What method are you receiving your salary? Chances are you don't clearly understand the company's salary calculation principles. That can be a major shortcoming in understanding and ensuring your legitimate rights. Immediately follow the article "Distinguishing the most common salary calculation methods in Vietnamese hr services payroll today".
1. Gross payroll
Gross salary is the total salary an employee receives before taxes and deductions. Gross salary includes all income from basic salary, allowances, allowances, overtime pay, commissions,... and insurance and personal income tax payments. Every month, employees need to set aside an amount to pay social insurance and personal income tax.
The rate of social insurance deduction from the employee's salary according to Decision No. 595/QD-BHXH stipulates: Employees must pay social insurance payment rate of 10.5%. Of which social insurance (8%) unemployment insurance (1%) health insurance (1.5%).
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2. Net payroll
Net salary is the amount of money the employee actually receives paid monthly after deducting insurance costs and personal income taxes.
Net Salary = Gross Salary – Personal Income Tax – (Social insurance + Health insurance + Unemployment insurance)
Both types of wages are directly related to the employee's income during working time, usually calculated on a monthly basis. The main difference is deductions and PIT. Gross salary is the amount before taxes and deductions and net salary is the amount after taxes and deductions. The payroll HR outsourcing service needs to clearly distinguish these two concepts to avoid miscalculation and errors in employee salaries.
3. Payroll based on time
Time-based salary is the salary calculation method most used by human resource outsourcing service today. Time-based wages are calculated based on working time as agreed between the employee and the business owner in the labor contract. In fact, in businesses, wages over time have two ways of calculation as follows:
3.1 How to calculate payroll for time 1:
Monthly salary = (Basic salary + allowances)/ working days of the month x actual working days
Working days of the month are the number of administrative working days in the month according to regulations. For example, your company works from Monday to Friday, off Saturday and Sunday. March 2021 has 31 days and 8 days off, so the month's working days are calculated as 31 - 8 = 23 days.
3.2 How to calculate payroll salary 2:
Monthly salary = (Basic salary + allowances) /26 x actual working days
In this way of calculating salary, the working day of the month is fixed at 26 working days. Many hr service outsourcing choose this method of calculating salaries because, according to this method, the accountant must first determine the number of working days of the month to calculate salaries for employees. However, with these salary calculations, hr service payroll only need to determine the actual number of days the employee worked during the month. HR services outsourcing companies can choose 26 or 24 working days.
Basic salary calculation formulas from hr service payroll
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4. Payroll based on product
The product-based salary calculation method is chosen by many enterprises, processing plants, and industrial parks. This is a form of salary calculation that ensures fairness based on employee productivity.
Salary per product = volume of product produced x unit price of product
This method of salary calculation serves as a motivator for staff to generate a higher quantity of products. It's a strategy frequently employed by businesses to boost productivity over a specific timeframe. Moreover, this compensation approach incentivizes employees to engage in continuous learning and skill improvement. As we step into the digital era marked by artificial intelligence and advanced science and technology, employees must possess highly specialized knowledge to operate cutting-edge machinery. Consequently, salary and bonus structures undergo new adaptations to align with the evolving demands of the times.
5. Payroll based on revenue
Salary based on revenue, also known as salary based on sales, is applied to sales staff, consultants, etc. Calculating salary based on revenue helps encourage working spirit. On the other hand, this salary calculation method accurately evaluates the employee's capacity. The employee's revenue salary has a close relationship with the company's revenue and profits. According to HR outsourcing, forms of calculating salary and bonus based on revenue:
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Salary/personal sales bonus
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Salary/bonus based on team sales
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Salary/bonus in other forms: debt/market development,...
Having grasped the concept of hr solutions payroll, are you curious about the effective solutions it offers to businesses? Every business is unique, with distinct requirements for human resource and salary management. While some companies prioritize enhancing the quality of their human resources management system, others opt to outsource, avoiding the expense and time associated with training and expanding their in-house department. Additionally, certain businesses integrate technology to streamline and optimize the salary and bonus monitoring process.
Have you considered outsourcing professional payroll services that combine human expertise with technology, resulting in doubled efficiency and accuracy in handling salary-related matters for your employees? Hr outsourcing solutions have proven to be cost-effective and are gradually gaining popularity in the Vietnamese market.
CONTACT FARO VIETNAM today for payroll HR outsourcing service.
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