Can the employer withhold a part of the salary paid to the employees?

Can the employer withhold a part of the salary paid to the employees?

According to Clause 2, Article 35 of the Labor Code 2019, an employee has the right to terminate the labor contract without prior notice if the salary is not paid in full or not paid on time. The 2019 Code also stipulates that employers must pay employees’ wages directly, in full, and on time. So, apart from the case the employer deducts the employee’s salary to compensate for damages of tools, equipment, assets of the employer as stated in article 102 and 129 of the Labour Code, can the employer keep a part of the employee’s income and pay later?

1. According to Point b, Point c, Clause 5, Article 3 of Circular 10/2020/TT-BLDTBXH (“Circular 10/2020”) and Article 104 of the Labor Code 2019, the amounts paid to employees can be classified into 04 main groups

1.1. Salary by job or position: Basic salary

This amount is one of the essential contents of a labor contract under Clause 1, Article 21 of the Labor Code 2019.

1.2. Allowances as agreed upon by both parties

The allowances are intended to compensate for factors such as working conditions, job complexity, living conditions, and employment attraction that the salary agreed under the labor contract fails to account for sufficiently. Allowances are associated with the job process and performance of the employee.

Accordingly, Environment allowance; Seniority allowance; Responsibility allowance; Acting allowance; Cum task allowance; Second language allowance; Skill allowance, may be under the group of Allowances as prescribed.

1.3. Additional payments

These additional payments can be determined by the specific amount along with the salary agreed in the labor contract and paid regularly in each pay period. Or these amounts cannot be determined the specific amount along with the salary agreed in the labor contract and paid regularly in each pay period, paid regularly or irregularly in each pay period, associated with the job process and performance of the employee.

Accordingly, the Oil fee; Meal fee; Cellphone allowance; Lodging allowance may be under the group of Additional payments as prescribed.

1.4. Bonuses

This is the amount of money, property, or other forms that the employer rewards employees based on production, business results, and the employees’ work completion level. A bonus regulation shall be decided and publicly announced at the workplace by the employer after consultation with the representative organization of employees.

Accordingly, the bonuses that the employer rewards to the employees based on production, business results, and the employees’ work completion level may be under this group.

2. Payments to Employees are/are not allowable to be withheld

Clause 1, Article 90 and Clause 1, Article 94 of the Labor Code 2019 stipulates:

“Article 90: Salary

1. A salary is the amount of money that the employer pays the employee under an agreement to perform the work, including salary by job or position, allowances, and other additional payments.”

“Article 94. Principles of salary payment

1. Employers shall pay their employees directly, fully, and on time. If the employee cannot receive the salary directly, the employer may pay it through a person legally authorized by the employee.”

From the above regulations:

a. the employer cannot withhold and pay later for the employee’s salary (listed in section 1.1, section 1.2, and section 1.3) without prior agreement with the Employee. On the contrary, if it is possible to reach an agreement with the employee on the withholding of some salaries/Allowances for later payment, the employer can perform it, but there must be a clear written agreement with the employee.

b. In addition, for the bonus in section 1.4, the payment of the bonus will be based on the bonus regulations issued by the Company (by the statutory order). Therefore, if the employer has a clear bonus regulation, issues it in the correct order, and the content of this regulation allows the Company to withhold a part of the employee’s reward, the employer can do the same.

In case the employer temporarily withholds and pays later allowances or additional payments, the employer may be fined for administrative violations and be subject to remedial measures as prescribed in Clause 2 and Clause 5, Article 17 of Decree 12/2022/ND-CP as follows:

“Article 17. Violations against regulations on salaries

2. Fines shall be imposed on employers for committing one of the following violations: Failing to pay salary on schedule as prescribed by law; failing to pay or insufficiently paying salary to employees as agreed in their labor contracts; failing to make or insufficiently making overtime pay; failing to make or insufficiently making nightshift pay; failing to pay or insufficiently paying work suspension allowances as prescribed by law; restricting or interfering employees’ spending of their salary; forcing employees to spend their salary on goods or services of the employer or any particular providers decided by the employer; deducting from employees’ salary in breach of law; failing to pay or insufficiently paying salary to employees how are reassigned to perform works which are not specified in their employment contracts or during a strike; failing to make or insufficiently making payments to employees who, due to employment termination or job loss, have not taken or not entirely taken up their annual leave in compensation for their untaken leave days; failing to make or insufficiently making advance payments to employees who temporarily leave their works in accordance with regulations of law; failing to pay full salaries to employees who are not disciplined for their work suspension period:

a) A fine ranging from VND 5.000.000 to VND 10.000.000 shall be imposed if the violation involves 01 – 10 employees;

b) A fine ranging from VND 10.000.000 to VND 20.000.000 shall be imposed if the violation involves 11 – 50 employees;

c) A fine ranging from VND 20.000.000 to VND 30.000.000 shall be imposed if the violation involves 51 – 100 employees;

d) A fine ranging from VND 30.000.000 to VND 40.000.000 shall be imposed if the violation involves 101 – 300 employees;

dd) A fine ranging from VND 40.000.000 to VND 50.000.000 shall be imposed if the violation involves 301 employees or more.

5. Remedial measures

a) The employer that commits the violation specified in Clause 2 or Clause 3 of this Article is compelled to pay full salary plus interest on late payments or insufficient payments of salary, which are calculated at the highest rate of the demand deposit interest rates publicly quoted by state-owned commercial banks on the date of penalty imposition, to employees;”

Disclaimer:

This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters related to Employment. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email info@apolatlegal.com.

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