Regional Minimum Wage After Province-city Mergers in Vietnam

Key takeaways

• When businesses operate in areas formed by merging different regional minimum wage zones, they must apply the highest wage rate – this regulation takes effect immediately.
• Areas not affected by cross-zone mergers will continue applying current wage rates until new directives are issued.
• Wage zone classifications will be completely redesigned based on actual socio-economic conditions rather than old administrative boundaries.
• CEOs should closely monitor National Wage Council decisions in mid-2025, as changes may be implemented from January 1, 2026.

As the government prepares to restructure administrative units, CEOs face a pressing question: how will regional minimum wage rates apply after provincial mergers? While long-term regulations are still being developed, clear and immediate rules already exist that businesses must follow.

How businesses should apply regional minimum wages immediately after mergers

This transition period requires businesses to master temporary application rules. This not only ensures legal compliance but also maintains stability in personnel costs. The government has established a clear legal framework through Decree 74/2024/ND-CP to handle these complex situations.

Rule 1: Maintain existing wages in unchanged areas

For administrative units that merge without combining different wage zones, the application rule is straightforward. According to the draft Resolution on administrative unit arrangement, businesses will continue applying:

• Regional minimum wage rates as before the arrangement
• Special policies and allowances such as regional allowances
• Professional incentive allowances, allowances for ethnic minority and mountainous areas

This regulation maintains continuity until official directives or replacement decisions are issued by competent authorities. This means businesses operating in these areas can maintain current payroll budget plans without sudden adjustments. To ensure full compliance, businesses should reference key points in payroll compliance principles in Vietnam.

Rule 2: Apply the highest wage rate when merging different zones

This is the most important rule with direct financial impact on businesses located in multi-zone merger areas. Decree 74/2024/ND-CP clearly states: if a new administrative unit is formed by merging multiple areas with different minimum wage rates, businesses must apply the highest minimum wage rate among those zones.

Example: When a commune in Zone III (3.86 million VND/month) merges into a city in Zone II (4.41 million VND/month), all workers in that commune will be subject to Zone II minimum wage rates.

This rule not only ensures no worker loses benefits but also creates a unified, fair wage standard in the new administrative unit. For CEOs, this means immediately recalculating personnel costs for affected areas, especially businesses with multiple branches or factories located in different zones within the same merger area.

Strategic adjustment roadmap for the future

While temporary rules are clear, long-term planning requires CEOs to understand the development direction of minimum wage policies in the context of comprehensive administrative restructuring. Functional agencies are building a completely new system that fits new geographical and economic realities.

Government will recalculate and rezone wages

The Ministry of Home Affairs and specialized agencies will implement comprehensive reform of minimum wage zoning methods. Instead of mechanically applying old district and commune boundaries, the new system will be more flexible and accurately reflect actual conditions.

According to experts from the Vietnam General Confederation of Labor, a new province after merger may be divided into smaller areas with different wage rates. For instance, commune A might be classified as zone 1, while commune B in the same province belongs to zone 2, based on specific socio-economic conditions of each area. This change will also affect the regional minimum wages.

Key factors determining new wage levels

According to the National Wage Council, adjusting regional minimum wage rates will be based on a complex and comprehensive system of factors:

1. Basic factors

• Minimum living standards for workers and their families
• Actual living costs in each area

2. Macroeconomic factors

• Consumer price index (CPI) and economic growth rate
• Labor supply-demand relationship and employment rates in each region

3. Business factors

• Company payment capacity, especially small and medium enterprises
• Impact on labor-intensive businesses

Experts emphasize that wage adjustments must balance interests between workers and business payment capacity, particularly for small and medium enterprises. To better understand regional wage trends, businesses can reference average salary levels by industry in Vietnam.

Expected timeline for adjustments

The National Wage Council may hold an important meeting in July 2025 to discuss and agree on a comprehensive adjustment plan. This meeting will not only consider new wage levels but also decide on complete system rezoning.

According to expert assessments, if there are no major fluctuations, new wage adjustments and rezoning may be officially implemented from January 1, 2026. This allows businesses time to prepare and adjust business plans accordingly.

While comprehensive wage restructuring takes time, immediate application rules for regional minimum wages after provincial mergers are already clear. The immediate action needed is reviewing all business locations to identify areas affected by mergers.

Calculate the financial impact of the “highest wage rule” immediately and incorporate it into budget planning. To support this process, businesses can use professional payroll services or reference HR compliance handbooks to ensure full compliance. Proactive compliance not only helps avoid legal risks but also ensures fairness and talent retention during this important transition period.