In the context of the market increasingly competitive, the construction of the salary scale is not only required by law but also a strategic tool for business management efficiency. A system of the salary scale is in reasonable design will help balance between the affordability of the business and expected income of workers, while improving transparency, fairness in the organization.
This article Lac Viet Computing will help businesses understand the concept, role and importance of the salary scale, at the same time provides detailed instructions on how to build the salary scale, how the salary scale in accordance with the practice activities.
1. The salary scale is what? Why enterprises should build?
1.1. The concept of the salary scale
Pay scale system is arranged wage in each position, job titles in the business, including a lot of different salaries. Each tier shown wages increasing by seniority, ability, or working results.
For example: A sales staff can be arranged 5 pay grade, from 8 million/rank 1 to 12 million/rank 5. Thanks to that, the business easily manage the process of increasing the salary according to seniority or achievement.
Need to distinguish:
- Basic salary: fixed sum charged for labor, is platform to the other mode.
- Minimum wage: the floor Level due to state regulations, the business is not paying lower.
- Pay scale: administration tool, reflecting the remuneration policy, internal, must be higher than or equal to the minimum wage.
1.2. The role of the salary scale in human resource management
Pay scale not only is the figure the dry, but also bring many practical benefits:
- Ensure internal: Employees of the same title, the same level wage equal; one who has the power or seniority, higher will be paid at the higher rank. This helps limit the discontent, reduce the risks of quitting.
- Base legal, financial: pay scale is the basis of social insurance contributions, personal income tax and other benefits.
- Tools attract retain talent: A system of wage transparency roadmap advance clear motivation for employee engagement long term.
1.3. Consequences if there is no pay scale standard
If the business does not build or operate the pay scale prescribed will be faced with many implications:
- Legal risk: the Decree 12/2022/ND-CP regulating the business in violation can be fined from 5 – 10 million.
- Lost internal: Staff ease of comparison, arose psychological discontent, reducing performance.
- Increased personnel costs, indirect: the Rate of high absenteeism synonymous with the cost of recruiting and training more.
As such, understanding how to build the salary scale not only help businesses comply with the law, but also create a platform for hr management modern sustainable.
2. Legal grounds about the building of the salary scale
The construction of the salary scale can not be made arbitrarily, but must be based on the grounds of the current legislation. This is the basis to ensure businesses comply with regulations and limit legal risks, creating a wage policy transparent and reasonable.
2.1. The Labour code 2019
The Labour code 2019 (effective from the date 01/01/2021) is writing important legal regulations, the general rule when businesses set pay scale. A number of the core include:
- The principle of equality: the Business must build the salary scale ensure fairness, irrespective of gender, ethnicity, age or creed.
- Based on the minimum wage: starting Salary of the lowest rank in the wage scale must be equal to or higher than the minimum wage due to The state announced.
- Ensure recommended: pay scale must have the notches higher wages to encourage employees to improve capacity, long-term commitment to the business.
For example: A manufacturing company in Binh Duong (department I) to ensure the starting salary minimum for ordinary worker from 4.680.000/month or more, according to the regulations on minimum wage.
2.2. Decree 145/2020/ND-CP and the written instructions
Decree 145/2020/ND-CP the guide details some articles of The Labor law 2019, which contains provisions related to the construction of the salary scale:
- Business is the right to self-determination: From date: 01/01/2021, businesses are not required to submit the salary scale for management agencies state as before. Instead, businesses are responsible for keeping internal and public to the workers know.
- Construction principle: the salary scale should be based on the organizational structure, nature of work, title the profession in accordance with the development strategy of the business.
- Transparency in the application: Business should consult with the representative organization of the workers in the base (if applicable) prior to official release.
This facilitates the organizations and enterprises are finding out information on how to build the salary scale more actively in the design of policies, wages, instead of depending on administrative procedures.
2.3. Minimum wages latest
The minimum wage is the government announced every year is grounds for mandatory when setting up the salary scale. From date 1/7/2024, Decree no. 74/2024/ND-CP official application replaces Decree no. 38/2022/ND-CP dated 12/6/2022, the minimum wage is as follows:
- Region I: 4.960.000/month
- Region II: 4.410.000/month
- Region III: 3.860.000/month
- Region IV: 3.450.000/month
(Source: The portal of electronic government)
Thus, when designing how the salary scale, business required to take the minimum wage as a landmark floor for the lowest level, then determine the distance between the notches to ensure the development of income according to seniority or competence.
3. How to build pay scale details for business
Building stairs payroll is the process required the combination of legal regulations, operational practices and hr strategies of the business. The organizations and enterprises are finding out information on how to build the salary scale is often interested in three main factors: compliance, fair competition. Below is the detail process:
3.1. Determine the organizational structure and functional groups the work
First of all, businesses need to clearly define the organizational structure consists of departments and job titles. This helps to classify the location groups according to the nature of work, level of expertise, responsibility.
For example: A company has 50 personnel can divide into groups of titles is as follows:
- Management team (directors)
- Professional groups (Staff, financial, personnel, engineer technology)
- Support groups (administrative Staff, reception)
- Group of unskilled workers (production workers, warehouse staff)
From this structure, business easily built of wage for each group. Such group management can take 5 – 7 rank, while the workers have 3 – 5 notches to reflect seniority and workmanship.
3.2. Collect market data, reference salary
To ensure competitive, businesses should refer to the average wage in the market for each location.
The source reference common include: Navigos Group, Mercer, Adecco or reports on the labor market from the General statistics office. These comparisons help business just to keep be fair, internal, just make sure there are no “lag” in comparison with common ground from which to increase the ability to attract retain talent.
3.3. Determine the distance wage reasonable
An important principle in the way the salary scale is the distance between the wage. Usual, reasonable distance ranges from 5% – 7%.
For example, If level 1 of the accountant is 8 million, then tier 2 should be from 8,4 – 8,6 million. This gap is enough to create motivation to strive, but not too high lead to loss of balance the budget.
If the distance is too small (under 3%), employees will not feel the difference. On the contrary, the gap is too big (over 10%) can cause unequal and difficult to maintain stability in personnel costs.
3.4. Construction principle of salary associated with the KPI, capacity
To the salary scale really means, enterprises should attach the increase in wage to the criteria specific measurement such as:
- KPI (Key Performance Indicator): Complete the target business or just personal goals.
- Professional competence: evaluation results workmanship skills.
- Seniority: Number of years with the business.
This not only helps businesses control the wage bill, but it also creates fair environment, promote productivity.
3.5. Drafting issued pay scale
After identifying the factors, enterprises need to drafting table the wage scale in the prescribed form, which is clearly shown:
- Name job title
- The number of degrees of wage
- Salary for each rank
Illustrative examples:
| Titles | Tier 1 | Tier 2 | Tier 3 | Tier 4 | Rank 5 |
| Staff accountant | 8.000.000 | 8.400.000 | 8.800.000 | 9.200.000 | 9.600.000 |
Under current regulations, businesses no longer have to pay the salary scale for agencies, labor management, but must be kept internal and public for laborers to know. This helps increase transparency to avoid disputes later.
3.6. Periodically review and adjust
The salary scale is not a document “do once and then leave it”. Businesses need to revise periodically, minimum once a year or when there are important changes such as:
- State regulation of the minimum wage.
- Business scale, appear the new location.
- Labor market volatility.
For example: in the Year 2024, when the government increases The minimum wage more 6%, many businesses are forced to update the pay scale to ensure compliance, and retain personnel.
The timely adjustment to help businesses avoid penalties, at the same time enhance the image recruiter. In particular, with the business development speed quickly, the flexible updates also help to control hr costs more effectively.
Thus, the process by building the salary scale is not just a legal procedure but also the tools human resources management strategy. If done correctly, the business will just ensure compliance with the law, just to optimize costs while improving the mounting employees.
4. Sample pay scale standard (attachment link download)
The form, pay scale standard pre-designed to help businesses have the basic foundation to deploy, saving time in the initialization phase. However, businesses need customize the indicator of the wage coefficient, or basic wage to match the scale and industry business. This is also a useful starting point for the new business establishment or no hr department in charge.
5. Important note when making the salary scale
The construction and application of the salary scale in the enterprise is not merely a legal requirement but also directly affects the fairness, motivation operating cost. When done, the organization should pay attention to some of the following factors:
- To avoid gap wage is too low or too high: If the distance between the wage is too small, the staff is hard to see the difference in income, thereby reducing the motivation to strive. On the contrary, the distance is too large can cause the income gap unreasonable and create financial pressures for the business.
- Should not copy general form, which must be customizable according to business: Every business has particular industry, organizational structure, level of competition is different. Therefore, the application of machinery a sample of the salary scale is available easily lead to the situation “out of phase” with the fact that remuneration policy takes away the competition. For example, in the field of technology, the salary for the position programmers often significantly higher than the market average, while a manufacturing enterprise re-prioritize budget to block direct labor.
- Ensure transparency with workers: According to The Labour code 2019, business to publicly pay scale at work for laborers to know. This is not only to meet legal regulations, but also helps increase transparency, reduce disputes and enhance the trust of employees. When employees clearly see the mechanism payroll, they are easy to stick more permanent, because understand that their rights are guaranteed fair.
6. Tools solutions support the construction of the salary scale
In the context of labor market fluctuations quick, businesses need to take advantage of modern tools to build, manage, pay scale more effectively, rather than just rely on how to make crafts on Excel.
With respect to the business can scale from medium to large human resource management software are essential tools to standardize automation payroll process. A number of outstanding value that the business received when app:
- Automate calculations, updated according to the latest regulations: minimize the risk of errors, especially when there is a change in the minimum wage, personal income tax or social insurance.
- Time saver resources: Instead of losing hours and hours to scrutinize formula in Excel, the system will calculate instant ensure accuracy.
- Ensure transparency, easy access to data: When employees have questions, HR or payroll accounting can immediately extract reports, minimizing conflicts.
- Integration with other modules: As attendance management, contract management, welfare, help shape an ecosystem management personnel sync.
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Construction of the salary scale is not only a mandatory procedure prescribed by legislation but also the administration tool important to help businesses create fairness, retain talent, and optimal personnel costs. Investing in a system hr manager salaries professional, transparent suit particular business will become advantage long-term.
