Vietnam Wage Table Preparation Guide: Legal Obligations, Drafting Procedure, and Penalty Risks

This article explains, in an accessible way, the legal obligation to maintain a "wage table" (payroll grading system) under Vietnam's Labor Code—its purpose, the steps for building one, its relationship to the minimum wage, the consultation process with the trade union, and the penalty risks for non-compliance—covering the practical points that HR and management at Japanese-affiliated companies need to grasp. It is a practical guide for companies entering Vietnam to build a fair and sustainable wage system while ensuring compliance. NEXORA LAW FIRM has extensive experience providing one-stop support to Japanese-affiliated companies in Vietnam, covering the building of HR/labor systems, wage system design, preparation of internal labor regulations, engagement with trade unions, and handling of labor inspections. Drawing on the latest developments in Vietnamese law, we support stable corporate management through practical advice and risk management.

01 - What Is a Wage Table, and Why Are Companies Obligated to Prepare One?

A wage table (salary scale) sets wage grades for each job and position within a company and systematically compiles the basic salary corresponding to each grade. Put simply, it is the company's internal "ruler" for setting pay according to an employee's position and skill level. The wage table sets out salary grades for each role and position in a stepped structure, and this table serves as the basis for determining pay levels when hiring, assigning, or promoting employees. For example, a company might set grades 1-5 for general staff and grades 6-8 for managers, assigning a specific monthly salary amount to each grade.

As a legal obligation, Article 93 of Vietnam's Labor Code clearly provides that "the employer (enterprise) must establish a wage table and labor norms." This applies regardless of company size or number of employees, and foreign-invested (FDI) companies are no exception. In the past, companies above a certain number of employees were required to register their wage table with the competent labor authority, but since the 2019 Labor Code took effect (January 2021), this registration obligation has been abolished. Companies are now simply required to formulate and retain their wage table internally (and be prepared to present and explain it if requested during a labor inspection).

The main reasons a wage table is necessary are as follows:

Legal compliance and clarity of standards: A wage table serves as the basis for wage payments under the labor contract and is also used in recruitment and hiring. This allows a company to build a pay structure that meets statutory requirements such as the minimum wage, and to ensure fair, consistent wage payments.
Protecting employee rights and ensuring fairness: By clearly presenting the wage structure and maintaining transparency, employees can understand their own pay level and avoid unfairly low wages or discriminatory treatment. This protects employee rights and enhances fairness within the company.
Trust and talent retention: Transparency in the wage structure also contributes to building trust between the company and its employees. For foreign-invested companies in particular, demonstrating transparency in the wage-determination process to local employees helps attract and retain talented staff.
Stability in labor relations: By determining the wage table in advance and consulting the trade union on it, friction between labor and management can be reduced and a smooth cooperative relationship can be built. An appropriate wage structure is also effective in preventing labor disputes.

02 - Steps for Building a Wage Table Under Vietnamese Law

Building a wage table in Vietnam requires following several legally mandated steps. The general procedure for formulating a wage table is set out below.

(i) Organizing internal job roles and designing wage grades

First, the company identifies the skills and scope of responsibility required for each job and position, and sets wage grades accordingly. A corresponding salary range is determined for each grade. In doing so, the company must strictly ensure that the basic salary of the lowest grade does not fall below the statutory regional minimum wage. Minimum wage amounts are set by the government for each region (Region I-IV) and are revised annually or every few years.

(ii) Preparing the wage table (pay scale)

The specific salary amount for each job/position grade is compiled into a single table (pay scale). For example, the company determines the salary-increase margin between grades and the rate/amount of increase as grades rise. Under current law, there is no minimum required percentage difference between grades (previously, under the old law, a difference of at least 5% was required, but this rule was abolished from 2021 onward). Companies can therefore flexibly design the increase margin to suit their own circumstances. It is common for companies to design a pay curve that reflects tenure and ability, with pay increasing by a certain proportion as grades rise.

(iii) Consultation with the trade union

Once a draft wage table has been prepared, the company seeks the opinion of the internal employee representative organization (such as the trade union). The specific consultation process is set out in Article 41 of Decree No. 145/2020/ND-CP, which provides for the following flow: the company gives written notice of the content for consultation → the union gathers employee opinions and responds → labor and management hold discussions (with minutes prepared and signed) → the agreed content is shared internally. This consultation process is not required at companies without a trade union, but making an effort to reflect employee voices is nonetheless desirable.

(iv) Internal publication and implementation

The wage table, once finalized following consultation with the union, must be publicly announced in the workplace before it takes effect.

03 - Points to Note When Building a Wage Table, and the Legal Risks of Non-Compliance

Compliance with the minimum wage (setting Grade 1): The basic salary for Grade 1, the lowest tier of the wage table, must always be set at or above the applicable regional minimum wage. Because the minimum wage may be revised annually by government decree (most recently raised in July 2024), the wage table must be promptly reviewed and adjusted whenever a revision occurs. Employing staff below the minimum wage is subject to severe penalties, so caution is required (see below).
Setting the number of grades and the increase margin: Vietnamese law sets no upper limit on the number of wage grades (the scale), but at least two grades must be established. As an extreme example, "the same salary for all employees company-wide" is not permitted; at minimum, a grading structure that differentiates pay between a new hire and a veteran employee is required. Many companies commonly adopt a fine-grained structure of around 5-15 grades. As noted above, the differential between grades (the rate of increase) may be freely determined by the company. Companies should consider a pace of salary increase suited to their industry and talent strategy.
Differences from the old rules (treatment of skill allowances): Under the new Labor Code from 2021 onward, the obligation to guarantee "minimum wage + 7%" for skilled workers has been abolished. Accordingly, when preparing a new wage table, a uniform mark-up based solely on technical qualifications or educational background is no longer required. That said, companies are not prohibited from independently establishing skill or job allowances, and each company retains discretion to design a system that rewards outstanding talent. The key point is that, as long as the minimum wage is not undercut, a certain degree of flexibility is permitted in the wage structure.
Seeking the opinion of the trade union, etc.: Where an internal trade union (employee representative organization) exists, its opinion must always be sought when formulating the wage table. There is no obligation to accept all of the union's views, but failing to go through the legally required process of "referring to its opinion" is subject to penalty. This obligation does not arise at companies without a union, but even informally seeking the views of employee representatives is advisable to build motivation and buy-in.
Publication and thorough dissemination in the workplace: The completed wage table must be publicly announced within the company before implementation, and all employees must be made aware of it. In practice, this means making the pay structure transparent through means such as workplace postings or distributed notices. Failure to publish constitutes a violation of the Labor Code and is subject to the fines discussed below. For multinational companies in particular, this is also a good opportunity to help local staff understand the company's wage system, so it is worth considering measures beyond a simple posting, such as holding briefing sessions.
Retention of the wage table and dealing with the authorities: As noted above, Vietnam currently imposes no obligation to register the wage table with the authorities. It is nonetheless important to keep the documentation properly on file internally so that it can be promptly produced and explained if requested by the labor authorities during an inspection. Particularly in industries such as manufacturing, where labor inspections occur periodically, companies should keep their wage-table files and related approval documents in good order.
Penalties for non-compliance: Vietnamese law imposes punitive fines for violations of the obligation to prepare and publish a wage table. Specifically, under Article 17 of Decree No. 12/2022/ND-CP, a fine of VND 10,000,000 to VND 20,000,000 is imposed on the enterprise for each of the following violations:
Failing to formulate a wage table or pay structure
Failing to publicly announce the wage table in the workplace before implementation
Failing to seek the opinion of the employee representative organization, where one exists

Separately from wage-table violations, if the wages actually paid to employees fall below the minimum wage, extremely severe penalties apply. Under Decree No. 12/2022, a minimum-wage violation can result in fines to the enterprise ranging from VND 40,000,000 to VND 150,000,000, depending on the number of employees affected. A minimum-wage violation can also seriously damage a company's reputation and employee morale, and must be avoided at all costs.