Developing salary scales and payrolls for managerial positions is a mandatory requirement for enterprises; however, not all employers fully understand and properly implement the applicable regulations. In the following article, NPLaw provides a detailed analysis of the legal framework, governing principles, and common risks associated with developing salary scales and payroll structures for management-level employees in order to help enterprises ensure legal compliance and optimize labor costs.

I. Common difficulties in developing salary scales and payrolls for managerial positions

In practice, developing salary scales and payrolls for managerial positions is not merely a matter of setting salary levels but also involves numerous complex legal and internal governance issues.

First, enterprises often encounter difficulties in correctly determining the legal status of managerial personnel. For example, a Director may simultaneously be both a corporate manager and an employee depending on the type of contract. Incorrect classification may result in the improper application of salary regimes, social insurance obligations, and tax liabilities.

Second, enterprises frequently struggle to set up an appropriate salary structure balancing fixed salary and performance-based remuneration. Labor law permits flexibility in this regard; however, if such matters are not clearly specified in the employment contract under Article 21 of the Labor Code 2019, disputes relating to bonuses, KPIs, or employee entitlements upon contract termination may easily arise.

In addition, many enterprises establish salary scales and payrolls merely for formalistic purposes without accurately reflecting actual employee income, thereby creating legal risks when labor inspection authorities require reconciliation under Article 93 of the Labor Code 2019 concerning the obligation to develop and publicly disclose salary scales and payrolls.

II. Concept of developing salary scales and payrolls for managerial positions

1. What is the development of salary scales and payrolls for managerial positions?

Pursuant to Clause 1 Article 93 of the Labor Code 2019, salary scales and payrolls are systems established by employers to serve as the basis for recruitment, labor utilization, salary negotiation in employment contracts, and salary payment to employees. With respect to managerial personnel, developing salary scales and payrolls refers to the process of establishing a remuneration system based on managerial titles and grades, connected to responsibilities, authority, and work performance.

Accordingly, developing salary scales and payrolls for managerial positions means that the employer establishes a system of salary grades and salary levels specifically applicable to leadership and executive positions within the organization. It serves as the legal basis for salary payment, social insurance contributions, health insurance contributions, and other benefits associated with managerial responsibilities and titles.

2. Which positions are considered managerial positions within an enterprise?

Pursuant to Clause 24 Article 4 of the Law on Enterprise 2020 regarding enterprise managers, such positions include: Chairpersons, Directors, General Directors, and other managerial titles prescribed in the company charter. In addition, according to labor practice, managerial positions may also include department heads, division managers, middle managers, and positions having authority to manage, direct, and supervise personnel.

Accordingly, managerial personnel (or enterprise managers) may be understood as individuals holding managerial titles with authority to represent the company in executing transactions and operating the daily activities of the enterprise. Depending on the type of enterprise (private enterprise, state-owned enterprise, or cooperative), the specific list of such positions may differ.

3. Purpose of developing salary scales and payrolls for managerial positions

The development of salary scales and payrolls for managerial positions aims to satisfy multiple legal and governance objectives.

  • First, it ensures compliance with the legal obligation under Article 93 of the Labor Code 2019 requiring enterprises to establish salary scales and payrolls.
  • Second, it creates a transparent basis for salary payment and helps avoid labor disputes relating to managerial employees’ entitlements.
  • Third, it assists enterprises in controlling labor costs while simultaneously designing competitive remuneration policies to retain senior personnel.

Accordingly, salary scales and payrolls are not merely legal instruments but also strategic tools in enterprise management.

III. Legal regulations relating to the development of salary scales and payrolls for managerial positions

1. Principles for developing salary scales and payrolls

Pursuant to Article 93 of the Labor Code 2019, enterprises must comply with the following principles when developing salary scales and payrolls:

  • Enterprises must independently establish salary scales and payrolls;
  • Salary scales and payrolls must be publicly disclosed at the workplace before implementation;
  • If the enterprise has an employee representative organization at the grassroots level, the employer must consult such organization before issuance.

For managerial personnel, these principles must be clearly reflected through reasonable salary differentials between managerial levels.

2. How does current law regulate the development of salary scales and payrolls?

Under current legal regulations, the development of salary scales and payrolls must ensure the following:

  • The lowest salary level must not be lower than the regional minimum wage prescribed under Clause 1 Article 3 of Decree No. 293/2025/NĐ-CP.
  • Enterprises are no longer required to register salary scales and payrolls with state authorities but must comply with the proper internal procedures:
  • Employers must consult the employee representative organization at the grassroots level (trade union) before issuance pursuant to Clause 3 Article 93 of the Labor Code 2019;
  • Salary scales and payrolls must be publicly posted at the workplace for employees to review prior to implementation under Clause 3 Article 93 of the Labor Code 2019.
  • Enterprises may independently determine salary differentials, provided that such structure encourages employees to improve professional qualifications and simultaneously ensures equal pay for employees performing work of equal value without gender discrimination according to Article 90 of the Labor Code 2019.

3. What procedures must be followed when amending salary scales and payrolls for managerial positions?

Pursuant to Article 93 of the Labor Code 2019, amendments to salary scales and payrolls for managerial positions must comply with the following procedures:

  • Preparation of amendment drafts: The human resources department or Members’ Council prepares draft amendments to salary levels and salary grades applicable to managerial positions.
  • Consultation with the trade union: The employer must consult the employee representative organization at the grassroots level (if any).
  • Issuance and public disclosure: The amendment decision must be publicly announced at the workplace so that employees and managerial personnel are informed.

In addition, where such amendments affect salary levels already agreed upon in employment contracts, the enterprise must amend the employment contracts in accordance with Article 33 of the Labor Code 2019 concerning amendments and supplements to employment contracts.

Accordingly, amendments to salary scales and payrolls for managerial personnel must follow procedures similar to those applicable to newly established salary systems, including consultation with employee representative organizations, issuance of amendment decisions, and public disclosure at the workplace before implementation.

4. Is an enterprise subject to administrative sanctions for failing to develop salary scales and payrolls?

Failure to develop salary scales and payrolls constitutes an administrative violation. Pursuant to Clause 1 Article 17 of Decree No. 12/2022/NĐ-CP, employers may be subject to fines ranging from 5,000,000 VND to 10,000,000 VND for committing one of the following acts:

  • Failing to publicly disclose salary scales, payrolls, labor norms, or bonus regulations at the workplace prior to implementation;
  • Failing to establish salary scales, payrolls, or labor norms; or failing to trial labor norms before official issuance;
  • Failing to consult the employee representative organization at the grassroots level in workplaces having such organization when establishing salary scales, payrolls, labor norms, or bonus regulations;
  • Failing to provide payroll statements to employees or providing payroll statements inconsistent with legal requirements;
  • Failing to ensure equal pay or engaging in gender discrimination against employees performing work of equal value.

In addition to monetary fines, violating enterprises may also be required by labor inspection authorities to implement remedial measures, including the compulsory establishment of salary scales and payrolls in compliance with legal regulations in order to protect employees’ lawful rights and interests.

IV. Questions relating to the development of salary scales and payrolls for managerial positions

1. Is it mandatory to establish a separate salary scale and payroll table for managerial positions?

Pursuant to Clause 1 Article 93 of the Labor Code 2019, employers are required to establish salary scales and payrolls for all jobs or positions stated in employment contracts. It means that enterprises may incorporate managerial personnel and ordinary employees into a common payroll structure while dividing them into different salary grades and levels. Alternatively, enterprises may proactively establish a separate payroll specifically for managerial positions for purposes of confidentiality and personnel management convenience. Regardless of whether a unified or separate system is adopted, the salary scale and payroll applicable to managerial personnel must still comply with the principles governing the establishment of salary scales and payrolls.

The law does not require enterprises to establish an entirely separate salary scale and payroll system specifically for managerial personnel. However, enterprises must ensure that all managerial titles are incorporated into the enterprise’s overall salary scale and payroll as the basis for salary payment and social insurance contributions.

2. Must salary scales and payrolls be issued in written form?

Salary scales and payrolls must be officially issued in written form by the enterprise in order to serve as the legal basis for entering into employment contracts, making social insurance contributions, and fulfilling the obligation to publicly disclose such documents at the workplace. Accordingly, salary scales and payrolls are required to be formally promulgated in writing by the enterprise to ensure transparency and to serve as legal evidence in the cases of disputes.

3. Can enterprises apply separately negotiated salaries instead of salary scales and payrolls for managerial personnel?

Enterprises are not permitted to apply separately negotiated salaries as a complete substitute for salary scales and payrolls. Pursuant to Clause 1 Article 93 of the Labor Code 2019, salary scales and payrolls constitute mandatory legal grounds for recruitment and labor utilization, salary agreements corresponding to jobs or titles stated in employment contracts, and salary payment to employees. Therefore, regardless of the salary amount specifically agreed upon with managerial personnel, such salary must still correspond to a salary grade or fall within the salary framework applicable to a managerial position already prescribed in the company’s payroll.

4. Are small enterprises required to establish salary scales and payrolls for managerial personnel?

Pursuant to Clause 1 Article 93 of the Labor Code 2019, all enterprises, regardless of size, are required to establish salary scales and payrolls for all job positions, including managerial positions. Therefore, even where an enterprise only has a few managerial personnel, it must still prepare written salary scales and payrolls to ensure legal compliance.

5. Is it necessary to amend employment contracts when changing salary scales and payrolls for managerial personnel?

Where changes to salary scales and payrolls result in adjustments to the actual salary of managerial personnel, enterprises are required to amend or supplement employment contracts through the execution of an Employment Contract Appendix or by entering into a new Employment Contract in accordance with Article 33 of the Labor Code 2019.

V. Why should you seek legal consultation from NPLaw regarding issues relating to the development of salary scales and payrolls for managerial positions?

In the context of increasingly stringent labor regulations, improper development of salary scales and payrolls for managerial personnel may create substantial risks relating to taxation, insurance obligations, and labor disputes. With extensive advisory experience in labor and corporate matters, NPLaw provides comprehensive solutions for enterprises regarding issues associated with the establishment of salary scales and payrolls.

The above information is provided for reference purposes only. Should clients require detailed advice regarding specific cases, please contact NPLaw Firm for immediate consultation.