Question 68: When Employees sign LCs with workplaces in many provinces and with different area minimum wages, will which area minimum wage related to any workplace serve as a basis for determining the salary paid by Employers under LCs at a higher rate than the area minimum wage announced by the Government?

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Pursuant to labour law, Employers are obliged to ensure that the salary paid to Employees must not be lower than the area minimum wage prescribed by the Government. The area minimum wage is differently applied in each area based on where Employees work. Specifically, Article 4.1 of Decree 141/2017/NĐ-CP determines the principle of applying the area minimum wage based on the area where enterprises operate, accordingly the respective area minimum wage will apply. In cases where enterprises have units or branches operating in geographical areas with different minimum wage levels, their branches or units will apply the minimum wage prescribed for the geographical areas where they operate.

In fact, Employers often record many workplaces for Employees in LCs to ensure timely response to the demand of Employers. So, in this case, will Employers apply which area minimum wage with regard to any workplace to determine Employees’ salaries? Pursuant to Article 4.3 (b) of Decree 05/2015/NĐ-CP, if Employees are required to work in many different places, LCs must clearly state the main workplace of Employees. Pursuant to this regulation, Employers are obliged to identify the main workplace of Employees in addition to other workplaces as assigned by Employers. However, there are no clear guidelines on which area minimum wage will apply in the said cases.

However, with prudence and ensuring compliance with the principle of prioritising the interests of Employees pursuant to the labour law; Employers may be required to apply the area minimum wage of the main workplace of Employees, where the area minimum wage is considered highest to ensure Employees have more favourable conditions. In addition, through consultation with DOLISA, its expert agreed with the view that the best interests of Employees should be protected. However, from the perspective of Employers, the application of the said principles pursuant to the Labor Code might lead to a significant increase in salary costs for businesses. Therefore, in order to ensure their interests, Employers may seek written advice from the competent local labour authority to have a firm basis prior to implementation.