HOURLY WAGES AND THE LEGALITY OF TIME SHEETS 2025
Topic 24:
HOURLY WAGES AND THE LEGALITY OF TIME SHEETS
Senior Lecturer, MSc. Đoàn Công Yên
SUMMARY OF THE CASE AND THE COURT’S DECISION
[Judgment No. 02/2021/LD-PT dated October 15, 2021, of the High People’s Court in Da Nang regarding labor disputes over unpaid wages and allowances.]
Case Summary:
On May 17, 2019, Mr. Mark and X Educational Development Co., Ltd. (abbreviated as X Company) entered into Labor Contract No. 10214/HDLD/X/2019-01. According to the contract, Mr. Mark worked as a mathematics teacher for X International School – The American University in Vietnam. The contract was valid for the academic year, from August 15, 2019, to May 26, 2020. His duties included teaching mathematics to X students and CBP students, and designing mathematics programs for the SAT curriculum. The agreed-upon salary (inclusive of housing allowance) after tax was 81,375,000 VND/month.
Mr. Mark argued that he had fulfilled his assigned tasks but was not paid in full. Specifically, his salary for November 2019 was underpaid by 15,500,000 VND; December 2019 by 7,362,000 VND; January 2020 by 18,494,000 VND; February 2020 by 35,894,000 VND; March 2020 by 41,607,000 VND; April 2020 by 75,380,000 VND; and May 2020 by 80,928,000 VND.
Trial Court Decision:
The trial court upheld the plaintiff’s claim. X Company was ordered to pay the outstanding wages according to the labor contract, amounting to 238,377,000 VND (two hundred and thirty-eight million, three hundred and seventy-seven thousand VND).
Appellate Court Decision:
The appellate court rejected the plaintiff’s claim against X Company for unpaid wages, leave compensation, and airfare reimbursement.
COMMENTARY
I. Introduction
In labor relations, employers and employees are entitled to agree on forms of wage payment based on time, product, or contract. Time-based payment involves wages calculated according to the working time of employees, which can be annual, monthly, weekly, daily, or hourly, depending on the nature and requirements of the job. Daily and hourly wages are primarily applied to part-time employees, while monthly or weekly wages are more common.
Due to its less frequent application, hourly wage payment remains a topic of differing opinions, and various disputes have arisen concerning its regulations.
II. Legal Issues
- Determining Hourly Wages
Hourly wages are paid for one hour of work. If the labor contract stipulates wages by month, week, or day, the hourly wage is calculated by dividing the daily wage by the standard number of working hours per day as provided in Article 105 of the 2019 Labor Code. Specifically, the employer has the right to set daily or weekly working hours but must notify the employee. For weekly arrangements, the normal working hours must not exceed 10 hours per day and 48 hours per week. The State encourages employers to adopt a 40-hour workweek for employees. Thus, the current labor law does provide for hourly wages.
Hourly wages can be determined in two ways:
(i) Based on a specific agreement between the parties in the labor relationship regarding wages for one hour of work;
(ii) If there is no specific agreement on hourly wages, the calculation relies on monthly, weekly, or daily wages and the standard number of working hours per day.
In the dispute between X Company and Mr. Mark, the parties agreed: “the base salary (including housing allowance) after tax is 81,375,000 VND/month.” This agreement indicates that the form of wage payment chosen was monthly. This could lead to the argument that hourly wages were not applied.
However, the appellate court’s opinion contradicted this argument. Specifically, based on the provision that “hourly wages are paid for one hour of work and are determined by dividing the daily wage by the standard number of working hours per day as regulated,” the court determined that “the parties agreed on payment for the employee’s actual working hours based on the principle of ensuring 40 hours per week, Monday through Friday, from 7:40 AM to 4:40 PM.”
The method of calculating hourly wages is not explicitly stipulated in labor law but is determined by the employer or agreed upon with the employee. X Company issued Decision No. 190/2017/QD-QDTN-X on the regulation of income calculation for staff, employees, and workers. According to Point a, Clause 6, Chapter II of this Decision:
“a. Monthly income is the salary for staff and employees based on actual working hours and tasks performed during the income calculation period minus (-) deductions per the Company’s regulations. Monthly income must not be lower than the regional minimum wage as stipulated by the State.
If staff and employees ensure sufficient working hours of 40 hours/week, teach six lessons/day, work certain weekends, and participate in events and tasks assigned by the Company per the academic calendar, the monthly income equals the salary agreed upon in the labor contract. If staff and employees do not meet the required working hours and tasks (including cases where the Company rearranges or assigns tasks), the Company will calculate income based on actual working hours.”
The Decision also specifies how to determine actual working hours:
“Actual working hours are recorded in the attendance log maintained by the security staff assigned by X Company. Security staff are tasked with tracking and recording the entry and exit times of staff members for each specific day and submitting them to the human resources department for review, verification, and income calculation. The attendance log does not require confirmation by staff members…”
Hence, X Company has implemented regulations for determining working hours for calculating wages for teaching staff, relying on attendance logs prepared by security staff assigned by the Company. These regulations do not conflict with the provisions of the 2019 Labor Code, were submitted to the unit’s labor union, and have been consistently applied across all officers, civil servants, and employees within the organization.
Thus, although the parties agreed to a salary of 81,375,000 VND per month (monthly salary paid for a month’s work), when resolving the dispute, the trial panel calculated Mr. Mark’s monthly income based on his working hours. This resulted in Mr. Mark’s salary in some months falling below 81,375,000 VND per month.
- Legality of Salary Deductions
According to the agreement between the parties: “Work schedule: Working hours are 40 hours/week (Monday to Friday: 7:40 AM – 4:40 PM, ensuring six teaching sessions/day and some weekends or events listed in the 2019–2020 academic calendar. Employees will have their salary deducted if not present on time during these hours. Employees must stay after class to guide and assist students with clubs, sports activities, other events, and attend scheduled meetings.”
The trial panel found that the parties agreed to calculate wages based on the employee’s actual working hours, ensuring 40 hours/week, Monday to Friday, from 7:40 AM to 4:40 PM. Any missing working hours in a day would result in a salary deduction. This agreement is not contrary to legal regulations and was established and implemented with mutual consent and voluntary agreement between the parties.
Therefore, the court concluded that the deductions from Mr. Mark’s salary complied with legal regulations since the parties had agreed to an hourly wage, and the working hours were lawful.
However, the trial panel did not cite any legal basis specifically related to the salary deductions but instead relied on legal provisions, X Company’s regulations, and the parties’ agreements on calculating monthly wages, hourly wages, and employee income. From this, it can be inferred that the appellate court recharacterized the nature of the issue from a salary deduction to an hourly wage calculation.
From the writer’s perspective, the agreement that “Employees will have their salary deducted if not present on time during these hours” shows signs of violating the prohibition on acts when handling labor discipline, namely “monetary fines or salary deductions as a substitute for handling labor discipline” (Clause 2, Article 127 of the 2019 Labor Code). Additionally, “An employer may only deduct an employee’s salary to compensate for damage caused by the employee to tools, equipment, or property of the employer as provided in Article 129 of this Code” (Clause 1, Article 102 of the 2019 Labor Code). Thus, such an agreement on salary deductions is unlawful.
- Legality of Time Sheets
Employers have the right to manage, direct, and supervise employees in accordance with legal regulations and internally issued rules (such as labor regulations and work hour policies). Labor law does not mandate the use of time sheets, nor does it provide a standard template. If an employer issues and utilizes time sheets to calculate employees’ wages, is it necessary for the time sheets to be signed by the employees?
The trial court asserted that time sheets without employees’ signatures lack legal validity. This opinion was rejected by the appellate court.
The appellate court evaluated the case based on Decision No. 190/2017/QD-QDTN-X and Circular No. 133/2016/TT-BTC issued on August 26, 2016, by the Ministry of Finance, which guides accounting regulations for small and medium-sized enterprises. Circular No. 133 provides a reference template for time sheets. However, the law does not require the template to be confirmed by employees. The time sheet only needs to be approved by the person in charge of attendance tracking, the HR department, and the authority approving the time sheet, which is deemed sufficient for calculating employees’ wages.
The appellate court stated that the employer’s monitoring of attendance complies with the provisions of the Labor Code, aligns with the labor contract agreement, and adheres to Circular No. 133/2016/TT-BTC.
In practice, X Company implemented attendance tracking according to regulations for all officers and employees within the company, using the time sheet as the basis for calculating wages under labor contracts and company policies. In Mr. Mark’s case, X Company also relied on the time sheet to pay his wages during periods like November and December 2019, even though these were below 81,375,000 VND per month, and Mr. Mark raised no complaints.
Decision No. 190/2017/QD-QDTN-X stipulates: “Complaints must be lodged within the period from when the company notifies wages to the actual payment date. If staff and employees do not raise concerns within this period, it will be considered that the staff have agreed with the time sheet and the actual received wages.”
III. Conclusion
The wage payment method is not a legally complex issue within the labor law system. In line with the goal of granting flexibility to employers, the State refrains from imposing overly detailed regulations on this matter. However, during practical application, errors are inevitable, leading to disputes. To address shortcomings, the State labor management authorities should issue specific guidelines to help parties identify hourly wage payment methods and establish standardized time sheet templates.
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“The article’s content refers to the regulations that were applicable at the time of its creation and is intended solely for reference purposes. To obtain accurate information, it is advisable to seek the guidance of a consulting lawyer.”
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