2. Head of the Supervisory Board

With the aim of empowering enterprises in salary management, ensuring wage levels align with market standards, and implementing a salary mechanism that enables businesses to attract and incentivize highly skilled personnel in high-tech fields prioritized by the State, on February 28, 2025, the Government issued Decree No. 44/2025/ND-CP on the management of labor, wages, remuneration, and bonuses in state-owned enterprises ("SOEs") ("Decree 44").

Below, ATA Legal Services has updated some key changes that significantly impact enterprises, specifically as follows:

1. Flexible Wage Management Principles Linked to Labor Productivity and Business Efficiency

Decree 44 explicitly states that wages must be determined based on labor productivity and business performance while remaining consistent with market levels. It also establishes an appropriate salary mechanism to help enterprises attract and retain highly skilled personnel in high-tech fields that the State prioritizes for development.

Additionally, based on labor and employment laws, corporate charters, and business strategies, SOEs have the autonomy to determine salary scales and tables without imposing a maximum limit for experts and personnel with high technical and professional qualifications.

Moreover, Decree 44 further clarifies the principles for excluding certain objective factors when calculating wages, such as state policies and market conditions.

Thus, compared to previous regulations, Decree 44 grants greater autonomy to SOEs in structuring their wage policies while also introducing clearer mechanisms for excluding external factors. This ensures fairness and enables SOEs to be more competitive in the labor market, particularly in attracting highly skilled professionals.

2. Addition of a New Method for Determining Wage Funds

Decree 44 stipulates that the wage fund for employees and the executive board is determined using the following methods:

(i) Determination of the wage fund based on the average wage level;

(ii) Determination of the wage fund based on a stable wage rate. This method applies only to enterprises that have operated for at least the duration they intend to apply the stable wage rate (minimum 2 years, maximum 5 years).

Compared to previous regulations, the new Decree introduces the stable wage rate method. This approach enhances wage fund stability and predictability while closely linking it to the business performance of SOEs. Under this method, the wage fund is adjusted based on profit levels, providing more specificity than earlier regulations:

• A maximum 2% increase in the wage fund when profits exceed 1%, but not exceeding 20% of the excess profit target and two months' average wage based on the actual wage fund;
• A proportional decrease when profits fall below the average, but not below the wage fund determined by actual average labor usage and regulated wage levels;
• For enterprises with no profit, losses, or reduced losses, the wage fund is calculated based on actual labor and loss reduction levels.

Regarding the application of wage fund determination methods, Decree 44 allows enterprises to choose between the two methods depending on their industry characteristics and operational conditions.

Enterprises engaged in multiple business sectors that can separate labor and financial indicators to assess productivity and efficiency for each sector may select the most suitable method to determine wage funds corresponding to each area of operation. This regulation provides greater flexibility for SOEs, especially those with diverse business operations.

3. Separate Wage Fund Determination for High-Tech Labor

To attract, incentivize, and retain high-tech workers, salaries for high-tech personnel such as pilots, digital technology experts, AI specialists, etc., as defined by the Law on High Technology, are determined separately based on market wage levels. However, this must ensure that profits do not decline compared to the previous year. In cases where a stable wage rate is applied, profits must not decrease compared to the average profit level.

4. Changes in Determining the Basic Salary of SOE Management Positions

For board members and controllers, the basic salary for each management position—such as Chairman of the Board of Members (Company Chairman), Board Members, Chief Supervisory Officer, and Controllers—ranges from VND 25 million to VND 80 million per month (compared to the current maximum of VND 36 million per month).

BASIC SALARY TABLE

Unit: million VND/month

Annually, SOEs will determine the planned salaries for each board member and controller based on their business targets. The maximum planned salary is twice the basic salary if targets are met.

Meanwhile, the salary of the executive board will be calculated together with employees' salaries according to the enterprise’s wage regulations. The maximum salary for the CEO/Director cannot exceed 10 times the average wage of employees in the company.

If the Company Chairman also serves as the CEO/Director, they will receive the salary corresponding to the Chairman position.

5. Specific Regulations on Maximum Employee Bonuses in SOEs with Over 50% State Capital

Decree 44 clearly stipulates that employee bonuses in SOEs where the State holds over 50% of charter capital (referred to as "SOEs over 50% capital") are capped at three months' salary if profit targets are met.

For the executive board, board members, and controllers, the maximum bonus is two months' salary. The Decree also specifies that employee bonus funds cannot be used to reward the executive board, board members, or controllers.

For employees, executive board members, board members, and controllers in wholly state-owned enterprises, the reward fund is determined by government regulations. The employee bonus fund is deducted from the reward and welfare fund and allocated according to the enterprise’s internal policies.

For the executive board, bonuses are based on contribution levels and the enterprise’s performance results.

Overall, Decree 44 consolidates scattered provisions from previous decrees and amends several related regulations. It is expected to be a significant advancement in SOE management, granting greater autonomy in salary adjustments based on performance while ensuring employee rights, particularly for high-tech workers.

Decree 44 will take effect from April 15, 2025.