Decree No. 53/2016/ND-CP dated June 13, 2016, regulations on management of employees, salaries, remunerations and bonuses by Joint-stock Companies with state controlling stakes

DECREE

REGULATIONS ON MANAGEMENT OF EMPLOYEES, SALARIES, REMUNERATIONS AND BONUSES BY JOINT-STOCK COMPANIES WITH STATE CONTROLLING STAKES

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

Pursuant to the Labor Code dated June 18, 2012;

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

Pursuant to the Law on management and allocation of State capital to production and business activities of enterprises dated November 26, 2014;

At request of the Minister of Labor, Invalids and Social Affairs; the Government hereby issues this Decree stipulating the regulation of management of employees, salaries, remunerations and bonuses by joint-stock companies with State controlling stakes.

Article 1. Scope

This Decree provides regulations on employees, salaries, remunerations and bonuses applicable to joint-stock companies and limited liability companies of at least two members having more than 50% of charter capital held by the State (hereinafter referred to as “company”).

Article 2. Regulated entities

1. Persons authorized to exercise rights and take on responsibilities as the representative of owner’s interests (hereinafter referred to as “State capital representative”) in writing by the State capital owner’s representative agency.

2. Ministries, Ministerial-level agencies, Governmental agencies, People's Committees of provinces and centrally-affiliated cities (hereinafter referred to as "province”) or organizations incorporated under regulations of laws authorized to exercise rights and take on responsibilities as the State capital owner’s representative agency by the Government (hereinafter referred to as “ representative agency”).

3. Other individual or institutional entities participating in the implementation of this Decree.

Article 3. Principles for management of employees, salaries, remunerations and bonuses

1. Every company shall introduce their own salary and bonus policy in accordance with regulations of laws and the company’s charter.

2. The amount of salaries or bonuses awarded to members of Board of Members or members of Board of Directors , Directors General, Directors, Deputy Directors, Deputy Directors General, Heads of Control Boards, controllers and Chief Accountants (hereinafter referred to as “manager”) shall be calculated according to the productivity, business or production effectiveness.

3. Employees, salaries, remunerations and bonuses shall be managed via the State capital representative and representative agency in accordance with regulations of laws.

Article 4.Employment plans

1. Every company shall prepare an annual employment plan as the basis for recruitment and allocation of employees.

2. The employment plan is prepared according to the business/production plan, output quota, organizational structure and employee structure.

3. The annual employment plan shall be approved by the Board of Directors or Board of Member prior to implementation; the recruitment, placement and allocation of employees shall be transparently and publicly carried out in accordance with regulations of laws and the company’s recruitment policy and charter.

4. In case of over-recruiting leading to lack of work, downsizing and increase in operation costs, the person in charge of recruitment shall be responsible to the Board of Director or Board of Member of the company for such mistakes.

Article 5. Employee salaries

1. The payroll budget is determined according the number of workers and budgeted average pay rate under clause 2 of this Article.

2. The budgeted average pay rate is determined according to the amount of salary prescribed in labor contracts, the realized average pay rate by productivity or business performance of immediately preceding year, and production quota and business/production plan of the company as follows:

a) For profitable companies, the budgeted average pay rate is determined according to the realized average pay rate by production or business performance of the immediately preceding year and the estimated productivity decrease/ increase compared with that in the immediately preceding year to ensure the amount of average salary increase is lower than that of the average productivity.
b)In case of losses or break-even ( except for objective factors prescribed in clause 7 of this Article), the budgeted average pay rate is determined according the average salary in labor contracts including days-off or holidays, overtime pay or night shift pay under the labor Code.

3. According to payroll budget and the reality, every company shall determine the piece rate for production/business operation and salary advance.

4. The realized payroll is determined according to the payroll budget and the fulfillment of business/production targets.

5. Every company shall introduce their policies on salaries and salary allocation to employees according to the contribution and performance.

Article 6. Manager salaries and remunerations

1. The payroll budget for full-time manager is determined according to the number of full-time managers and the budgeted average pay rate under clauses 2 and 3 of this Article.

2. The budgeted average pay rate of a full-time manager as State capital representative is determined according to the realized average salary of the immediately preceding year, capital growth, the ability to pay the employees’ salaries, fulfillments of business/production targets and obligations to employees and the Government under regulations of laws but not exceeding 36 million dong/month (also known as base pay rate. In case of any adjustment by the Government, the new on shall prevail) for company with the planned profit of less than 50 billion dong. Where the company makes the profit of 50 billion dong or more, the salary increase factor shall be adjusted on base pay rates as follows:

a) The maximum salary increase factor is 0.5 for companies making the profit of at least 50 billion dong to less than 100 billion dong

b) The maximum salary increase factor is1.0 for companies operating in banking, finance or telecommunications industries with profit of 100 to less than 500 billion dong, those operating in oil/mineral extraction and refinery, electricity, commerce or services with the profit of 100 billion dong to less than 300 billion dong, and companies in other industries with the profit of 100 billion dong to less than 200 billion dong.

c) The maximum salary increase factor is 1.5 for companies in banking, finance or telecommunications industries with profit of 500 to less than 1,000 billion dong, those operating in oil/mineral extraction and refinery, electricity, commerce or services with the profit of 300 billion dong to less than 700 billion dong, and those operating in other industries with the profit of 200 billion dong to less than 500 billion dong.

d) The maximum salary increase factor is 2.0 for companies in banking, finance or telecommunications industries with profit of 1,000 to less than 1,500 billion dong, those operating in oil/mineral extraction and refinery, electricity, commerce or services with the profit of 700 billion dong to less than1, 000 billion dong, and those operating in other industries with the profit of 500 billion dong to less than700 billion dong.

e) The maximum salary increase factor is 2.5 for companies operating in banking, finance or telecommunications industries with profit of at least 1,500 billion dong, those operating in oil/mineral extraction and refinery, electricity, commerce or services with the profit of at least 1,000 billion dong, and those operating in other industries with the profit of at least 700 billion dong.

f) For companies whose scale and profit exceed the above mentioned limits or those operating in specialized industries, the salary increase factor shall not exceed 10% of that prescribed in clause 2 of this Article.

3. The budgeted average pay rate of full-time managers other than the State capital representative is determined according to their job position and similar position-based salaries on the market, and salaries of State capital representatives in the same company.

4. The realized payroll for full-time managers is determined according to the payroll budget and other criteria in clauses 2 and 3 of these clauses, and the fulfillment of profit targets. If the actual profit overshoots the profit target, the full-time manager salary shall be added 2% for every 1% profit growth rate but not exceeding 20% of the budgeted average pay rate.

5. The salary budget of part-time managers is determined according to the number of such managers and their actual working time; and their maximum salary shall not exceed 20% that of full-time managers.

6. Every company shall pay manager’s salaries or remunerations according to their policies on remunerations or salaries.

Article 7. Objective factors

Objective factors that may affect the company's profit or productivity beyond the control of the company as the time the salary budget is determined are as follows:

1. Price adjustments (for products or services priced by the State), corporate income tax incentives, State capital investment or withdrawal, amendments to policies by the State, company relocation or company’s scale reduction that directly affect the company’s productivity and profit at request of the State.

2. Business expansion, increases in amortization for cost recovery approved by competent authorities and participation in social security under the Government’s regulations.

3. Acts of God, conflagration, epidemics, wars and other force majeure events.

Article 8. Bonuses and welfares

According to the annual profit after deduction from financial obligations to the State and capital contributors, every company shall award bonuses and welfares to employees and managers as follows:

1. The budget for employee awards or welfares shall not exceed 03-month realized payroll in case the actual profit reaches the profit target. In case the actual profit overshoots the profit target, the budget for awards and welfare is added 20% of the excessive of actual profit but not exceeding 03-month realized payroll.

2. The award budget shall not exceed one- and-a-half-month realized payroll in case the actual profit reaches the profit target. In case of failure to reach the profit target, the bonus shall not exceed one-month average actual profit.

3. According to the budget for awards or welfares prescribed in clause 1 of this Article, the company decide to award to employees. The award budget for employees shall not be awarded to managers (except for awards under regulations of laws on emulations and commendation). The welfare budget shall be used for construction or renovation of public works, employee and manager welfares

Article 9. Responsibilities of State capital representatives

Every State capital representative shall:

1. Consult with the Board of Directors or Board of Member about policies on employments, salaries, remunerations and bonuses under this Decree.

2. Request the representative agency to give comments on employment plans, and methods of determination of salary and bonus budgets for employees and managers prior to consultation with the Board of Member or Board of Directors.

3. Submit reports on realized salaries, remunerations and bonuses of the immediately preceding year and annual plans to the representative agency, after being approved by the Board of Member, Board of Directors or Shareholder General Assembly.

4. Annually carry out assessment of actual employment, salaries, remunerations and bonuses as the basis for responsibility allowance, bonus and salary policies. In case of failure to fulfill responsibilities, reasons and measures for fulfilling unfulfilled responsibilities and sanctions shall be imposed.

Article 10. Responsibilities of representative agencies

Every representative agency shall:

1. Authorize the State capital representative to manage employees, salaries, remunerations and bonuses in writing under this Decree.

2. Assess reports on employees, salaries and bonuses prepared by the State capital representative. In case of application of salary increase factor to full-time managers whose salary is higher than that in clause 2, Article 6 hereof, the representative agency shall consult the Ministry of Labor, War Invalids and Social Affairs prior to release of any directive.

3. Annually assess the State capital representative performance as the basis for proper salaries, remunerations, bonuses, allowances and sanctions.

4. Take charge of and cooperate with the Ministry of Labor, War Invalids and Social Affairs to supervise the implementation of regulations on employees, salaries, remunerations and bonuses of the State capital representative agency under regulations of laws.

5. Submit annual reports on employees, salaries and bonuses to the Ministry of Labor, War Invalids and Social Affairs.

Article 11. Responsibilities of the Ministry of Labor, War Invalids and Social Affairs

The Ministry of Labor, War Invalids and Social Affairs shall:

1. Take charge of and cooperate with relevant agencies to provide guidance on management of employees, salaries, remunerations and bonuses under this Decree.

2. Cooperate with representative agencies to supervise the management of employees, salaries, remunerations and bonuses.

3. Consult the representative agency in case of application of salary increase factor to salaries of full-time managers stipulated clause 2, Article 6 of this Decree.

4. Aggregate, assess and report the management of employees, salaries, remunerations and bonuses to the Prime Minister under regulations of laws.

Article 12. Entry into force

1. This Decree enters into force from August 01, 2016.

2. Every Board of Member or President of parent companies of State-owned economic groups, state-owned corporations, parent companies belonging to groups of parent-subsidiary companies of which controlling stake is wholly owned by the State shall assign and direct their representative to manage employees, salaries, remunerations and bonuses in such companies.

3. Every Board of Member or President of parent companies of State-owned economic groups, state-owned corporations, parent company having their subsidiaries whose controlling stake is owned by the State shall consult the Board of Directors or Board of Member prior to application of this Decree to management of employees, salaries, remunerations and bonuses.

4. Ministers, Head of ministerial-level agencies, Heads of Governmental agencies, Presidents of People’s Committee of provinces and relevant agencies shall be responsible for the implementation of this Decree./.