Piece Wage: Definition and Detailed Calculation Method

Piece Wage: Definition and Detailed Calculation Method

Piece wage refers to the compensation provided to workers based on the quantity of work agreed upon with the employer, and it is a legally recognized method of payment according to regulations in Vietnam. The following article will delve into this method in detail.

What is Piece Wage? Essence of Piece Wage

Piece Wage is a method of compensation based on the amount of work accomplished as agreed upon between the worker and the employer, and it is regulated as lawful in Vietnamese legislation.

Piece wage is remunerated to workers based on piecework.

According to Article 96, Clause 1 of the 2019 Labor Code, parties can agree to pay wages based on criteria such as productivity, working time, or piece rate. Additionally, Point C, Clause 1 of Article 54 in Decree 145/2020/NĐ-CP also provides detailed guidance on how to calculate piece wage, based on the volume and quality of work performed as well as the completion deadline, to determine the final wage that the worker receives under the contract.

Although there is no official definition of piece wage, this method is becoming increasingly common, especially in seasonal or temporary jobs.

Before initiating a project or task, workers and employers often have an agreement on the quantity of work to be performed and the wage to be paid upon completing that work fully, i.e., 100%. In cases where the work is not completed in full, the wage is calculated based on the percentage of work completed.

For example, suppose Ms. X agrees to make 100 pens with a piece wage of 4 million VND. If she only completes 90 pens in the end, she will receive 90% of the total wage, which is 3,600,000 VND.

Guide to the Most Accurate Method of Calculating Piece Wage

Formula for Calculating Piece Wage

In business, piece wage is a commonly used method of wage calculation. This method calculates wages based on the quantity and quality of work that the worker has completed.

To calculate piece wage, the formula is as follows:

Piece wage = Agreed piece wage * Percentage of work completed

Forms of Piece Wage Payment

Piece wage is a basic and popular method of wage calculation in enterprises. To understand this method better, it is necessary to refer to the 2012 Labor Code and Article 54 of Decree 145/2020/NĐ-CP. From these legal sources, the following key points can be drawn:

Wages can be calculated based on hours worked.

Enterprises typically stipulate in labor contracts the method of wage calculation based on time. For example, wages paid weekly can be calculated as follows:
  • Weekly wage = Monthly wage x 12 / 52
  • Daily wage is determined by dividing the monthly wage by the number of working days specified in a month by the Enterprise.
  • Hourly wage is the wage an employee receives for each hour worked, usually based on the regional minimum wage. For example, according to Official Dispatch 294/LĐLĐ Hanoi, the minimum hourly wage in Hanoi is 22,500 VND, and the same in Ho Chi Minh City.

Wage paid according to product

Product-based wages are calculated based on the quantity and quality of products the employee produces, in accordance with the requirements of the business.

Depending on the policy of each business to choose the payment method

In this article, we have provided detailed and accurate information about piece wage, including definitions, methods of wage calculation, and some typical examples. We hope that this information will be helpful to your business. If you need further information or advice, please do not hesitate to contact us to receive free assistance from our specialists. Thank you for your interest.

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