The government of Vietnam released Decree No. 90/2019/ND/CP, announcing that in 2020, the monthly minimum wage in Vietnam would increase by approximately 5.7%. This new payroll regulation in Vietnam became effective on January 1, 2020. If you are a foreign direct investor looking to setup in Vietnam, these are regulations you would be aware of.
Setting Up in Vietnam? See Cekindo’s Payroll Outsourcing Services
In this article, you will read more about the payroll update with regard to minimum wage in Vietnam in 2020.
Increased Rate of Minimum Wage in 2020
The increased rates of monthly minimum wage in Vietnam in 2020 are detailed as follows, based on the cost of living in each region:
- Region 1 (urban Ho Chi Minh City and Hanoi): increased by US$10
- Region 2 (rural Ho Chi Minh City and Hanoi; Da Nanang): increased by US$9
- Region 3 (provincial cities and districts of Bac Giang, Bac Ninh, Phu Tho, Vinh Phuc, Hai Duong, and other provinces not included in Region 1 and 2): increased by US$8
- Region 4 (the rest of the areas): increased by US$6
Apart from the minimum wage raise, employers need to pay employees who have been in vocational training a salary that is 7% higher than the minimum salary. Employers are not permitted to reduce employees’ allowances of their overtime, hardships and/or night shifts, even with the increase of minimum wage in 2020.
Latest update: The minimum wage in Vietnam will be increased from 1,490,000 VND/month (US$63,8) to 1,600,000 VND/month (US$68,5), an increase of 110,000 VND and valid from July 1st, 2020. This is in accordance with Decree 86/2019/QH14 on Nov 12, 2019 about Government’s budget plan in 2020.
The unemployment insurance’s capped salary will also increase following the hike of the minimum wage:
- Region 1: from US$3,600 to US$3,800
- Region 2: from US$3.200 to US$3,380
- Region 3: from US$2,800 to US$2,950
- Region 4: from US$2,344 to US$2,645
Note that there is no plan to change the minimum wages in Vietnam until the end of 2021.
Foreigners Should Make Plans for 2021
Owing to the rapidly-growing economy and foreign direct investments in Vietnam, the wage increase in the country is inevitable. Therefore, foreigners who are already doing business in Vietnam, or thinking of doing so, it is definitely a good idea to plan ahead for the rising minimum wage in 2020: prepare your budgets, new costs, and the capacity of your operation when the updated minimum wage law enforced in 2021.
If you are still unfamiliar with the new regulation, or finding the new wage hike too much for you to handle in a short amount of time, payroll outsourcing is the best way to go.
Why It Is Best to Outsource Payroll in Vietnam?
Even with just a few employees in your company, payroll outsourcing is always a good idea. Here are some of the reasons:
Ensure Your Business Complies with the Latest Payroll Regulations
Vietnamese payroll law changes quite frequently and it may be difficult for employers, especially foreigners to keep up with the updates. In this case, only a payroll expert can make sure that your business’ payroll is in compliance all the time.
Save Money and Time, Focus on Business Growth?
When you delegate time-consuming payroll tasks to a professional, you can immediately free up all that time and use them on your core business activities. Moreover, you do not have to spend substantial money on those high-tech software and full-time payroll staff.
Manage Your Payroll Efficiently
Payroll outsourcing provider streamlines and handles all your payroll tasks including generating detailed payroll reports. Therefore, you will have a much better payroll management with easy access to all the payroll information.
Outsource Payroll in Vietnam to Cekindo
Payroll management is a huge responsibility that requires time, effort and manpower. It is a delicate task that may be difficult to be taken care of by one person at the HR department. This is where Cekindo’s payroll outsourcing comes in to make sure that your payroll duties are fulfilled with performance that exceeds your expectations.
Cekindo uses advanced technology and software to process your payroll efficiency, of which can reduce your operational costs and influence your company’s profitability. Regardless of your company size, number of staff and payroll complexity, we can tailor our payroll outsourcing services to meet your needs.
Our payroll services in Vietnam include the following, but not limited to:
- Monthly payroll calculation
- Monthly payslip generation and reporting
- Social and medical insurance registration
- Assessment and declaration of personal income tax
Let Cekindo assist you in growing your business in the right direction. Get in touch with us by filling in the form below.