How is the Tet bonus calculated?

Are businesses required to give Tet bonuses?

Tet bonus is a concept that refers to an amount of money (or other assets/forms of bonus) that a business pays to employees at the end of the year before Lunar New Year.

Many workers wonder whether businesses are required to give their employees a Tet bonus or not? And if they do not give a Tet bonus, will they be prosecuted?

The current Labor Code 2019 does not have specific regulations on the obligation of enterprises to give Tet bonuses to employees. According to Article 104 of the Labor Code 2019:

Bonus is the amount of money/property/other forms that the enterprise rewards employees based on the production and business results and the level of work completion of the recipient. The bonus regulations are decided by the enterprise and publicly announced at the company after consulting the opinion of the organization representing employees at the facility for enterprises with an organization representing employees at the facility.

According to the above regulations, Tet bonus is not a mandatory regulation for enterprises. Based on the business performance of the enterprise and the efficiency index, labor productivity, and the level of work completion of employees in 1 year, the enterprise can develop internal regulations on Tet bonus regime. The level of Tet bonus will be decided by the enterprise itself.

Therefore, the Tet bonus is just a term to encourage employees to stick with their jobs and strive harder at work. The amount of the bonus depends on the agreement between the business and the employee. If the business makes a loss that year or the employee does not complete the job well, it is completely normal for them not to receive the Tet bonus.

How is the Tet bonus calculated?

Depending on the business situation, corporate culture, welfare policy and actual conditions, each business will apply a different way of calculating Tet bonuses.

However, the common Tet bonus regulations are as follows:

– Based on the business status and results of the enterprise. In case of high profit, the enterprise will deduct from the profit earned that year to reward employees.

– Based on employee productivity and seniority.

The common formula for calculating Tet bonus is applied as follows:

Bonus level

= Bonus rate (% productivity + % seniority) x Average monthly salary

For example, an employee has worked at the company for 3 years with a monthly salary of 15 million VND, the quality of work in the year is assessed at 70%. It is known that working seniority of 2-3 years is 50%. Accordingly, your Tet bonus will be calculated as follows:

Tet bonus = 15 million VND x (70% + 50%) = 18 million VND.

However, this is just a reference formula because each business applies its own Tet bonus policy.

Hopefully the above "decoded" Tet bonus policies will help employees understand better to avoid expecting too much.