What is a salary scale? How to build a salary scale

What is a salary scale? What is a salary table? Regulations on salary scales, salary scale system, how to build a salary scale according to the latest job position

I. What is a salary scale?

1. What is a salary scale?

The salary scale is a system built from salary scales, salary levels, and salary groups that are pre-determined as a basis for businesses to pay salaries and periodically consider salary increases for employees. Based on the salary scale, managers will easily classify each group and labor capacity in their business. Thereby demonstrating fairness and transparency in salary payments.

2. What is payroll?

Payroll is a summary of the actual amount of money that a business must pay to its employees, including basic salary, bonuses, salary allowances and other benefits over a specified period of time.

II. Regulations on enterprise salary scale

1. Regulations on building salary scales

• All businesses are required to develop a salary scale and labor norms as a basis for recruiting, employing workers, and negotiating salary levels according to work;
• The labor rate is an average rate that must be ensured to be achieved by the majority of workers without having to extend normal working hours and must be tested before being officially issued;
• Enterprises must consult with the organization representing employees at the facility (if any) to develop salary scales, payrolls and labor norms;
• Before implementing the salary scale, salary table and labor norms must be publicly announced at the workplace for employees to know.

>> See more: Regulations on salary, bonus, allowance for employees. 

2. Principles of building a salary scale system

• Based on the production organization and labor organization, the enterprise builds and decides on the salary scale and payroll for managerial workers, professional workers, and workers directly involved in production, business, and service;
• The salary scale multiple is the difference between the salary of a job with a high technical qualification and the salary of a job with a low technical qualification;
• Minimum wage is the lowest wage that a worker receives for doing the simplest job under normal working conditions, determined by region and determined by month and hour;
• Equality must be ensured, without discrimination based on gender, social class, ethnicity, skin color, etc. At the same time, standards and conditions must be established for salary classification and salary increase;
• When there are changes in state regulations, businesses need to review the salary scale to amend and supplement it to suit actual conditions, ensuring compliance with labor law regulations;
• Salary scales must be publicly and transparently announced at the workplace before implementation.

3. Salary scale registration file

Salary scale registration file includes:

• Salary scale system; 
• Decision to build salary scale;
• Minutes of consultation on salary scale;
• Table of requirements for positions.

III. Instructions on how to build a salary scale – Refer to the salary scale sample

Salary scale sample by job position:

Although there is no regulation limiting the maximum number of salary levels, enterprises must establish at least 2 salary levels in the salary scale. New employees will apply level 1 and those who meet the requirements will be raised 1 salary level. 

Depending on the nature of the job and title, the business divides into different groups and applies different salary levels:

➤ For level 1: In the salary scale, enterprises determine the minimum wage applicable to their enterprises. The salary at level 1 must be equal to or greater than the regional minimum wage prescribed in Article 3 of Decree No. 38/2022/ND-CP dated June 12, 2022, effective from July 1, 2022 as follows:

Decree 38/2022/ND-CP no longer stipulates that “Employees doing jobs that require vocational training must be paid at least 7% higher than the regional minimum wage”. However, if the enterprise and the employee previously signed a labor contract or collective labor agreement, in which there was an agreement to pay at least 7% higher wages to trained employees, the enterprise must continue to comply with the previous agreement.

➤ For level 2 and above: Previously, according to Decree 49/2013/ND-CP, the difference between 2 salary levels was at least 5%. However, currently, according to Decree 145/2020/ND-CP, the gap between levels in the salary scale is no longer regulated, but enterprises decide on the difference between salary levels in accordance with the actual situation at the enterprise.

See also:

>> Regional minimum wage;

>> Procedures for registering salary scales for businesses.

>> Payroll accounting services, building payroll systems.

IV. Penalties related to the construction of the salary scale system

According to Clause 1, Article 17 of Decree 12/2022/ND-CP, the fine for violations of regulations on wages is as follows: A fine of VND 5,000,000 to VND 10,000,000 shall be imposed on employers who violate one of the following acts:

• Failure to publicly announce salary scales, payrolls, labor rates, salary and bonus regulations… at the workplace before implementation;
• Not developing salary tables, salary scales, labor standards or not applying trial labor standards before officially promulgating them;
• Not consulting with the organization representing employees at the enterprise when building salary scales, payrolls, salary and bonus regulations, and labor norms; 
• Failure to notify the payroll statement or notify the payroll statement to employees but not in accordance with regulations;
• Failure to pay equal wages or sex discrimination against workers doing work of equal value.

Accordingly, employers must be responsible for developing and publicizing the salary scale before implementing it at the workplace for employees to know. If there is a violation, they will be fined according to regulations.

V. Questions related to regulations on salary scale construction

1. Does the salary scale have to be submitted to the Department of Labor, War Invalids and Social Affairs?

Employers do not have to register the salary scale with the Department of Labor, War Invalids and Social Affairs, they only need to publish and keep it at the enterprise. 

2. The company builds a salary scale with 6 job groups, each group has 7 levels. So when the employee is at the highest level, how should the next level be built and is it necessary to adjust the social insurance contribution level?

When the employee is at the highest level, the company can build the next level depending on the management level, job rank or title that requires a change in salary. When increasing the level, increasing the social insurance contribution level, the company needs to complete the procedure to adjust the contribution level with the insurance agency. 

>> See more: Regional minimum wage, insurance contribution rate.