The regional minimum wage will be applied from January 1, 2017.

(Baonghean) - The Social Insurance Agency of Nghe An province has just issued Official Letter No. 157/BHXH-QLT to the heads of labor-employing units regarding the application of the regional minimum wage as stipulated in Government Decree No. 153/2016/NĐ-CP.

Accordingly, from January 1, 2017, the regional minimum wage stipulated in Clause 1, Article 3 of Decree No. 153/2016/ND-CP shall be the lowest level used as a basis for enterprises and employees to negotiate the wage stated in the contract and to pay wages to employees working under normal working conditions and performing the simplest tasks, specifically:

- The rate of VND 2,900,000/month/person applies to businesses operating in Vinh City (Region III);

- The rate of VND 2,580,000/month/person applies to businesses operating in districts and towns within Nghe An province (Region IV).

For workers performing jobs requiring vocational training as stipulated in Clause 2, Article 5 of Decree No. 153/2016/ND-CP, the minimum wage stated in the labor contract must be at least 7% higher than the regional minimum wage mentioned in Section 1 of this document.

Workers are processing their social insurance book applications at the Nghe An Social Insurance office. (Photo courtesy)

Businesses operating in a particular area must apply the minimum wage rate stipulated in that area. If a business has branches operating in areas with different minimum wage rates, each branch must apply the minimum wage rate of the area in which it operates. For businesses operating in industrial parks, export processing zones, or high-tech zones located in areas with different minimum wage rates, the minimum wage rate of the area with the highest rate applies.

Businesses operating in areas where the name has changed or the area has been split will temporarily apply the regional minimum wage rate applicable to the area before the name change or split until the Government issues new regulations.

Businesses operating in an area that are newly established from one or more areas with different regional minimum wage levels shall apply the regional minimum wage level of the area with the highest minimum wage.

Example: Enterprise (A) operates in commune (X), district (M), province (T). In April 2017, a new district (Y) was established in province (T), comprising commune (X) of district (M) and 9 communes of district (Z). Before April 2017, district (M) applied a regional minimum wage of VND 2,580,000/month/person; district (Z) applied a regional minimum wage of VND 2,900,000/month/person. Based on the above regulations, from April 2017, enterprise (A) applies a regional minimum wage of VND 2,900,000/month/person.

In the case of businesses operating in a city directly under a provincial administration that was newly established from one or more areas belonging to Region IV, the minimum wage for the remaining cities directly under provincial administration as stipulated in Section 3 of the Appendix issued with Decree 153/2016/ND-CP shall apply (the minimum wage for Region III).

Example: Enterprise (B) operates in commune (C) of district K. In May 2017, city (H) was established under the provincial administration, comprising commune (C) of district (K) and 9 wards of town (E). Before May 2017, both district (K) and town (E) applied a regional minimum wage of VND 2,580,000/month/person (Region IV). Based on the above regulations, from May 2017, enterprise (B) applies a regional minimum wage of VND 2,900,000/month/person (Region III).

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