The company must pay wages directly, fully and on time to employees, and must not force workers to spend wages to buy its products

Legal grounds:

• Labor Code 2019;
• Decree No. 12/2022/ND-CP.

We get the following questions:

In difficult business times, can the company pay employees with products instead of cash?

1. Company’s salary obligation

Pursuant to Clause 1, Article 90, Article 94 of the Labor Code 2019 as follows:

Article 90. Salary

1. Wage is the amount that the employer pays the employee under an agreement to perform the job, including the salary according to the job or title, salary allowances and other supplements.

Article 94. Principles of salary payment

1. Employers must pay wages directly, in full and on time to employees. In case the employee cannot receive the salary directly, the employer can pay the salary to the person legally authorized by the employee.
2. The employer must not restrict or interfere with the employee’s right to self-determination of salary expenditure; Employees must not be forced to spend their salaries on the purchase of goods or services from the employer or other units designated by the employer.

According to the above provisions, the law not has any provision prohibit enterprises from paying wages with product.

However, the salary is clearly defined as the amount that the business has to pay to the employee. Enterprises must not force employees to spend wages to buy products and goods of the company.

Therefore, it is illegal to convert wages into products and goods to pay employees instead of paying in cash. Therefore, enterprises cannot pay wages with products.

2. Administrative fines for not paying enough wages

It is illegal for enterprises to pay wages with products. Therefore, the enterprise cannot assume that having paid with the product has fulfilled the payment obligation.

Failure to pay wages in full by an enterprise or forcing employees to pay wages to buy products of the company will be administratively sanctioned according to the provisions of Clause 2, Point a, Clause 5, Article 17 of Decree No. 12/ 2022/ND-CP as follows:

Article 17. Violations against regulations on wages

2. A fine shall be imposed on the employer who commits one of the following acts: Paying wages not on time as prescribed by law; fail to pay or pay insufficiently wages to employees as agreed in the labor contract; not paying or not paying enough overtime wages; not paying or not paying enough wages to work at night; failing to pay or not paying enough wages to stop working for employees as prescribed by law; restrict or interfere with employees’ right to self-determination of wage expenditure; forcing employees to spend wages on the purchase of goods or services from the employer or other units designated by the employer; withholding wages of employees in contravention of the law; failing to pay or underpaying employees the prescribed salary when temporarily transferring the employee to another job compared with the labor contract or during the strike period; failing to pay or underpaying the employee’s salary during the unpaid annual leave or the number of annual leave days when the employee resigns or loses his/her job; failing to advance or pay insufficient wages to employees during the period of temporary suspension of work as prescribed by law; fail to pay the employee enough wages for the period of temporary suspension from work in case the employee is not disciplined at one of the following levels:

• a) A fine from 5,000,000 VND to 10,000,000 VND for violations from 01 to 10 employees;
• b) A fine ranging from VND 10,000,000 to VND 20,000,000 for violations of between 11 and 50 employees;
• c) A fine ranging from VND 20,000,000 to VND 30,000,000 for violations of between 51 and 100 employees;
• d) A fine ranging from VND 30,000,000 to VND 40,000,000 for violations of between 101 and 300 employees;
• đ) A fine of from VND 40,000,000 to VND 50,000,000 for violations involving 301 employees or more.

5. Remedial measures

• a) Forcing the employer to pay the full salary plus the interest on the late payment or underpayment to the employee calculated at the highest interest rate on demand deposits of domestic commercial banks; announced by the country at the time of sanctioning for the violations specified in Clauses 2 and 3 of this Article;

Note:

• The above fine level applies to individual has violation;
• The fine level for violating organizations is 2 times the above-mentioned level.