Organization of Salary and Salary Deductions at Joint Stock Company

2.1 Accounting for the number of employees:

Determining labor needs ensures that the company has the right people in the right jobs at the right time and can respond flexibly to market changes.

- For direct production workers: to complete the delivery target on schedule, the company often recruits more workers, these workers will be trained by the company for free with the training time depending on the level of the worker, each stage. In addition, the company regularly organizes exams to improve the skills of workers and that is also a form of increasing wages for long-term experienced workers.

- For management staff: Usually included in the list of employees on the payroll of the company with standards for staffing management departments. The number of employees does not change except in the case of employees being transferred to work in another department, the company will recruit employees with appropriate qualifications and professional functions.

2.2 Accounting for labor time:

Every day, officers and employees work and rest according to company regulations:

Morning: 7am – 11am.

ƒ Afternoon: 13:00 – 17:00.

When entering and exiting the gate, workers are recorded in the logbook by the security team.

In case of emergency, having to leave early or go on a business trip, officers and employees must request a gate pass at the Administration Office and present it to the security team.

The team leader of the team, after receiving the production order and the work assignment form from the planning department, transfers it down to carry out the work. Every day, directly record the working days of each worker under his/her management on the timesheet twice a day (early in the morning and late in the afternoon) to ensure strict accuracy, avoiding the situation of skipping work but still recording it on the timesheet.

Every day, the staff of the labor and salary organization department checks and records the above situation for comparison at the end of the month when calculating salary. At the same time, based on the timesheet, work assignment form, contract

Assignment, confirmation of actual work completed at workshops to serve as a basis for reviewing rewards at the end of the quarter and year.

2.3 Accounting for labor results:

Every day, team leaders base on the work assignment form or production order to clearly define the work content, work quality, and completion time to transfer to the completion quality control department (KCS - HT) for approval. When the work is completed, team leaders report and submit the work assignment form, production order, and timesheet to the accounting department. The accountant compiles the documents to serve as the basis for calculating the salary for each worker, paying them, and serving as the basis for allocating to expenses.

II. Analysis of Salary Accounting Work:

1. General issues:

The company is applying three forms of salary payment, which are payment by product, payment by time and payment by piece rate.

However, the company deducts social insurance and health insurance based on basic salary, which means it is still based on salary level.

™ In addition to salary, the company also considers bonuses for employees. Bonuses are based on the following criteria:

- According to the competition points A, B, C: this point is used to evaluate the level of completion of assigned work of employees.

- By high working days: this standard is used to evaluate whether employees have completed the monthly working day target or not.

Appendix 1 and 2 present details on the company's bonus regulations based on competition points and working days.

- Annual leave: staff and employees are entitled to 12 days of annual leave. If an employee does not take leave but takes all 12 days of leave, the company will pay 3 months' salary in compensation for the 12 days of leave.

Salary coefficient

290,000

Yearly allowance =

month

26 days

- According to delivery progress in case of urgent delivery: when the company needs urgent delivery, depending on the revenue the company achieves, bonuses will be given to the employees.

staff.

- On holidays: the company pays bonuses to employees based on monthly, quarterly and yearly revenue.

2. Organizing salaries and salary deductions at the Joint Stock Company

An Giang Garment Enterprise:

2.1 Main bases in the payroll accounting process:

Š The number of employees of the company is reflected in the labor book, this book is established for the whole company and established separately for each department for convenient management. Each person in the company has an employee code and this code is used to record documents.

Š Based on documents such as: "Timesheet", "Product or work completion confirmation slip", "Contract for assignment", accountants calculate product salary, time salary, shift salary for staff and workers.

Š Salary is calculated separately for each person and aggregated by labor department, reflected in the "Salary payment table established for that department".

Š For employee bonuses, accountants need to calculate and create a bonus payment table to monitor and pay according to regulations.

Š Based on the documents "Social Insurance Leave Slip", "Work Accident Investigation Record", etc., the accountant calculates the social insurance allowance to be paid to employees and reflects it in the "Social Insurance Payment Table".

Š Based on accounting documents on time, labor results and social policies on labor, wages, and social insurance issued by the State, accountants calculate wages, social insurance benefits, and other payable amounts to employees.

Š Based on the “Salary Payment Table” of each department to pay and pay salaries to employees. At the same time, summarize the salaries payable during the period according to each employer, calculate and deduct social insurance, health insurance, and union contributions according to the prescribed rate. The results of the summary and calculation are reflected in the “Salary and Social Insurance Allocation Table”.

Š Every month, the calculation of salaries, social insurance benefits and other payments to employees is carried out at the company's accounting department.

Š The payment of salaries in the enterprise is carried out by the Treasurer. The Treasurer bases on the "Salary payment table" and "Social insurance payment table" to

Pay salaries and other payments to staff and workers. When receiving money, they must sign the salary payment sheet.

Team leader established

2.2 Payroll process:

Timesheet (per team, unit)

Production report (each team, unit)

Bonus payment table (actual salary accounting)

Salary payment table for each team and unit (paid accountant to perform)

Payment table for social insurance, health insurance, and allowances

granted to each team, unit (payroll accounting)

Salary and social insurance, health insurance, and union funds allocation table (planning)

actual salary calculation)

Pay salary (cabinet)

Unit leaders, representatives of
Department	get paid

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Re-distribute salary to staff

2.3 How to calculate salary, pay salary and salary deductions at the company:

2.3.1 How to calculate and pay salary:

ƒ The implementation of the salary regime must meet the requirements of fairness and science, creating conditions for increasing labor productivity, while also ensuring product quality.

ƒ Salary calculation at An Giang Garment Company is based on the following bases:

This:

- Salary fund source.

- Staffing and labor standards.

- Job title and position.

- Salary level is applied according to Decree 26/CP of the Prime Minister.

An Giang Garment Company is a service and trade business unit, so

Salary is determined based on the company's monthly revenue. Revenue varies each month because it depends on the unit price and processing output of each product code and item.

The company's salary fund is determined by 50% of revenue, of which:

+ Total distributed salary fund accounts for 44% of revenue.

+ Total reserve salary fund accounts for 6% of revenue.

™Salary calculation formula:

ß Total distributed salary fund:

Lp = revenue

44%

The distributed salary fund is used to pay salaries to direct production workers, workshop managers and business managers.

Salary is paid in 2 installments:

Š Period 1: advance 50% of actual salary in the middle of the month. Š Period 2: pay remaining salary at the end of the month.

Every month on salary calculation day, the payroll accountant relies on the total salary distribution table to calculate the salary fund for each department, division and sewing team.

™Management: salary regulations for the year

Table 3: Salary Allocation Ratio of Departments

Unit	Number	Rate (%)
1. Enterprise 1	420	38,775
2. Enterprise 2	420	38,775
3. Office	46	9.3
4. Technical department	14	2.2
5. Cutting team	48	5.4
6. KCS – HT Team	18	2.3
7.Packaging team	27	3.25
Add	993	100

We have the formula for calculating the allocated salary fund as follows:

QLpb = Lp allocation ratio

In there:

o QLpb: allocated salary fund.

o Allocation ratio: determined by the company based on the number of workers, skill level, seniority, this ratio is fixed during the year (based on the payroll table - in the salary regulations of the year)

ß Reserve salary fund:

Qldp = revenue × 6%

Used to pay for the following: 9 Annual leave salary.

9 Overtime.

9 Extraordinary or year-end bonuses.

9 Other allowances are of the same nature as salary.

For example:

Revenue of An Giang Garment Joint Venture Company in December 2003 was 100,000 USD with exchange rate of 13,500 converted to Vietnamese Dong:

100,000 × 13,500 = 1,350,000,000 VND.

ƒ Distributed salary fund:

1,350,000,000 0.44 = 594,000,000 VND.

ƒ Reserve salary fund:

1,350,000,000 × 0.06 = 81,000,000 VND.

When there is a distributed salary fund, the labor and salary accountant will calculate salaries for the departments.

Table 4: Allocation of Office Department Salary Fund

Unit name	Number	Rate (%)	Total payroll	Amount
Board of Directors	2	0.9	594,000,000	5,346,000
Accounting Department	3	0.8	594,000,000	4,752,000
HC-QT Department	22	3.72	594,000,000	22,096,800
Department of Science and Technology	19	3.88	594,000,000	23,047,200
Add	46	9.3		55,242,000

The company does not have an allowance coefficient, which causes employees to lose an income that they should have received according to State regulations.

2.3.1.1Calculate salary for indirect department:

Once the salary fund for each department is available, the Labor and Salary Accountant will calculate the salary for the indirect department as follows:

Salary for indirect departments is calculated based on product salary, calculated based on the total salary of each department, the total salary of each department's work coefficient and the total salary fund of each department. Specifically as follows:

Salary = HSL × 290,000 × HSCV × CSTĐ

In there:

o HSL: individual salary coefficient based on skill level, rank, seniority (job-based salary coefficient).

o Salary coefficient according to State regulations: 1 coefficient = 290,000 VND.

o HSCV: work coefficient based on work completion level. o CSTĐ: equivalent index.

Specifically as follows:

Š Salary by coefficient:

Salary coefficient is used as a basis for calculating and dividing salary for each employee.

The company has arranged workers according to their ranks and corresponding salary coefficients.

The corresponding salary is based on the regulations on salary coefficient levels issued by the State in the Labor and Wage Law. The minimum salary prescribed by the State in early 2003 was 290,000 VND corresponding to a salary coefficient of 1. The salary according to the coefficient is determined as follows:

♦ Salary coefficient:

Salary coefficient = salary according to coefficient × work coefficient

♦ Product salary:

In fact, in some companies, indirect employees are paid by time, direct employees are paid by product. In some other companies, the total salary of workers in direct or indirect departments is calculated as including 2 items: main salary (time salary) and additional salary (product salary). However, due to the specific industry of An Giang Garment Joint Venture Company, which is manufacturing and processing according to orders, the salary paid to the indirect department or the direct production department is paid by product salary. However, the calculation method of indirect and direct production departments is different, specifically the calculation method of product salary of the indirect department is as follows:

Product salary = salary according to work coefficient × CSTĐ

CSTD =

In there:

Salary fund for each department and division

Total salary coefficient of work of each department, division

For example:

- Accounting department salary fund is 4,752,000 VND.

- Total salary coefficient of accounting department is 3,105,610 VND.

- Chief Accountant Nguyen Minh Triet has a salary coefficient of 3.28, a work coefficient of 1.5 and an equivalent index of: 1.530134177

So, the chief accountant's product salary is: 290,000 × 3.28 × 1.5 × 1.530134177 = 2,183,195 VND.

The salary calculation of the remaining employees is similar to the above.

According to company regulations, the salary received by employees will include product salary and other salary-like benefits (high working day bonus, annual leave, allowance, overtime, etc.)

Salary received

In there:

= Product salary +

Other payments (high working days, annual leave, Tet holiday pay, overtime, allowances, etc.)

+High working day: because the employees in the accounting department work 26 days (1 Sunday), the product salary of 3 employees is over 500,000 VND/month, so the high working day bonus is as follows:

Š Bonus for 25 normal working days: 2,000 × 25 = 50,000 VND.

Š Bonus for 1 day of work on Sunday: 10,000 × 1 = 10,000 VND.

The total bonus for high working days in December 2003 is: 50,000 + 10,000 = 60,000 VND.

+Five years leave:

For chief accountant Nguyen Minh Triet is: ((290,000 × 3.28 × 3)/26) = 109,754 VND.

The calculation of annual leave for the remaining employees is similar to the above.

So, the salary received by the chief accountant is: 2,183,195 + 60,000 + 109,754 = 2,352,949 VND.

According to company regulations, the net salary of employees is equal to the total salary minus deductions (advance, social insurance, health insurance, unemployment insurance, etc.)

Specifically, the Chief Accountant's deductions:

+Social insurance deduction rate = 3.28 × 290,000 × 5% = 47,560 VND.

+ Health insurance deduction level = 3.28 × 290,000 × 1% = 9,512 VND.

+ Human insurance (not mandatory): the contribution level is 97,000 VND/year (12 months), depending on the ability and circumstances of each person, the company will deduct from the monthly salary, after paying on behalf of employees. Employees with good income will deduct 20,000 VND, employees with difficult circumstances and low income will deduct 7,000 VND.

Specifically, the personal insurance premium for the chief accountant is 20,000 VND.

+The chief accountant has an advance payment of 1,000,000 VND.

So, the actual salary of the chief accountant is:

2,352,949 – 1,000,000 – 20,000 – 47,560 – 9,512 = 1,275,877 VND.

The actual salary calculation for the remaining employees in the accounting department is similar to that for the chief accountant.

2.3.3.2 Direct production department salary :

Calculated based on product salary, but still calculate Decree salary as the basis for deducting social insurance and health insurance.

Lsp = Distance × Distance

In there:

+ Lsp: product salary

+ CDi: output of stage i

+ DGi: unit price of stage i, depends on 3 factors: production time of a stage, complexity of the stage, worker's skills. Worker's skills are based on the complexity of the stage, worker's ranks are as level 3.5; level 4; level 4.5.

Every month, the workshop sews many product codes, each product code has a sewing process with more or less steps.

During the payroll period, each person's sewing output must be confirmed daily on the production declaration form.

Based on the process declaration table made separately for each product code recorded by the team leader, the timesheet, the salary accountant calculates the worker's products.

For example:

Salary deduction for direct production workers in group 8 in December 2003 (factory 2)

Payment of Product Salary December 2003 (Enterprise 2)

WORKER NAME

PRODUCT CODE

PROCESS

PROCESS NAME

QUANTITY

UNIT PRICE

TOTAL

Nguyen Thi

My Dung

508-

short

parade

middle back

3,820

29.75

113,643

ADD

113,643

Piece rate = (3,820 × 29.75) = 113,643.

Personal Salary Payment December 2003 (Enterprise 2)

Unit: Dong

WORKER NAME	PRODUCT WAGE	SUBSIDY	ANNUAL LEAVE (JULY-AUGUST-SEPTEMBER)	TOTAL SALARY RECEIVED
My Dung	113,643	300,000	46,846	460,489

Explain:

Because the December 2003 workers' product wages were low, the company used its reserve fund to subsidize workers' wages to encourage labor.

annual leave

(1.4 × 290,000 × 3)

46,846 VND

Net income = total salary received – deductions (advance, social insurance, health insurance, personal insurance, lunch money…)

My Dung's salary coefficient is 1.4

à Social insurance = 290,000 × 1.4 × 5% à Health insurance = 290,000 × 1.4 × 1%

Advance payment: 50,000 VND.

Lunch money: 27,000 VND.

¾ So, the actual income of worker Nguyen Thi My Dung is: 460,489 – 50,000– 20,900– 4,060– 27,000= 359,129 VND.

2.3.3.3 Fixed salary :

™ The company's fixed salary is calculated as follows:

The company calculates and pays salaries to employees not based on rank, position, or number of products produced, but the company contracts salaries for employees (security guards, janitors, and 1 individual in the Administration Department) in a month, calculated as 26 days. If an employee works more than 26 days, take the contracted salary for one day, multiply it by the number of days worked, then add it to the contracted salary for 26 days. If an employee works less than 26 days, subtract the number of days worked less in the month.

The company's salaried employees are security guards, janitors, and an individual in the Administration Department.

Salary table for security guards

HR CODE	Full name	DAY WORK	SALARY
M1V103	Huynh Tai Loc	30	810,000
M1V104	Truong The Ngoc	25	750,000

— The company stipulates 26 working days per month. Mr. Huynh Tai Loc works 30 working days:

¾ So the additional salary for 4 working days is: (4× 810,000)/ 26 = 124,615 VND.

Mr. Truong The Ngoc worked 25 working days, missing 1 working day.

¾ One working day should be deducted from the salary as follows: (1 × 750,000)/ 26 = - 28,846 VND.

Because the salary is paid in the form of a piecework, the company does not deduct any deductions from the employee's salary.

So, the net salary of 2 people is:

+ Mr. Huynh Tai Loc: 810,000 + 24,615 = 934,615 VND.

+Mr. Truong The Ngoc: 750,000 – 28,846 = 721,154 VND.

2.3.2 Deductions from salary at the company:

After calculating and paying salaries to employees. At the end of the month, the accountant will allocate salaries, social insurance, health insurance and union fees for the month to the following cost-bearing objects:

For direct production labor costs (622): this account collects salaries and salary deductions of all direct production workers in the factories.

For general production costs (627): including salaries and salary deductions of management staff at workshops are collected into this account.

For sales expenses (641): including salaries and salary deductions of sales staff are collected into this account.

For business management costs (642): Including salaries and salary deductions of the following departments included in business management costs: Board of Directors, accounting department, administrative organization department, planning department.

In December 2003, the following salaries and salary deductions arose:

Table 5: Allocation of Salary and Social Insurance, Health Insurance, and Union Fees in December 2003

EXPENSE	HAVE ACCOUNT 334				HAVE ACCOUNT 338
EXPENSE	MAIN SALARY	PRODUCT WAGE	SUBSIDY	TOTAL SALARY	3382 (extract 2%)	3383 (15% deduction)	3384 (extract 2%)	ADD
IN DEBT	(1)	(2)	(3)	(2) + (3)
Account 622	165,317,007	127,796,863	309,904,875	437,701,738	8,754,035	24,797,551	3,306,340	36,857,926
Account 627	27,976,727	21,627,158	52,445,444	740,772,602	1,481,452	4,196,509	559,534	6,237,495
Account 641	33,063,400	25,559,376	61,980,972	87,540,348	1,750,807	4,959,510	661,268	7,371,585
Account 642	27,976,727	21,627,155	52,445,447	74,072,602	1,481,452	4,196,509	559,534	6,237,495
ADD	254,333,861	196,610,552	476,776,738	673,387,290	13,467,746	38,150,079	5,086,676	56,704,501

Figure 1: Graph Representing the Main Salary Structure

11%

13%

11%

Account 622

Account 627

Account 641

Account 642

65%

¾ Main salary structure:

The labor structure in the company is mostly workers in garment factories (workers who directly produce products), with a rate of 65% of the total salary, who create revenue for the company. Therefore, the company needs to have salary and subsidy policies to ensure the lives of staff and workers, keeping them with the company for a long time.

Selling expenses (13%), administrative expenses (11%) and general production expenses (11%). This is also easy to see as follows: when the company has many orders, the revenue is high, the distribution salary fund is high, the company distributes fairly, it is clear that the direct production labor costs account for a large amount. When there are many orders, the selling expenses, business management expenses, and general production expenses increase.

♦ Provisions:

- Salaries and other payments to employees are included in production and business costs: