The Vietnamese Government has recently issued Decree 73 formally approving increases to the Minimum Basic Wage and Minimum Monthly Wage, effective from 1 July 2024. This article examines the impacts of these increases to help employers and employees understand the changes and plan for updates in their payroll calculations.
It is essential to distinguish “Minimum Monthly Wage” from “Minimum Basic Wage”, terms that are often confused. The Minimum Basic Wage is used by government organisations as a foundation for payroll calculations, allowances and other salary matters. It also serves as a threshold for calculating the maximum payments for Social Insurance, Health Insurance, and Trade Union contributions.
In contrast, the Minimum Monthly Wage forms the basis for salary calculations and negotiations between commercial employers & employees, as evidenced in labour contracts. It is also used as a threshold for calculating the maximum payment for Unemployment Insurance (UI). Minimum Monthly Wages are applied at different rates across various ‘zones’ to align with the differing economic and living standards of each area.
Minimum Basic Wage
Following the Resolution of the National Assembly on 10 November 2023 regarding the increase to the Minimum Basic Wage (base salary) from 1 July 2024, the Government issued Decree 73/2024/ND-CP dated 30 June 2024 formally approving the increase and providing further details.
Although the Minimum Basic Wage is generally only applicable to Government employees (with variations based on their role/position), it is also used as a threshold for all employers and employees upon which the maximum payments for certain insurances are calculated. Therefore, changes to the Minimum Basic Wage impacts all employers and employees.
Impacts on salary (insurance) payments by employers and employees
In particular, an increase in Minimum Basic Wage will result in an increase in the maximum caps for calculating Social Insurance, Health Insurance, and Trade Union payments, consequently increasing the potential payments by both employees and employers.
The below table indicates the maximum caps that apply to Insurance calculations during 2024 for employee payrolls:
| Insurances | Contribution Basis | Maximum Monthly Cap | |
| Up to 30 June 2024 | From 1 July 2024 | ||
| Social Insurance (SI) | 20 x Minimum Basic Wage | 36,000,000 VND (20 x 1,800,000 VND) | 46,800,000 VND (20 x 2,340,000 VND) |
| Health Insurance (HI) | |||
| Trade Union (TU) | |||
| Union Fee (UF) | 20 x Minimum Basic Wage But maximum contribution amount is capped at 10% of the Minimum Basic Wage | 36,000,000 VND (20 x 1,800,000 VND Maximum contribution amount: 180,000 VND/employee/month | 46,800,000 VND (20 x 2,340,000 VND)
Maximum contribution amount: 234,000 VND/employee/month |
| Unemployment Insurance (UI) | 20 x Minimum Monthly Wage* (of the Zone the employer is in) | 93,600,000 VND (20 x 4,680,000 VND) (Applicable to Zone 1 employer/ employee) Similar to Zone 1, it shall be 83,200,000 VND, 72,800,000 VND and 65,000,000 VND for Zone 2, Zone 3 and Zone 4 respectively. | 99,200,000 VND (20 x 4,960,000 VND) (Applicable to Zone 1 employer/employee) Similar to Zone 1, it shall be 88,200,000 VND, 77,200,000 VND and 69,000,000 VND for Zone 2, Zone 3 and Zone 4 respectively. |
Impacts on Social Insurance benefits/allowances of employees
As a result, the increase in Minimum Basic Wage will also result in an increase in Social Insurance benefits/allowances (paid by Social Insurance authorities) of employees, as detailed in the below table, which shows the comparison of benefits under the current and new Minimum Basic Wages.
| Items | Up to 30 June 2024 | From 1 July 2024 |
| Allowance of health recovery after pregnancy/sickness | 540,000 VND/day | 702,000 VND/day |
| One-time allowance when giving birth or adopting a child under 6 months old | 3,600,000 VND/child/time | 4,680,000 VND/child/time |
| The minimum pension | 1,800,000 VND/month | 2,340,000 VND/month |
| Funeral allowance (Received by relatives upon the death of the employee) | 18,000,000 VND/time | 23,400,000 VND/time |
Monthly survivor allowance (Received by relatives upon the death of the employee)
| 900,000 VND/month 1,260,000 VND/month | 1,170,000 VND/month 1,638,000 VND/month |
One-time support for occupational accident or occupational disease:
| 9,000,000 VND/time 900,000 VND/time | 11,700,000 VND/time 1,170,000 VND/time |
| Monthly allowance for occupational accident or occupational disease (for employees whose working capacity is reduced by 31%)
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