Are you facing difficulties in the payroll process for employees: how to handle employees resigning in the middle of the month, maternity leave, or temporary suspension of labor contracts? How can you avoid calculation errors that may lead to internal dissatisfaction or even legal risks? In the following article, KMC will provide you with a detailed guideline on the standard payroll calculation process for FDI enterprises, ensuring accuracy, transparency, and compliance with Vietnamese law. Along with that is guidance on handling special situations in the payroll process for employees.

Standard 7-Step Payroll Process for FDI Enterprises

An effective payroll process for FDI enterprises must ensure three core factors: Fairness – Accuracy – Efficiency.
To help enterprises easily build and optimize their payroll process, below KMC provides you with a 7-step payroll roadmap recommended by leading HR experts:

Step 1: Collect & verify input data

This step determines the accuracy of the entire process. Data must be collected fully, accurately, and promptly, including:

Attendance records (actual working hours, overtime hours, leave days, unpaid leave, etc.).
Sales and production data (for piece-rate wages, sales bonuses).
Decisions on bonuses, penalties, allowances (lunch, transportation, position, hazardous work, etc.).
Information on deductions (social insurance, health insurance, unemployment insurance, personal income tax, advances, etc.).
Contract and personnel changes (new hires, resignations, transfers, etc.).

Step 2: Calculate income items

Apply the correct salary calculation formula (e.g., time-based salary, piece-rate, 3P salary), and add bonuses and allowances according to company policy and the labor contract.
See also: The 3P salary calculation method and its relation to KPIs!

Step 3: Calculate deductions

Accurately calculate deductions, including:
● Social insurance contributions (social, health, unemployment insurance) at the prescribed rates (latest updates) based on the insurance salary base.

Personal income tax (PIT) according to the progressive tax schedule and valid family deductions.
Deductions for advances, disciplinary actions (if any).

Note: Salary deductions must strictly comply with Articles 102 and 103 of the Vietnamese Labor Code (refer to details on the Government’s official portal).

Step 4: Determine net salary

Net salary = Total income – Total deductions

Step 5: Prepare payroll sheet & cross-check

Use spreadsheets or specialized software to prepare a detailed payroll sheet for each employee. Conduct cross-checking by another staff member or a manager to detect errors (if any).

Step 6: Submit for approval

After finalizing the payroll sheet, submit it to the competent authority (Director, Chief Accountant) for approval before payment.

Step 7: Payment & record keeping

Pay salaries on time via the agreed method (bank transfer, cash).
Keep complete and confidential payroll records (payroll sheets, attendance records, decisions, etc.) in accordance with legal retention requirements.

7 Common Mistakes in the Payroll Process and How to Avoid Them

Even when applying a standard payroll process, errors can still occur. Below, KMC summarizes common mistakes that affect not only accuracy but also the reputation of FDI enterprises:

Errors in input data

Mistake: Inaccurate attendance records, missing approved overtime hours, failure to update information on new/resigned employees.
Prevention: Digitize the attendance process (fingerprint, face ID), establish a clear reporting and approval process for overtime, update the labor book and HRMS system immediately upon changes.

Omission of allowances and benefits

Mistake: Forgetting position allowance, hazardous allowance, transportation allowance, or lunch allowance according to the labor contract/collective labor agreement.
Prevention: Maintain a complete list of allowances and benefits applicable to each position/department. Review labor contracts and collective agreements before payroll calculation.

Errors in social insurance & personal income tax (PIT) calculation

Mistake: Applying incorrect contribution rates, wrong subjects of contribution, miscalculating PIT based on the tax schedule, or forgetting family circumstance deductions.
Prevention: Regularly update new regulations on social insurance and PIT from reliable sources (Vietnam Social Security, General Department of Taxation). Use automated tax calculation software updated with new policies. Provide continuous in-depth training for payroll accountants.

Failure to comply with payment deadlines

Mistake: Late salary payment compared to the labor contract (usually the last working day of the month or the beginning of the following month). This violates the Labor Code and may cause employee dissatisfaction or result in penalties for the enterprise.
Prevention: Plan payroll early, ensuring internal processes are completed at least 3–5 working days before the payment deadline.

Lack of transparency in payroll

Mistake: Employees do not understand how their salary is calculated, leading to suspicion or complaints.
Prevention: Provide detailed, easy-to-understand electronic/traditional pays lips clearly explaining income and deductions. In addition, the HR department must be ready to answer employees’ questions thoroughly and accurately.

Poor data confidentiality

Mistake: Salary information of employees is leaked externally or unnecessarily within the company. This violates personal data protection laws and may cause internal conflicts.
Prevention: Establish strict rules on payroll data access rights, use secure systems, and train employees on information security.

Failure to store/incomplete storage of records

Mistake: Inadequate records for explanation in case of inspection or complaints.
Prevention: Digitize payroll records and strictly comply with legal record retention periods (usually 5–10 years).

Smart Handling of “Special” Payroll Situations for FDI Enterprises

A standard payroll process sometimes encounters situations that fall outside the usual scenarios. To ensure accurate payroll calculation for these cases, below KMC provides detailed guidelines to handle commonly confusing situations today.

Employee resigns mid-month

Calculation: Salary is calculated based on actual working days in the month. Formula: (Monthly salary / Standard working days of the month) * Actual working days.
Legal risk: Late payment of salary after resignation is a serious violation of the Labor Code.

Note: Pay full salary + allowances and benefits (if any) + insurance + severance allowance (if eligible) in the final payment along with completion of exit procedures. Illegal salary deductions are not permitted.

Employee on maternity leave

Maternity allowance is paid from the Social Insurance Fund. Benefit amount = 100% of the average monthly salary on which social insurance contributions were made during the 6 consecutive months before leave. The enterprise does not pay salary during this period, unless there is a higher welfare policy.
Note: Continue paying social insurance contributions for employees during maternity leave. Calculate the leave period accurately according to regulations (6 months). Ensure rights when employees return to work.

Suspension of labor contract

Principle: No salary arises during the suspension period unless otherwise agreed by both parties.
Note: The suspension agreement must be in writing, clearly stating the reason and duration. Handle social insurance rights correctly during the suspension period (usually the employee pays their own contributions if they wish to maintain coverage).

Employee on unpaid leave

Calculation: No salary is paid for unpaid leave days. Formula for monthly salary: (Monthly salary / Standard working days) * Actual working days.
Note: An approved unpaid leave application is required. It affects the continuity of social insurance contributions.

Employee transfer mid-month with salary change

Calculation: Salary is calculated separately for each position/salary region corresponding to the number of days worked in each department within the month.
Note: A transfer decision must clearly state the effective date and new salary (if changed). Notify the payroll department promptly.
Enterprises must handle each situation accurately to ensure legal compliance, avoid legal risks, and, more importantly, demonstrate professionalism, respect for employees, and retention of the workforce.
Especially in the high-quality labor market and among specialized workforces at FDI enterprises, establishing and applying a standard process from the beginning plays a crucial role in demonstrating professionalism, retaining employees long-term, and contributing to building a skilled workforce with sustainable engagement with the enterprise.

KMC: Consulting on Building a Professional “Error-Free” Payroll Process for FDI Enterprises

Are you a business manager seeking a comprehensive and professional payroll solution that saves time while ensuring maximum efficiency and accuracy? Are you looking for a professional partner to work alongside your enterprise in establishing a complete standard payroll system that fits your company’s scale and needs?

Contact KMC, a consulting company providing full-package solutions in taxation, accounting, and human resources for FDI enterprises, especially Japanese FDI companies. We support businesses in building and maintaining a complete payroll process that is absolutely accurate and fully compliant with Vietnamese law.

KMC’s professional HR and payroll consulting services bring the following outstanding advantages:

Standard payroll calculation & payment process: A payroll process designed specifically to fit your FDI enterprise’s industry characteristics, scale, and corporate culture (including complex methods such as piece-rate salary, 3P salary), with built-in mechanisms for error prevention and handling special cases.
Comprehensive & updated templates and documents: From attendance sheets, payroll calculation sheets (in standard formats), to transparent explanation procedures for employees, ensuring accuracy from the input stage and effective implementation.
Strict compliance with Vietnamese law: With a team of experts deeply knowledgeable in the Labor Code, Social Insurance Law, Personal Income Tax Law, and related guidance documents, we help enterprises avoid unnecessary legal risks and penalties.
Time & cost savings: Optimizing processes and payroll solutions helps free HR/Accounting departments from error-prone manual calculations, allowing them to focus on strategic human resource development.
Enhanced employee trust & satisfaction: Through transparent processes, accurate payroll, and clear explanations.
Specialized support for Japanese enterprises: With a deep understanding of Japanese work culture and unique management requirements, we provide solutions and bilingual (Vietnamese–Japanese) documents when needed.

The above is KMC’s complete guidance on a standard payroll process that can be applied immediately for FDI enterprises. Have you already established a precise payroll and bonus system for your employees? What difficulties are you facing in payroll calculation for your workforce?

Let KMC’s experts accompany, consult, and support you—and more than that, build a professional payroll process applying the most efficient and accurate payroll methods.

📞 Contact hotline: +84 91 988 9331 for direct consultation with KMC’s experienced team of experts.

Standard Payroll Calculation Process for FDI Enterprises