Question: “ How will the increase of the base salary level to 2,530,000 VND/month from July 01, 2026 under Decree 161/2026/ND-CP impact private enterprises, especially entities having contracts for provision of services to the public sector or having wage scales/tables referenced to the base salary?”
Answer: Although the direct subject of regulation of the base salary level is the public sector, Decree 161/2026/ND-CP creates indirect but very strong impacts on the private enterprise sector in the following aspects:
According to current regulations, the maximum income level for calculating social insurance and health insurance contributions is usually equal to 20 times the base salary level. When the base salary increases to 2,530,000 VND, this ceiling level shall increase significantly (50,600,000 VND). This increases insurance contribution costs for enterprises regarding the group of personnel having high income.
Many enterprises still maintain the habit of establishing wage scales/tables or allowance regimes (toxicity allowance, responsibility allowance) by multiplying a coefficient by the base salary level. If this system is not updated in a timely manner from the salary period of Jul 2026, enterprises may face the risk of paying incorrect regimes, leading to employees’ complaints.
Failure to accurately forecast the increase level of the base salary in the financial plan shall lead to a deficit in the human resources budget, inaccuracies in bidding prices, or incorrect financial plans for projects implemented after July 01, 2026.
Thus, Decree 161/2026/ND-CP is not only a regulation for the state sector but also an important personnel cost change milestone for every enterprise. To ensure compliance, enterprises need to:
- Update wage scales, allowances, and new salary fund estimates from July 01, 2026.
- Review and renegotiate service contracts containing adjustment terms referenced to the base salary
- Adjust social insurance and health insurance contribution levels for subjects reaching the new ceiling level.
- If your enterprise needs support in reviewing contracts or advice on restructuring wage scales/tables to optimize costs following this change, please contact SB Law for detailed advice from experts.
If your enterprise needs support in reviewing contracts or advice on restructuring wage scales/tables to optimize costs following this change, please contact SB Law for detailed advice from experts.
