REGULATIONS ON PAY RISE FOR EMPLOYEES

Legal situation: Is it permissible for a company to delay an employee’s pay rise? Is it mandatory to specify a salary review period in an employment contract?

FDVN’s Opinion:

Thank you for your inquiry to FDVN Law Firm. After careful study of the relevant legal provisions, FDVN would like to provide the following response to your request.

According to current laws, there is no specific provision regarding the pay rise term for employees. The pay rise period is entirely determined by the enterprise and is usually stipulated in the company’s salary scale, payroll, and pay rise conditions of each enterprise.

Pursuant to Clause 6, Article 3 of Circular 10/2020/TT-BLĐTBXH, it is stipulated that:

Regimes for promotion and pay rise shall be agreed upon by both parties regarding conditions, time, and salary level after promotion or pay rise, or shall be implemented in accordance with the collective labor agreement or the employer’s regulations.

According to the regulations, employers are allowed to implement pay rise policies for employees based on mutual agreements regarding conditions, timing, and the amount of salary after promotion or pay rise, or in accordance with collective labor agreements and the employer’s regulations.

Pursuant to Clause 1, Article 21 of the 2019 Labor Code, the content of a labor contract is stipulated as follows:

“1. An employment contract shall have the following major contents:

1. a) The employer’s name, address; full name and position of the person who concludes the contract on the employer’s side;
2. b) Full name, date of birth, gender, residence, identity card number or passport number of the person who concludes the contract on the employee’s side;
3. c) The job and workplace;
4. d) Duration of the employment contract;
5. dd) Job- or position-based salary, form of salary payment, due date for payment of salary, allowances and other additional payments;
6. e) Regimes for promotion and pay rise;
7. g) Working hours, rest periods;
8. h) Personal protective equipment for the employee;
9. i) Social insurance, health insurance and unemployment insurance;
10. k) Basic training and advanced training, occupational skill development.”

Therefore, the pay rise policy is one of the mandatory provisions in the labor contract.

The above is FDVN’s advisory opinion in response to your consultation request, based on our research of relevant legal regulations. We hope that FDVN’s advice will be helpful to you.

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