, salary and bonuses of employees and General Directors, Deputy General Directors and Chief Accountants, and salary, remuneration and bonuses of members of Boards of Members, members of Management Boards, heads of Control Boards and comptrollers in 2020 of the following economic groups and corporations:

1. Parent company - Vietnam Posts and Telecommunications Group (VNPT).

2. Parent company - Vietnam Airlines JSC (Vietnam Airlines).

3. Parent company – Viet Nam Air Traffic Management Corporation (VATM).

These parent companies are hereinafter referred to as “company” or “companies”.

Article 2. Regulated entities

1. The employees as defined in the Labour Code.

2. General Directors, Deputy General Directors and Chief Accountants.

3. Members of Boards of Members, members of Management Boards, heads of Control Boards and comptrollers.

4. Representatives of state capital invested in companies, the owner’s direct representatives and the owner’s representative agencies as defined in the Law on management and utilization of state capital invested in the enterprises’ manufacturing and business operations.

5. Other regulatory authorities, institutional and individual entities involved in the implementation of this Decree.

Article 3. Labor, salary and bonus management rules

1. Companies shall introduce their own policies on recruitment and use of labor, salary and bonus in accordance with applicable laws and the company’s Charter.

2. Salaries and bonuses awarded to employees, General Directors, Deputy General Directors, Chief Accountants, members of Boards of Members, members of Management Boards, heads of Control Boards and comptrollers shall be associated with the productivity, business or production effectiveness of companies.

3. Labor, salary, remuneration and bonuses in wholly state-owned companies shall be managed by the Government according to regulations on assignment of tasks and responsibilities to the owner’s representative agencies and direct representatives in companies; with regard to joint-stock companies, the owner’s representative agencies shall, pursuant to this Decree, direct the representatives of state capital invested in such companies to attend and vote on these matters at meetings of the Management Boards or General Meetings of Shareholders.

Article 4. Elimination of objective factors

Companies shall exclude objective factors (if any) which may directly cause increase or decrease in the labor productivity, profits and return on equity when determining salary and bonus in accordance with this Decree, including:   

1. The Government shall adjust the pricing of products and services of which the price or price bracket is set out by the Government, revise corporate income tax incentives, amend mechanisms/policies or request companies to relocate or shrink their business premises, make accelerated depreciations for quick capital recovery, increase or decrease the charter capital or state capital invested in companies.

2. Companies undertake social security tasks, maintain market stabilization, balances of economic supply and demand according to the Prime Minister’s decisions, expand their business and production, invest in and develop new products and services, implement regulations of competent authorities, conventions, treaties or recommendations which are adopted by international organizations and to which Vietnam is a signatory.

3. Basic production inputs of companies are adversely affected by the market; natural disasters, conflagration, epidemics, war and other force majeure events.

Chapter II

LABOR MANAGEMENT AND DESIGN OF PAY SCALE AND PAYROLL

Article 5. Labor management

1. Each company must develop its own workforce plan which shall be used as the basis for its recruitment activities.

2. A workforce plan shall be rationally developed based on the company’s business and production plan, labor standards, organizational structure and indirect labor structure.

3. The workforce plan must be approved by the company's Board of Members or Management Board before it is implemented.

4. The company’s recruitment must be overt and transparent as per relevant laws, recruitment rules and its Charter.

5. If the number of employees recruited exceeds the company's labor demand, and this results in job deprivation, termination of labor contracts and/or increase of costs, the company’s General Director shall be accountable to its Board of Members or Management Board (even he/she shall be subjected to salary reduction and/or bonus cut).

Article 6. Design of pay scale and payroll

Based on its production and workforce plans, and its charger, the company shall design and introduce its own pay scale/payroll (including salary-based allowances) for implementing salary policies for its employees, General Director, Deputy General Directors, Chief Accountant, members of the Board of Members or Management Board, head of Control Board and comptrollers, including:

1. Pay scale and payroll of employees.

2. Payroll of General Director, Deputy General Directors and Chief Accountant (hereinafter referred to as “executives”).

3. Payroll of full-time members of the Board of Members or Management Board, head of the Control Board, and full-time comptrollers.

Chapter III

SALARY AND BONUS PAID TO EMPLOYEES AND EXECUTIVES

Article 7. Piece rate

1. Salaries paid to employees and executives shall be predetermined based on pay rate for piecework (hereinafter referred to as the "piece rate") as follows:

a) For VNPT, the piece rate shall be expressed as a percentage (%) of its total revenue minus total costs, excluding salaries, determined on the basis of average pay rate during 2018 – 2019 and include compensation for salary differences of employees who directly perform hi-tech products on the list of hi-tech products adopted by the Prime Minister or regulatory Ministries and receive pay lower than the market pay for the same job.

b) For Vietnam Airlines, the piece rate shall be based on the revenue tonne – kilometers performed, determined on the basis of average pay rate during 2018 – 2019 and include compensation for salary differences of Vietnamese pilots who receive pay lower than foreign pilots.

c) For VATM, the piece rate shall be based on the converted kilometers of air control services, and determined on the basis of average pay rate during 2018 – 2019 and salaries and safety bonuses (if any) paid to additional employees to be recruited in 2020 at the request of competent authorities for ensuring aviation safety and security purposes.

2. The average pay rate during 2018 – 2019 shall be determined by dividing total budget for salaries and safety bonuses (if any) annually paid to employees and executives by the norm used for calculating the piece rate specified in Clause 1 of this Article during 2018 – 2019.

3. When determining the piece rate as prescribed in Clause 1 of this Article, each company must ensure that its planned pre-tax profit in 2020 shall not be lower than the average realized profit during 2018 – 2019.

4. Each company shall make its own decision on salary advances which shall not exceed 85% of the monthly piece rate-based budget planned for employees and executives.

Article 8. Realized salary budget

1. The realized salary budget shall be determined by multiplying the piece rate by the norm for calculating the piece rate as prescribed in Article 7 hereof, provided that the average salary increase shall not be lower than the increase in average labor productivity and the realized profit shall not be lower than the average profit realized during 2018 – 2019.

2. If the realized profit of a company exceeds its average profit realized during 2018 – 2019, its salary budget may be increased (such increase may be recorded as expenses) according to the following principle: for every 1% of exceeding profit, the salary budget shall be increased by 2% but not exceed 20% of total exceeding profit and 02 months’ realized salary budget.

3. If the realized profit of a company is lower than its average profit realized during 2018 – 2019, its salary budget must be reduced by a corresponding percentage (%) or by the difference between its realized profit and average profit realized during 2018 – 2019. Such reduction shall not exceed 02 months' realized salary budget and ensure that the realized salary budget shall not be lower than the salary budget calculated according to the average pay rate specified in employment contracts.

4. Based on the realized salary budget and salary paid in advance to employees, the company shall determine the remaining salary budget. If salary advances overtake the realized salary budget, the amount of salary advances overpaid shall be reimbursed from the salary budget of the following year.

Article 9. Bonus budget

1. After setting aside a portion of its realized profit for fulfillment of obligations to the Government and shareholders, and setting aside of funds as prescribed by the Government’s regulations on profit distribution, the company shall determine the bonus and benefit budget for employees and executives, which shall not exceed 3 months’ realized salary budget, if the realized profit is not lower than the planned profit, or 3 months’ realized salary budget multiplied by a percentage (%) of the realized profit to the planned profit, if the realized profit is lower than the planned profit.

2. Based on the bonus and benefit budget referred to in Clause 1 of this Article, the company may divide such budget into the bonus budget which shall be used for reward employees and executives and the benefit budget which shall be used for development or repair of welfare projects and welfare activities of the company (including members of the Board of Members or Management Board, head of Control Board and comptrollers).

Article 10. Payment of salary and bonus

Payment of salary and bonuses to employees and executives shall be made according to the company’s rules for paying salary and bonus as follows:

1. The company’s rules for paying salary and bonus shall be promulgated by the Chairperson of the Board of Members or Management Board, and ensure democracy, public disclosure and involvement of the employee representative body.

2. Payment of salary and bonus to employees shall be made based on job positions or titles and work performance.  Payment of salary and bonus to executives shall be made based on the position, associated with profit, return on equity and fulfillment of duties by each executive. Total amount of salary and bonus paid to the General Director shall not be more than 7 times the average amount of salary and bonus paid to employees.  Payment of salary and bonus to a hired General Director shall be subjected to terms and conditions specified in the signed employment contract.

3. The company's General Director shall assess and decide salary and bonus paid to employees; salary and bonus paid to General Director, Deputy General Directors and Chief Accountant shall be subjected to assessment and decision of the Board of Members or Management Board.

Chapter IV

SALARY, REMUNERATION AND BONUS PAID TO MEMBERS OF BOARDS OF MEMBERS, MEMBERS OF MANAGEMENT BOARDS, HEADS OF CONTROL BOARDS AND COMPTROLLERS

Article 11. Base pay

1. Base pay rates of full-time members of the Boards of Members, members of Management Boards, heads of Control Boards and comptrollers are provided for as follows:

2. Types of companies referred to in Clause 1 of this Article are determined as follows:

a) Type-1 company is a company that has VND 10,000 billion or more of owner’s equity, planned revenue of VND 30,000 billion or more and 10 focal management points (subsidiaries that maintain either separate or shared accounting records with the parent company) or employ 5,000 employees or more.

b) Type-2 company is a company that has less than VND 10,000 billion of owner’s equity, planned revenue of less than VND 30,000 billion and less than 10 focal management points or employ less than 5,000 employees.

3. Each company shall determine the company’s type and base pay rates of full-time members of the Board of Members or Management Board, head of Control Boards and comptrollers based on its planning targets.

Article 12. Salary

1. The planned salary of full-time members of the Board of Members or Management Board, head of Control Board and comptrollers of a company shall be calculated based on the base pay rates associated with the planned profit and return on equity after tax (hereinafter referred to as “ROE”) compared with the realized profit and ROE recorded in the previous year as follows:

a) If the planned profit or ROE is equal to or greater than the profit or ROE recorded in the previous year, the maximum planned salary may be equal to 02 times the base pay rate.  

b) If the planned profit or ROE is less than the profit or ROE recorded in the previous year, the maximum planned salary shall be equal to 02 times the base pay rate multiplied by the negative difference (expressed in %) between the planned profit or ROE and the profit or ROE recorded in the previous year. If both planned profit and ROE are less than the profit and ROE recorded in the previous year, the maximum planned salary shall be equal to 02 times the base pay rate multiplied by the percentage difference (%) between the planned profit and the profit recorded in the previous year and the percentage difference (%) between the planned ROE and the ROE recorded in the previous year. The planned salary which is calculated based on the profit and/or ROE shall be at least 50% of the base pay rate.

c) If the company generates no profit, the maximum planned salary shall be equal to 50% the base pay rate; if it incurs loss, the maximum planned salary shall not exceed 30% of the base pay rate.

2. The realized salary shall be determined based on the planned salary and the realized profit/ROE compared to the planned profit/ROE according the rules laid down in Clause 1 of this Article.  If the realized profit and ROE are greater than the planned ones, the salary may be increased (such increase shall be recorded as expenses) according to the following principle: for every 1% of profit greater than the planned profit, the salary shall be increased by 2% but not exceeding 02 months’ planned salary.

Article 13. Remuneration

Remuneration paid to part-time members of the Board of Members, or Management Board, and comptrollers of a company shall be determined based on the position and working period of each person, and shall not exceed 20% of the salary paid to the full-time ones.

Article 14. Bonus

After having fulfilled obligations to the Government and setting aside of funds as prescribed by the Government’s regulations on profit distribution, the company shall determine the bonus awarded to members of the Board of Members, or Management Board, head of Control Board, and comptrollers as follows:

1. A wholly state-owned company shall determine the bonus budget on the basis of its achievement of target profit and the company’s type. To be specific: the bonus budget shall not exceed 02 months’ salary and remuneration budget if the realized profit is equal to or greater than the planned one and the company is graded A; the bonus budget shall not exceed 02 months’ salary and remuneration budget multiplied by the percentage difference (%) between the realized profit and the planned one if the realized profit is less than the planned one and the company is graded A or B; the company shall have no bonus budget if it is graded C or ungraded.

Companies shall be graded in accordance with the Government’s regulations on and the Ministry of Finance’s guidelines for supervision of state capital invested in enterprises, financial supervision and performance assessment and disclosure of financial information by state-owned enterprises and state-invested enterprises.

2. After having fulfilled obligations to its shareholders, a joint-stock company shall determine the bonus budget based on its achievement of target profit as follows: the bonus budget shall not exceed 02 months’ salary and remuneration budget if the realized profit is equal to or greater than the planned one; the bonus budget shall not exceed 02 months’ salary and remuneration budget multiplied by the percentage difference (%) between the realized profit and the planned one if the realized profit is less than the planned one.

Article 15. Payment of salary, remuneration and bonus

1. The company shall consider making advance payment of monthly salary and remuneration to members of the Board of Members, or Management Board, head of Control Board and comptrollers provided total advanced amount shall not occupy more than 85% of the planned salary and remuneration budget.

2. Salary, remuneration and bonus paid during the year shall be determined based on the salary, remuneration and bonus prescribed in this Decree and the work performance by each person.

The owner’s representative agency shall develop criteria for work performance evaluation, carry out performance evaluation and decide the salary, remuneration and bonus paid to each member of the Board of Members, or Management Board, who is representative of state capital, head of Control Board and comptroller.

3. If total amount of salary and remuneration advanced to members of the Board of Members, or Management Board, head of Control Board and comptrollers exceeds their salary and remuneration amounts as calculated, they must immediately returned the exceeding amounts in the year.

Chapter V

RESPONSIBILITY FOR IMPLEMENTATION

Article 16. Responsibility of a wholly state-owned company

1. General Director shall:

a) Determine and report on the piece rates, rules for paying salary and bonus to employees and executives, pay scale and payroll to the Board of Members.

b) Determine the planned salary budget for advancing salary to employees; provide the Board of Members with the workforce plan, the realized amount of salary paid to employees and executives in the previous year, specific salary and bonus of each executive.

c) Make salary, remuneration and bonus of executives, members of the Board of Members, head of Control Board and comptrollers available as prescribed.

2. Chairperson of the Board of Members shall: 

a) Get opinions from the owner’s representative agency about the payroll of members of the Board of Members, head of Control Board, comptrollers and salary paid to the Board of Directors included in the rules for paying salary; introduce rules for paying salary and bonus to employees and executives, pay scale and payroll; request the owner’s representative agency to consider giving approval for the piece rate.

b) Consider approving the workforce plan, the realized amount of salary paid to employees and executives in the previous year; consider approving specific salary and bonus of each executive; determine and request the owner’s representative agency to consider eliminating objective factors (if any) and approving salary, remuneration and bonus paid to each member of the Board of Members, head of Control Board, comptrollers.

c) In Quarter IV, 2020, prepare and submit consolidated report on the pilot implementation of this Decree to the owner’s representative agency and Ministry of Labor, War Invalids and Social Affairs.

3. Head of Control Board and comptrollers shall assist the owner’s representative agency to inspect the compliance by the Board of Members and General Director to relevant laws and this Decree.

Article 17. Responsibility of representative of state capital invested in a joint-stock company

1. Give opinions to the Management Board about regulations on responsibility of Chairperson of the Management Board, General Director, head of Control Board and comptrollers for compliance with regulations on management of labor, salary, remuneration and bonus set out in Article 16 hereof.

2. Get opinions from the owner’s representative agency about the workforce plan, piece rate and bonus awarded to employees and executives; salary, remuneration and bonus paid to members of the Management Board, head of Control Board, and comptrollers before giving opinions to the Management Board or voting at the General Meeting of Shareholders; report on the implementation of these matters after they are approved by the Management Board or General Meeting of Shareholders.

3. Evaluate the compliance with regulations on labor, salary, remuneration and bonus by the company. In case of failure to fulfill assigned duties, responsibility of relevant persons and reasons must be clarified and possible remedial actions shall be proposed.

Article 18. Responsibility of the owner’s representative agency

1. Consider approving the piece rate of a wholly-state owned company or give directives on the piece rate to the representative of state capital in a joint-stock company after consultation with the Ministry of Labor, War Invalids and Social Affairs.

2. Give approval of (for a wholly-state owned company) or give directives to the representative of state capital (for a joint-stock company) on the planned salary, awarded salary and bonus of each member of the Board of Members, or Management Board, who is the representative of state capital, head of Control Board and comptroller; and send such written approval or directives to the Ministry of Labor, War Invalids and Social Affairs for inspection.

3. In Quarter IV, 2020, prepare and submit a consolidated report on the pilot implementation of this Decree to the Ministry of Labor, War Invalids and Social Affairs.

Article 19. Responsibility of Ministry of Labor, War Invalids and Social Affairs

1. Give instructions about the piece rate and realized salary budget of employees and executives as prescribed in Article 7 and Article 8 hereof.

2. In Quarter IV, 2020, prepare and submit a consolidated report on the pilot implementation of this Decree to the Prime Minister.

Chapter VI

IMPLEMENTATION

Article 20. Entry into force

1. This Decree comes into force as from April 01, 2020.

2. Regulations on salary and bonus paid to employees and executives; salary, remuneration and bonus paid to members of the Board of Members, members of the Management Board, head of Control Board and comptrollers herein shall be applied from January 01, 2020 to December 31, 2020 inclusively.

Article 21. Implementation organization

1. Pursuant to regulations herein, Boards of Members or Management Boards of parent companies shall decide the pilot management of their subsidiaries of which at least 51% of charter capital is held by the parent company, and ensure that the amount of salary and bonus paid to the Board of Members, comptrollers and Management Board of a subsidiary shall not exceed the prescribed one of the parent company.

2. Ministers, heads of ministerial-level agencies, heads of the Government’s affiliates, Chairpersons of People’s Committees of provinces and central-affiliated cities and relevant organizations and individuals shall implement this Decree./.