According to the provisions of the current Labor Code 2019, there are only 03 cases where the employer is allowed to deduct the employee’s salary. Whether or not the employee’s salary can be arbitrarily deducted is a question many readers are interested in and send a question to Lawyer X. In case of illegal wage deduction, the employer may be fined Administrative Violations. Please read the article below to understand the legal provisions of the above content.
Legal grounds
Labor Code 2019
Decree No. 145/2020/ND-CP guiding the implementation of the labor law 2019
What is payroll deduction?
Salary deduction means the employer deducts part of the employee’s salary according to the provisions of law; to make up for the amount previously shown or damaged.
With the concept that salary is the main source of livelihood for employees and their families; The law has promulgated regulations on salary deduction only in case the employee has to compensate for material damage; salary advance or wrong payment from last month. Before deducting the employee’s salary; the employer must discuss it with the executive committee of the grassroots trade union. Employees have the right to know the reason for any deductions from their wages.
Is it possible to arbitrarily deduct an employee’s salary?
Pursuant to the provisions of Article 102 of the Labor Code 2019, the employer may only deduct the employee’s salary to compensate for damage caused by damage to tools, equipment, and property of the employer. act in accordance with Article 129 of this Law.
According to Clause 1, Article 129, an employee who damages tools or equipment or commits another act that damages the employer’s property must pay compensation in accordance with the law or the employee’s internal labor regulations.
Thus, the employer is only entitled to deduct the employee’s salary to compensate for damage caused by the employee’s damage to the tools, equipment, and assets of the employer.
When is the salary deduction?
Relating to deductions from employees’ wages; The 2019 Labor Code stipulates: Employers can only deduct the wages of employees; to compensate for damage caused by damage to the tool; equipment and property of the employer according to the provisions of article 129 of this Code. The employee has the right to know the reason for the deduction of his salary. The monthly salary deduction must not exceed 30% of the employee’s monthly salary; after deducting the compulsory social insurance payments; health insurance, unemployment insurance, and personal income tax.
Where the employee causes non-serious damage; due to negligence with a value not exceeding 10 months of the regional minimum wage; announced by the Government to be applied at the workplace; the employee must compensate at most 03 months’ salary; and have monthly deductions from salary as prescribed in Clause 3, Article 102 of this Code.
In addition, the Employee loses tools, equipment, and property of the employer; or other property assigned by the employer; or consumes materials beyond the allowable limit; must compensate for all or part of the damage at market prices; or under labor regulations; where there is a contract of liability, compensation must be made according to the contract of liability.
Employee salary deductions
Currently, when paying salaries to employees, usually the employer side has to deduct a number of amounts, specifically specified as follows:
(i) The employee’s social insurance premium pays 8% of salary as the basis for paying social insurance premiums according to the provisions promulgated in the Law on Social Insurance 2014
(ii) Unemployment insurance premium paid by the employee at 1% of salary as the basis for insurance payment as prescribed in the current 2013 Employment Law.
(iii) The employee’s health insurance premium pays 1.5% of the salary as a basis for paying health insurance premiums as specified in the Law on Health Insurance.
(iv) Union fees (in case the employee is a union member); is 1% of the salary as the basis for paying social insurance premiums.
(v) Fund for natural disaster prevention and control with the prescribed payment rate of 1 day salary/year
(vi) Personal income tax after deduction of deductions: the deduction for yourself; for dependents, then pay according to the progressive schedule of each part as specified in the Law on Personal Income Tax.
How to arbitrarily deduct employee salary?
Article 127 of the Labor Code clearly states that one of the prohibited provisions when handling labor discipline is to use the form of fines or salary cuts instead of handling labor discipline.
Accordingly, the labor discipline can only be handled in the following forms: reprimand; Extend the time limit for salary increase to no more than 06 months; dismiss; Dismissal as specified in Article 125.
Thus, it can be seen that in case the enterprise deducts wages and fines employees for errors such as coming to work late, leaving early; Not finishing the work; making errors when performing assigned tasks; voluntarily leaving work without the consent of the enterprise … are also considered violations under the provisions of the Labor Code.
In the above cases, enterprises will be administratively sanctioned with a fine of between 10 and 15 million VND. Specifically, according to point b, clause 3, Article 18 of Decree 28/2020/ND-CP; Arbitrary deduction of an employee’s salary will be handled as follows:
Article 18. Violations against regulations on labor discipline and material responsibility
3. A fine of between VND 10,000,000 and VND 15,000,000 shall be imposed on the employer when committing one of the following acts:
b) Using the form of fines and salary cuts instead of handling labor discipline;
Related article:
gRights of employees when unilaterally terminating the labor contract
Employee’s rights when the labor contract is terminated without a valid reason by Vietnamese law
Frequently asked questions:
According to Article 37 of the Labor Code, it is clear that the employees are entitled to unilaterally terminate the labor contract. Thus, the employee unilaterally terminates the contract must give advance notice.
In case the individual working at the enterprise voluntarily quits without permission and does not notify the employer. Thus, if it is not in the cases specified above, whether the leave will be paid or not will first depend on the agreement in the labor contract.
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