Question 63: May Employers simultaneously refer to the salary scale and table and the system of Key Performance Indicators (KPIs) to evaluate the Employees’ task completion level and the corresponding salary level?

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The Key Performance Indicators (KPIs) serve as a condition for evaluating the Employees’ task completion level. In addition, there are no regulations allowing Employers to combine the salary scale and table with the KPIs to evaluate the Employees’ task completion level and to raise their salaries; also, there is not any guideline on what contents should be included in the salary scale and table. In practice, the salary scale and table often include such contents as positions, titles/levels and the salary plus corresponding allowances excluding KPIs. Moreover, as prescribed by labour law, the salary scale and table must be notified and submitted to the local labour management agency. Therefore, to prevent state agencies having queries about the unusual contents in the salary scale and table, Employers should not combine the salary scale and table with the KPIs system.

Another way, Employers can issue the pay raise regime in accordance with the Labor Code[1]. In addition, to make grounds for the unilateral termination of LCs for the reason that Employees regularly fail to fulfil the tasks assigned, Employers must specify the KPI system in their internal regulations[2]. So, it will be more appropriate for Employers to issue the pay raise regime in combination with the KPIs system to evaluate the Employee’s performance; accordingly, they will be the grounds for Employers to unilaterally terminate LCs if Employees regularly fail to fulfil the tasks assigned, as well as the basis for raising salaries. Of note, the pay raise regime combined with the KPIs should also be consulted with the TUEC before it is issued officially.

[1]Article 102 Labor Code

[2]Article 12.1 Decree 05/2015/NĐ-CP dated 12/01/2015