Standard Payroll Calculation Process for FDI Enterprises

Are you running an FDI enterprise in Vietnam and feeling overwhelmed by the complex regulations on salary payment methods? How can you choose a payroll method that fits your business while eliminating potential legal risks? Let KMC—a professional consulting firm specializing in tax, accounting, and HR solutions for FDI enterprises—provide you with the most detailed and transparent guidance.

Why Should Enterprises Choose the Right Salary Payment Method?

Practical surveys show that over 68% of labor disputes in FDI companies originate from errors in salary calculation and payment.
While most organizations and businesses pay close attention to salary calculation and employee remuneration, the method of payment itself often does not receive adequate consideration. Enterprises should recognize that the salary payment method has a significant impact not only on cash flow but also on the employee experience. Moreover, choosing the wrong payment method may expose businesses to certain legal risks.
Therefore, for every enterprise – especially Japanese companies, where workplace culture emphasizes transparency and discipline – understanding the forms of salary payment as regulated in Vietnam becomes even more essential.

Common Salary Payment Methods Today

According to Clause 1, Article 96 of the 2019 Labor Code, the forms of salary payment are stipulated as follows:

1. The employer and the employee shall agree on the form of salary payment based on time, product, or fixed contract.
2. Salary may be paid in cash or transferred to the employee’s personal bank account.

In cases where salary is paid via the employee’s personal bank account, the employer must bear all costs related to account opening and salary transfer.

Accordingly, based on the above regulation, the employer and employee may agree on the following salary payment methods:

• Salary based on time, including month, week, day, or hour.
• Salary based on product.
• Salary based on fixed contract (lump-sum payment).

Practical Application of Salary Payment Methods

To pay salaries to employees, enterprises may apply the following methods in practice according to their payroll processes:

1. Salary Based on Time

This is the most common method used in FDI office companies as well as in most types of enterprises today.

Formula:
Net Salary = (Agreed Salary / Standard Working Days) × Actual Working Days – Deductions

Example: XYZ Co., Ltd. (100% Japanese-owned) in Hanoi applies a monthly salary scheme for its office staff. With an agreed salary of VND 15,000,000/month (22 working days), if an employee works for 20 days due to 2 days of leave, the salary received will be: (15,000,000 / 22) × 20 = VND 13,636,364.

Advantages:

• Easy for budgeting and suitable for qualitative jobs.
• Flexible and simple to calculate.

Disadvantages:

• Does not directly reflect employee productivity.

2. Salary Based on Product

This is the most performance-optimized method, suitable for factories, workshops, and manufacturing enterprises.

When applying this method, businesses must pay attention to legal requirements. According to Article 104 of the 2019 Labor Code, piece-rate wages must ensure that an employee working 8 hours/day receives not less than the regional minimum wage.

Formula:
Total Income = Number of Completed Products × Unit Price per Product

Example: A Japanese electronic components company in Bac Ninh applies a unit price of VND 500/product. Worker A completes 1,200 products/day and will receive VND 600,000.

Advantages:

• Links income directly to labor productivity, reducing the need for close supervision.

Disadvantages:

• Difficult to apply for creative jobs; may lead to quality compromises.

3. Salary Based on Lump-Sum (Contract)

This is the most optimal method for special projects. Decree No. 145/2020/NĐ-CP stipulates that lump-sum payments must be agreed upon in writing, clearly defining the workload, quality requirements, and completion deadlines.

Formula:
Total Salary = Lump-Sum Amount for Completed Workload

Example: A Japanese interior design company in Da Nang agrees to a lump-sum payment of VND 50,000,000 for preparing the design drawings of a luxury apartment project to be completed within 15 days.

Advantages:

• Flexible working time.
• Focuses on final results.

Disadvantages:

• Difficult to control progress.
• Potential for disputes if “completion of work” is not clearly defined.

See also: 3P Salary and KPI!

Detailed Comparison of Salary Payment Methods

Even after understanding different salary payment methods, you may still face challenges in selecting the most optimal option for your enterprise. Refer to the detailed comparison table below:

Conclusion:
Each salary payment method comes with its own advantages, disadvantages, and risks, and is suitable for different types of businesses. As a manager, the key is to thoroughly understand your enterprise in order to make the right choice—or even combine multiple salary methods in a smart way to enhance productivity and overall efficiency of your workforce.

Choosing Salary Payment Methods for FDI Enterprises

In addition to salary calculation and salary payment forms, the method of disbursement itself is also a major source of disputes. According to a survey by the Ministry of Labor, Invalids and Social Affairs (2024), 42% of labor complaints are related to salary disbursement methods.

Article 94 of the 2019 Labor Code clearly stipulates:

• Salaries must be paid directly, fully, and on time.
• Salaries may be paid in cash or transferred to the employee’s personal bank account.
• If paid via a bank account, enterprises are not allowed to deduct transfer fees from employees’ salaries.
• A signed payroll slip or bank transaction record must be kept as proof of payment.

Note: Under Circular No. 23/2021/TT-BLĐTBXH, payment in kind is allowed for a maximum of 30% of the employee’s total monthly income and requires the employee’s written consent.

Currently, FDI enterprises in general—and Japanese FDI enterprises in particular—are implementing salary disbursement as follows:

• Bank Transfer: 92% of Japanese enterprises adopt this method to ensure transparency and align with centralized accounting systems.
• Bank Fee Handling: The company bears 100% of the transfer fees and does not deduct them from employees’ salaries.
• Payment Schedule: Strictly in accordance with the labor contract, typically between the 15th and 25th of each month.

5 Common Mistakes in Applying Salary Payment Methods in FDI Enterprises

Many Japanese FDI enterprises in Vietnam still make certain mistakes when selecting and applying salary payment methods for employees, such as:

• Not specifying the salary payment method in the labor contract: 65% of disputes arise from contracts lacking this detail.
• Failing to include holiday pay: According to Article 112 of the Labor Code, employees are entitled to full pay on 11 public holidays per year.
• Applying the wrong regional minimum wage: The current (2025) rates range from VND 3,920,000 to VND 4,680,000/month depending on the region.
• Not adjusting salaries when changing payment methods: An addendum to the labor contract must be signed when the salary calculation method is changed.
• Delayed payment exceeding 15 days: This violates Article 17 of Decree No. 12/2022/NĐ-CP and may result in fines of up to VND 75 million.

Professional Payroll and Salary Payment Solutions from KMC Experts

As a new enterprise entering the Vietnamese market, you may seek consultation and guidance on the latest regulations regarding tax, accounting, and human resources. Building a professional, legally compliant payroll–tax–accounting framework is essential for long-term and sustainable growth.

Contact KMC—a consulting firm with more than 15 years of experience advising over 300 FDI enterprises in Vietnam. We work alongside our clients to design payroll schemes, select appropriate salary payment methods tailored to each business’s characteristics, ensuring transparency and enhancing employee performance.

KMC provides a comprehensive A-to-Z solution, including:

• Multi-dimensional analysis: Assessing business type, HR structure, and corporate culture to recommend the most suitable salary payment method.
• Comprehensive legal review: Ensuring compliance with Vietnam’s Labor Code and international conventions applicable to FDI enterprises.
• Standardized process design: Developing a transparent payroll system with clear formulas and appropriate payment methods.
• Technology solutions: Integrating automated payroll systems compatible with the company’s existing accounting software.
• Labor negotiation support: Advising on negotiation strategies when changing salary payment methods with employees.

With proven experience in successfully implementing payroll systems for 47 Japanese companies in Vietnam, KMC’s team of experts is ready to accompany you in building a professional payroll policy that aligns with your business operations.

Frequently Asked Questions on Salary Payment Methods for Employees

Is it mandatory for FDI enterprises to pay salaries via bank transfer?
No, it is not mandatory. However, under Circular No. 23/2021, if salaries are paid to more than 10 employees at the same time, enterprises are encouraged to use bank transfers to ensure transparency.

Can the salary payment method be changed during the contract period?
Yes, but it must comply with Article 35 of the Labor Code: any change requires a written agreement with the employee in advance and must not reduce the employee’s agreed rights and benefits.

How should disputes over salary payment methods be resolved?
The Labor Code provides 4 steps:

• Direct negotiation
• Mediation by the Labor Mediation Council
• Labor arbitration
• Court litigation

Statistics show that 80% of disputes are resolved at the negotiation stage when contracts and related documents are clear. Therefore, enterprises should carefully develop both payroll policies and salary payment methods from the beginning to: minimize legal risks – reduce internal disputes – and enhance employee performance.

For professional consultation, please contact our hotline: +84 91 988 9331.

See also: Standard Payroll Calculation Process for FDI Enterprises