Question:
Due to financial difficulties, a company plans to reduce the salaries of certain employees by 20% for a period of six months. The company considers the salary reduction temporary and necessary to maintain its business operations. In this case, can the company unilaterally decide to reduce the employees’ salaries without obtaining their consent?
Answer:
Pursuant to Point dd, Clause 1, Article 21 of the Labor Code No. 45/2019/QH14, as consolidated under Integrated Document No. 18/VBHN-VPQH dated 12 February 2026, the salary according to the job or position, salary payment method, salary payment period, salary allowances and other additional payments are among the principal contents of an employment contract.
Accordingly, the salary specified in an employment contract constitutes a term agreed upon between the employer and the employee.
In addition, Article 33 of the Labor Code provides for amendment and supplementation of employment contracts. Accordingly, during the performance of an employment contract, where either party requests an amendment or supplementation of the contract, such party must notify the other party at least 03 working days in advance of the proposed contents. If the parties reach an agreement, the amendment or supplementation shall be made by signing an appendix to the employment contract or entering into a new employment contract. If the parties fail to reach an agreement, the existing employment contract shall continue to be performed.
Applying these provisions to the above situation, although the company is facing financial difficulties and the salary reduction is intended to apply only for six months, these circumstances do not give the company the right to unilaterally change the salary agreed upon in the employment contracts.
The company may propose a 20% salary reduction and negotiate with the affected employees. If the employees agree, the parties may amend or supplement the employment contracts by signing an appendix to the employment contract or entering into new employment contracts in accordance with the law.
Conversely, if the employees do not agree to the salary reduction, the company may not unilaterally apply a salary lower than the salary agreed upon in the employment contracts. In such case, the parties shall continue to perform the existing employment contracts.
In addition, even if the employee agrees to the salary reduction, the adjusted salary must not be lower than the statutory minimum wage. At present, the minimum wage applicable to employees working under employment contracts is stipulated in Decree No. 293/2025/ND-CP dated 10 November 2025 of the Government, which takes effect from 1 January 2026.
Conclusion:
An employer may not unilaterally reduce an employee’s salary by 20% solely due to financial difficulties, even where the reduction is intended to be temporary and applicable for six months. Any reduction of the salary agreed upon in an employment contract must be based on the agreement between the employer and the employee and must comply with the applicable regulations on amendment and supplementation of employment contracts and statutory minimum salary.
The company should review the relevant employment contracts, salary structure and components of employees’ income before implementing any salary adjustment plan in order to determine which payments may be adjusted by agreement and minimize the risk of labor disputes.
Should your company require further advice on this matter, please contact SB Law for timely assistance from our team of lawyers and legal experts.
