How to calculate salary for employees

Salary is always an issue of concern for many workers. However, not everyone knows how to calculate the salary they receive to see if the calculation by the business or employer is reasonable or accurate.

Salary is the amount of money paid by the employer to the employee. Including salary according to job, title, salary allowance, other supplements, according to the agreement signed in the contract.

This salary must not be lower than the regional minimum wage (as mentioned in the article 14 things workers need to know to protect themselves). Currently, there are many different forms of salary payment such as real-time salary payment (by hour, by day, by month), salary payment by product, salary payment by product, salary payment by revenue… The form of salary payment applied depends on the production and business conditions and the nature of the job.

According to Article 54 of Decree 145/2020/ND-CP, employees are paid in the following ways:

Method 1: Time-based salary payment

Time-based salary is a form of salary payment based on actual working time, by month, week, day, specific hour:

– Monthly salary is paid for a month of work determined on the basis of the labor contract.

– Weekly salary is paid for a week of work determined on the basis of monthly salary multiplied by 12 months, divided by 52 weeks.

– Daily wages are paid for one working day. In case the labor contract stipulates monthly wages, the daily wages are determined by dividing the monthly wages by the number of normal working days in the month according to the provisions of law chosen by the enterprise. In case the labor contract stipulates weekly wages, the daily wages are determined by dividing the weekly wages by the number of working days in the week according to the agreement in the labor contract.

– Hourly wages are paid for one working hour. In case the labor contract agrees on monthly, weekly or daily wages, the hourly wage is determined by dividing the daily wage by the number of normal working hours per day as prescribed in Article 105 of the Labor Code..

*Formula for calculating monthly wages

Formula 1:

Monthly wages = Wages + Allowances (if any) / monthly working days x actual number of working days

In which monthly working days are the days the employee works in the month, excluding holidays as prescribed by the State, days off with full pay as prescribed by the determined

Example: Monthly working days of Employee A in January 2023 = 31 (Days) – 5 (Sundays) – 6 (holidays, Tet) = 20 days.

Formula 2

Monthly salary = Salary + Allowance (if any) / fixed working days in the month x actual number of working days

According to Article 105 of the Labor Law, working time and rest are regulated. The fixed number of working days in a month can be 26/24 days, but Enterprises often take 26 days for convenience in calculation.

 For example: Employee A signs a labor contract with an official salary of 8,000,000 VND

Meal allowance 730,000 VND/month. + Phone 200,000 VND, Actual working days in January 2023 are 20 days.

Similarly, we have:

Employee A’s salary by week is as follows:

Salary received for 01 week = Salary received for January 2023 / 4 weeks = 1,717,308 VND

Salary received for 01 day = Salary received for January 2023 / 26 fixed working days = 264,201 VND

Salary received for 01 hour = Salary received for January 2023 / 26 days fixed salary / 8 hours = 33,025 VND

If employees are applied this salary calculation method, they almost do not need to worry about their income each month because the amount deducted for each unpaid day off is fixed, the number of days off is deducted that much money.

– In case the employee works at night (from 10pm – 6am the next day), the salary will be calculated according to the following formula:

Example: Following the above example, if employee A works the night shift, the salary for working the night shift is calculated = (33,025 + 33,025 x30%) x 8 hours = 343,462 VND (excluding allowances, if any)

Note: Employees working the night shift are entitled to a break of at least 45 consecutive minutes.

Method 2: Payment by product

Product salary is paid to employees who receive salary by product, based on the level of completion of quantity and quality of products. This method of payment is linked to labor productivity and labor remuneration. This method of calculation is often applied in manufacturing companies. Calculation formula:

Product salary = Number of products meeting the target x product unit price.

Example:

Company X stipulates the unit price of 01 shirt at the cutting stage is 5,000 VND

Worker A cuts 1,000 shirts in January 2023

Actual salary received in January 2023 = 5,000 x 1,000 = 5,000,000 VND

Method 3: Piecework salary payment method

Piecework salary is a form of salary payment when the employee completes the assigned amount of work according to the assigned quality.

Salary = Piecework salary x % of completed work delivery.

For example: Mr. A agreed with Company B to complete the design and interior decoration for a Level 4 house within 1 month with a salary of 8,000,000 VND. After handing over and accepting 100% of the design within 1 month, Mr. A received the full amount as agreed.

Method 4: Salary payment based on revenue

Salary based on revenue is a form of salary payment (bonus) in which the employee’s income depends on the sales achieved according to the sales policy target set by the employer. (Usually applied to sales staff, sales staff, employees directly related to the revenue of the Enterprise)

Salary/bonus forms based on revenue:

– Salary/bonus based on individual sales.

– Salary/bonus based on group sales.

Formula: Salary + Allowance (if any) + % Sales/Sales commission

Example: Company A sells air conditioners and stipulates that sales staff, in addition to a basic salary of 5,000,000, will receive 3% x Sales revenue per month. January 31, 2023. Sales revenue is 300,000,000 VND

Salary of sales staff = 5,000,000 + 3% x 300,000,000 = 14,000,000 VND

The above is the way to calculate salary for employees according to the provisions of the Labor Code. In addition to the basic salary that the business must pay, it is necessary to pay overtime wages to employees. To know how to calculate overtime wages, please wait and read the following article.

Please connect with ADSMO via hotline 0356.105.388 to discuss and consult on Administrative – Human Resources software to help businesses and units operate more effectively.