What should enterprises do to issue a lawful salary scale and payroll decision?

A decision promulgating salary scales and payroll structures serves as an important basis for enterprises to determine wage levels, fulfill social insurance contribution obligations, and ensure the principles of transparency and equality in remuneration. However, if such salary structures are developed or issued in violation of applicable regulations, enterprises may face risks of administrative sanctions, retroactive insurance collection, or labor disputes. The article below provides a comprehensive understanding of the legal content, regulatory requirements, common violations, and practical solutions when complaints or disputes relating to salary scales and payroll structures arise.

I. Overview of issues relating to decisions on promulgation of salary scales and payroll structures

A decision on promulgation of salary scales and payroll structures is one of the main internal corporate instruments used as the basis for determining salary levels by job title and employee groups, and for entering into and implementing employment contracts. Such a document not only directly affects employees’ entitlements but also relates to obligations concerning social insurance contributions, tax declarations, and compliance with wage regulations under labor law.

If such a decision is issued without proper authority, fails to ensure lawful remuneration principles, or lacks sufficient legal grounds, the enterprise may face administrative sanctions, retroactive social insurance assessments, and labor disputes. Thus, understanding the legal nature, required contents, and issuance procedures of salary scale and payroll decisions is an essential compliance requirement for all enterprises.

II. Understanding decisions on promulgation of salary scales and payroll structures

1. What is a decision on promulgation of salary scales and payroll structures, and what are its principal contents?

Pursuant to Article 93 of the Labor Code 2019, employers are obligated to establish salary scales, payroll structures, and labor norms as the basis for recruitment, conclusion of employment contracts, and wage payment. Accordingly, a decision on promulgation of salary scales and payroll structures is an internal document issued by an enterprise to formally approve and implement its salary scale and payroll system.

In terms of substance, such decision generally includes:

• Salary scales and payroll structures: Clearly specifying job groups, salary grades, salary coefficients, or specific wage levels corresponding to each job position, serving as the basis for negotiating remuneration under employment contracts (Clause 1, Article 93).
• Labor norms (if applicable): Ensuring that the prescribed norm represents an average level achievable by the majority of employees within normal working hours and has undergone trial application prior to official implementation (Clause 2, Article 93).
• Effectiveness and scope of application: Stipulating the effective date and applicable subjects within the enterprise.
• Implementation arrangements: Defining the responsibilities of HR, accounting, and management departments in execution.

In addition, based on Clause 3, Article 93, prior to issuance, the enterprise must consult the employee representative organization at the grassroots level (if any) and publicly disclose the salary scales and payroll structures at the workplace before implementation.

2. Who has authority to sign a decision promulgating salary scales and payroll structures within an enterprise?

Pursuant to Clause 1, Article 93 of the Labor Code 2019, employers take responsibility for establishing salary scales, payroll structures, and labor norms. Accordingly, the authority to sign the decision promulgating such a system belongs to the employer.

Within an enterprise, such an authority is typically exercised by the legal representative (Director, General Director, Chairperson of the company, etc.) or an individual duly authorized in accordance with law.

However, before issuance, Clause 3 of Article 93 requires the employer to obtain opinions from the employee representative organization at the grassroots level (if any) and publicly announce the salary scales and payroll structures at the workplace before implementation.

3. What is the primary objective of issuing a decision on salary scales and payroll structures?

The principal objective is to establish a transparent and unified legal basis enabling the enterprise to conduct recruitment, negotiate remuneration in employment contracts, and pay wages in accordance with Clause 1, Article 93 of the Labor Code 2019.

Through such a decision, enterprises define salary grades, remuneration levels by job title, principles for classifying work groups, and labor norms, thereby ensuring remuneration practices that are fair, substantiated, and aligned with the organizational structure. At the same time, it serves as a foundation for fulfilling social insurance obligations, tax declaration requirements, and resolving disputes should they arise.

In essence, the decision on promulgation of salary scales and payroll structures legitimizes the enterprise’s remuneration system while ensuring legality, transparency, and stability in labor relations.

4. How does a decision on promulgation of salary scales and payroll structures relate to employees’ employment contracts?

A decision on promulgation of salary scales and payroll structures is directly connected to employment contracts as it serves as the basis upon which parties negotiate and record remuneration terms.

Pursuant to Clause 1, Article 13 of the Labor Code 2019, an employment contract constitutes an agreement regarding remunerated work, wages, working conditions, and the rights and obligations of each party. Thus, the salary stated in the employment contract must be determined based on the salary scale and payroll system promulgated by the enterprise under Article 93.

III. Legal regulations governing decisions on promulgation of salary scales and payroll structures

1. Under current law, what conditions must enterprises comply with when issuing a decision on salary scales and payroll structures?

Pursuant to Article 93 of the Labor Code 2019, enterprises must comply with the following mandatory conditions:

• First, under Clause 1 of Article 93, employers must establish salary scales, payroll structures, and labor norms as the basis for recruitment, employment administration, salary negotiation under employment contracts, and wage payment. Accordingly, such systems must be clear, substantiated, and aligned with the enterprise’s organizational structure and job positions.
• Second, under Clause 2 of Article 93, if labor norms are established, such norms must represent an average level achievable by the majority of employees during normal working hours and must undergo pilot application prior to official promulgation. Enterprises must not impose unrealistic standards to justify salary reductions or exert unlawful pressure.
• Third, according to Clause 3 of Article 93, prior to issuance, employers must consult the employee representative organization at the grassroots level (if any). Thereafter, salary scales, payroll structures, and labor norms must be publicly disclosed at the workplace before implementation.

2. How does a decision on promulgation of salary scales and payroll structures affect tax declaration and social insurance contributions under applicable law?

A decision on promulgation of salary scales and payroll structures directly affects obligations relating to social insurance contributions and personal income tax declarations of both employers and employees as it serves as the basis for determining lawful remuneration under labor relations.

First, based on Point b, Clause 1, Article 31 of the Law on Social Insurance 2024, for employees receiving wages determined by employers, the salary serving as the basis for compulsory social insurance contributions means monthly remuneration, including salary by job or title, salary allowances, and other supplementary payments agreed to be paid regularly and consistently in each payroll cycle.These amounts are determined based on the salary scales and remuneration stated in employment contracts. Thus, if salary scales are improperly established or recorded salaries do not reflect actual remuneration, enterprises may be subject to retroactive collection and administrative sanctions.

Second, under Article 7 of Circular No. 111/2013/TT-BTC, taxable income from salaries and wages is determined based on taxable income and applicable tax rates. Taxable income is calculated from total taxable earnings received by employees, including salaries, allowances, and supplementary payments. Accordingly, salary levels established under salary scales and payroll structures also constitute the basis for determining withholding obligations and personal income tax declarations.

3. Common violations relating to decisions on promulgation of salary scales and payroll structures

In practice, enterprises frequently encounter the following violations:

• Failure to establish or issue salary scales and payroll structures in accordance with Article 93 of the Labor Code 2019 while still paying salaries and entering into employment contracts.
• Failure to consult employee representative organizations at the grassroots level (if any) before issuance, in violation of Clause 3, Article 93.
• Failure to publicly disclose salary scales and payroll structures at the workplace prior to implementation, thereby affecting employees’ right to access information.
• Establishing salary levels lower than the regional minimum wage, contrary to Article 91 of the Labor Code 2019.
• Setting unreasonable labor norms or failing to conduct pilot application before official promulgation, contrary to Clause 2, Article 93.
• Establishing salary scales inconsistent with actual remuneration, resulting in under-declaration of salary bases for social insurance contributions or taxation, thereby creating exposure to retroactive collection and sanctions.

IV. Questions relating to decisions on promulgation of salary scales and payroll structures

1. What is the validity period of a decision on promulgation of salary scales and payroll structures, and when should it be reviewed or adjusted?

A decision on promulgation of salary scales and payroll structures does not have a fixed validity period under the Labor Code 2019. Instead, it takes effect from the date of issuance and public disclosure at the workplace and remains applicable until a new decision is issued to replace, amend, or revoke it.

Pursuant to Article 93 of the Labor Code 2019, such a decision serves as the basis for salary negotiation and wage payment; thus, it must be applied consistently and uniformly throughout the enterprise.

Currently, the law does not prescribe a mandatory point in time for adjustment. Nevertheless, enterprises should proactively review and revise the salary scale and payroll system whenever there are changes in organizational structure, job positions, minimum wage levels, production and business conditions, or legal regulations governing remuneration.

2. Must a decision on promulgation of salary scales and payroll structures be publicly disclosed to employees? Why?

A decision on promulgation of salary scales and payroll structures must be publicly disclosed to employees in accordance with applicable laws. Specifically, Clause 3, Article 93 of the Labor Code 2019 provides that salary scales, payroll structures, and labor norms must be publicly announced at the workplace before implementation.

In addition, Article 43 of Decree No. 145/2020/ND-CP requires employers to disclose to employees internal labor regulations, salary scales, payroll structures, labor norms, and policies directly affecting employees’ rights and obligations.

3. If labor inspectors determine that a decision on promulgation of salary scales and payroll structures lacks legal basis or violates regulations, what sanctions may be imposed on the enterprise?

Based on Clause 1, Article 17 of Decree No. 12/2022/ND-CP. A fine ranging from 5,000,000 VND to 10,000,000 VND shall apply to employers committing one of the following acts:

• Failing to publicly disclose salary scales, payroll structures, labor norms, or bonus regulations at the workplace prior to implementation;
• Failing to establish salary scales, payroll structures, or labor norms; or failing to conduct trial application of labor norms before official promulgation;
• Failing to consult the employee representative organization at the grassroots level (if  such organization exists) when establishing salary scales, payroll structures, labor norms, or bonus regulations;
• Failing to provide payroll statements or providing payroll statements to employees in a manner inconsistent with legal requirements;
• Failing to ensure equal pay or engaging in gender-based discrimination against employees performing work of equal value.

The above fine applies to individual employers. Pursuant to Clause 3, Article 6 of Decree No. 12/2022/ND-CP, organizations employing labor shall be subject to a fine equal to twice the amount imposed on individuals.

In addition to monetary fines, enterprises may also be required to remedy the consequences by re-establishing, publicly disclosing, or adjusting the salary scale and payroll system in compliance with applicable regulations.

4. If an employment contract specifies a salary different from the enterprise’s salary scale and payroll decision, which document will govern dispute resolution?

If the salary specified in the employment contract differs from the salary determined under the decision on promulgation of salary scales and payroll structures, the employment contract shall take precedence in dispute resolution, provided that the agreed terms do not contravene the law.

Pursuant to Article 13 of the Labor Code 2019 , an employment contract is an agreement between the employee and the employer regarding remuneration, working conditions, and the rights and obligations of each party. Thus, the salary recorded in the employment contract constitutes the direct legal basis governing the parties’ relationship.

However:

• If the contractual salary is lower than the applicable regional minimum wage or otherwise violates legal requirements, that part of the agreement shall be invalid under regulations governing employment contracts and must be adjusted to the lawful minimum level.
• If the contractual salary exceeds the internal salary scale and payroll structure, such salary shall continue to apply because it is more favorable to the employee, unless there is evidence establishing that the agreement violates the law.

5. If an enterprise is subject to complaints regarding its decision on promulgation of salary scales and payroll structures, may employees bring claims before a court or another authority?

If an enterprise is challenged regarding its decision on promulgation of salary scales and payroll structures, employees are entitled to request dispute resolution under the individual labor dispute mechanism prescribed in Article 187 of the Labor Code 2019.

The competent authorities include:

• Labor Mediator: It is generally a mandatory conciliation stage for most individual labor disputes before filing a lawsuit with the Court, except in cases where direct litigation is permitted by law.
• Labor Arbitration Council: Competent to resolve disputes where the parties choose arbitration procedures.
• People’s Court: The judicial authority empowered to adjudicate and issue legally binding judgments and decisions.

V. Are you looking for a trusted legal expert to assist with issues relating to decisions on promulgation of salary scales and payroll structures?

With practical experience in labor and remuneration advisory services, NPLaw assists enterprises in establishing lawful salary scales and payroll structures, minimizing inspection risks, reducing exposure to retroactive insurance collection, and effectively handling labor disputes when they arise.

The information above is provided for reference purposes only. Should you require detailed advice tailored to your specific circumstances, please contact NPLaw Law Firm for prompt consultation.