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Interest on overdue wages an untested measure

Update: January, 16/2015 - 08:54
The decree, which guides implementation of several Labor Code articles, says employers who have delayed paying salaries by 15 days or more will have to pay interest on the overdue salary at the rate fixed by the State Bank of Viet nam for one-month deposits. — Photo giaoduc

HA NOI (VNS) — A new decree requiring the payment of interest on overdue salaries has been issued by the Government, but neither employers nor employees are sure how effective it will be.

The decree, which guides implementation of several Labor Code articles, says employers who have delayed paying salaries by 15 days or more will have to pay interest on the overdue salary at the rate fixed by the State Bank of Viet nam for one-month deposits.

If the central bank does not stipulate such a rate, the interest on deposits paid by the commercial bank at which the employer has an account will apply.

No interest has to be paid on overdue salaries if the payment is less than 15 days late.

The decree also stipulates that the date on which the monthly salary is paid must be mutually agreed upon by employers and employees.

It says employers have to pay the salaries in full and on time.

When employees work overtime on workdays, their weekly days off or holidays, the extra payment must be 150 per cent, 200 per cent or 300 per cent of their normal wages.

This decree does not apply to State agencies making late payments.

Not enough funds

Le Hong Nga, an employee of a private company in Ha Noi's Nam Tu Liem District that publishes an advertisement magazine in Korean, said her boss always pays her salary at least a month late.

She said this practice has been going on for the last three years, with the boss giving the excuse of not having enough funds for various reasons.

Employees found it difficult to meet their daily expenses in such a situation, Nga said.

She said she was not confident that the new decree will change the situation.

"I have worked here for three years and so far no labour inspectors have ever come to my company, so no one knows whether the decree will be implemented or not," she said.

She felt the decree would be effective only if more labour inspectors are assigned to check salary payments by private companies.

Nguyen Hoang Long, director of the Thanh Dong Co Ltd which specialises in producing cardboard boxes, welcomed the decree, saying it would ensure worker's rights.

He said his company paid the monthly salary for workers in the middle of month, and it was always made the payment on time.

However, the decree will create difficulties for companies without stable or regular work that might not have enough funds to make salary payments on time, Long said. — VNS

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