The common minimum wage increase to 1,050,000 VND from 1st May 2012

On 12thApr 2012, Government issued Decree No 31/2012/NĐ-CP regulation on the common minimum wage, taking effective from 1stMay 2012. According to this Decree, the common monthly minimum wage will be raised from the current VND 830,000 to VND 1,050,000, increasing by VND 220.000 from current minimum rate.

The maximum salary contribution to Social Insurance, Health Insurance as well as Unemployment Insurance will be risen up to 21,000,000 VND instead of the current amount of 16,600,000 VND.

Therefore, for an employee who has his/her gross salary (contract salary) higher than 20 times of minimum wage, the wage for insurance calculation will be:

The wage for insurance calculation = 20 x VND 1,050,000 = VND 21,100,000

For example on salary of USD 1,200 (equal to VND 24,993,600), the insurance contribution of the employee and the employer will be applied as below:

Current 1st May 2012 up to Increase amount
The wage for insurance 16.600.000 21.100.000
SI MI UI Total SI MI UI Total
Employee 1.162.000 249.000 166.000 1.577.000 1.477.000 316.500 211.000 2.004.500 427.500
Employer 2.822.000 498.000 166.000 3.486.000 3.587.000 633.000 211.000 4.431.000 945.000
Total 3.984.000 747.000 332.000 5.063.000 5.064.000 949.500 422.000 6.435.500 1.372.500

Decree No 31/2012/NĐ-CP is replaced for Decree No 22/2011/NĐ-CP dated 04/04/2011 by Government. This decree takes effective from 1st June 2012.  However the regulations of this decree will be applied from 1st May 2012.

Tuan Nguyen

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