Basic salary coefficient

Base Salary Factor: Definition, Limitations, and Calculation

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Basic salary coefficient is one of the most important issues that workers need to know when participating in the labor market. However, many people are still unaware of these regulations. That's why, let's Johnson's Blog Find out more through the article below!

What is Base Salary?

Base salary is a type of indicator that represents the minimum wage that an employee is entitled to for a particular job position.

The base salary in 2021 is 1,490,000/month (Based on Resolution No. 128/2020/QH14)

However, many businesses now also have some adjustment policies and build a salary coefficient scale to calculate the basic salary for employees as well as the accompanying allowances or regimes for their employees. .

This is considered as an element of the salary scale and payroll, which is the basis for enterprises or state agencies to ensure the rights of employees and related regimes. Specifically:

  • State agencies will have their own ranks and salary coefficient framework
  • Private enterprises will have salary coefficients according to different ranks, salary levels are also based on qualifications, degrees and position levels in the enterprise.

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What is the Basic Salary Ratio (HSL)?

Base salary coefficient is a concept in the field of compensation, used to calculate the base salary of an employee. This coefficient is often applied in companies, organizations and businesses to determine the minimum salary for a position, a rank or a certain industry.

Specifically, the base salary coefficient is a constant number set by the employer and the company and communicated to the employees. This number is usually calculated based on the average salary of a certain industry or job position, depending on the employee's experience and qualifications.

When calculating an employee's salary, the base salary multiplier is multiplied by the number of hours worked or the number of days worked by the employee to calculate their base salary. From there, allowances, allowances, bonuses or other deductions are taken into account to calculate the employee's actual salary.

Definition of the basic salary coefficient can be understood as the salary coefficient that an employee is calculated when working at an agency or organization.

In Circular No. 17/2015/TT-CLDTBXH, Decree No. 145/2020/ND-CP stipulates:

  • Intermediate level: The coefficient is 1.86.
  • College level: The coefficient is 2.10.
  • University degree: The coefficient is 2.34.

In fact, this coefficient is often used to calculate the base salary for officials working in state agencies by multiplying the basic salary coefficient corresponding to the job.

For enterprises outside the public sector, the basic salary is the amount that the employee and the HR department of the enterprise agree on in the labor contract. This is the basis for calculating the salary in the payroll, allowances and other remuneration regimes. Over time, the basic salary will have a certain adjustment according to the regulations of the enterprise.

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How to calculate Salary by coefficient

The calculation of the salary according to the salary coefficient is done according to the general formula as follows:

Current salary = Base salary x Current salary coefficient

In there:

Base salary be adjusted according to current legal documents in accordance with the socio-economic situation at the prescribed time.

The current salary coefficient prescribed by law in each group of ranks will be different.

How to calculate salary according to The salary coefficient applied from July 1, 2019 is calculated according to the following formula:

Salary = 1,490,000 VND x Current salary coefficient

For example, the base salary is currently 1,490,000 VND, the basic salary coefficient for civil servants with a university degree is 2.34 . The basic salary of that civil servant will be 1,490,000 x 2.34 = 3,486,600 VND.

The current salary coefficient of civil servants and public employees is determined according to the classification of civil servants and public employees based on the salary coefficient tables specified in the appendix issued together with Decree 204/2004/ND-CP .

In addition, corresponding to each profession, in addition to the basic salary, employees can also receive additional allowances according to the corresponding coefficient according to regulations, then the monthly income will increase significantly. .

According to Decree 204/2004/ND-CP, there are currently from 1 to 12 salary levels, the salary coefficient increases gradually from level 1 to level 12.

In addition to the main salary, officials and employees are also entitled to an additional salary allowance based on their position, work, seniority, etc. of each specific object and each case that the allowance salary will be calculated difference.

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Benefits of Basic HSL

The multiplier is an important salary management tool and has many benefits, including:

  • Provides a simple method to calculate salary: Basic HSL is a simple and easy to understand tool to calculate the salary for the employees in the company.
  • Adjust salaries periodically: The basic HSL also allows the company to periodically adjust salaries to reflect the current labor market.
  • Help locate job positions: Basic HSL can help a company locate different job positions and determine the corresponding salary.
  • Help manage salary effectively: Basic HSL also helps with effective salary management by providing a basis for comparing employee salaries and ensuring that salaries are paid according to each employee's qualifications and job position.
  • Financial management support: Basic HSL can also help a company predict future salary costs and manage finances more efficiently.

Limitations of Basic HSL

Although the base salary coefficient is a popular tool for calculating wages, it also has some limitations as follows:

  • Does not fully reflect employee values: The underlying HSL does not fully reflect an employee's worth. Those with high qualifications, skills and experience may be paid a higher salary than the base salary multiplier, while those with lower qualifications will be paid a lower salary.
  • Inflexible: HSL is basically a fixed number and does not change over time. This means it cannot reflect changes in the labor market, the demands of the job or the advancement of employees.
  • Hard to change: once established, the base salary coefficient can be difficult to change due to legal regulations and company policies. Changing the base pay multiplier needs to be through processes and agreements between the employer and employee representatives.
  • Not suitable for some professions: Basic HSL may not be suitable for some professions or special jobs where wages must be calculated based on various factors, such as project work, sales, or performance personal capacity.
  • Do not distinguish between different quality employees: HSL basically pays employees based on factors such as qualifications, experience, job location, etc. But it does not distinguish between employees with different performance and can lead to payment pay salaries that are not commensurate with the actual contribution of each employee.

Legal principles in salary adjustment today

Comply with the law on wages

Companies and organizations need to comply with legal regulations related to salary such as regulations on minimum salary, regulations on full and timely payment of salary and in accordance with the law.

Respect the agreement of the parties on wages in the labor relationship

One of the Legal principles of salary The first is based on the voluntary agreement between the two parties and does not violate the law. Because in fact, the sacred salary is the trade-off of labor and collective agreement.

This agreement is based on the principle of mutual respect, ensuring full implementation and both parties have responsibilities and obligations during the effective contract period.

Salary adjustment within certain limits

In addition to mutual respect, wages should be guaranteed a certain limit. In particular, the salary must not be lower than the minimum wage. At the same time, this principle also ensures the rights of employees and is highly legal.

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Ensure fair and non-discriminatory wages

For this principle, employees will be guaranteed fairness in benefits. From there, wages will also be paid according to the productivity, quality and efficiency of labor that employees bring. At the same time, this is also a factor that helps to balance economic and social conditions.

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Base salary coefficient is a commonly used method to calculate the salary of employees in companies and organizations. However, the basic salary coefficient also has limitations such as being difficult to update, not reflecting the actual capacity and contributions of employees. Correct salary adjustment is very important to ensure benefits for employees, while also increasing employee satisfaction and productivity, contributing to the sustainable development of the company.

Here are all the shares of Johnson's Blog about base salary coefficient. Hope readers can understand the issues related to salary and especially protect their rights.

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