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[Special Series Vol.1 | The Salary Raise Negotiation!] What to Know About Salary Increases and Bonuses Before Negotiating
ICONIC is now conducting our annual "Vietnam Salary Increase & Bonus Survey 2026". If you would like to gain an objective understanding of other companies’ salary and bonus trends, please join the survey here.
To accompany this critical planning period, we are launching a four‑part special series — “The Salary Raise Talk!” — exploring how HR leaders in Vietnam can navigate the complex realities of salary negotiations.
For many organizations, the true challenge is not only how much to raise salaries, but how to strike the right balance between fixed pay adjustments and performance‑based bonuses to sustain motivation, retention, and business performance.
In this first article, before diving into negotiation techniques, we return to the basics. Understanding the difference between salary increases and bonuses is the foundation for effective pay management.
Clear distinctions help leaders evaluate compensation holistically - viewing salary changes as part of a strategic total‑rewards framework, rather than as one‑off responses to employee demands.
Core differences between Salary Increases and Bonuses
As the year‑end approaches, many local subsidiaries begin planning for next year’s salary adjustments and this year’s bonuses.
Employees often ask, “Will salaries go up?” or “With rising prices, shouldn’t wages increase too?”
Meanwhile, management and HR leaders face more complex questions: “How much should we raise?” and “How can we align pay decisions with company performance?”
It’s essential to recognize that salary increases and bonuses are two different mechanisms of compensation, each serving a distinct purpose in the organization’s reward strategy.
- Different Time Horizons
A salary increase is a forward‑looking decision — once implemented, it carries into future years and shapes long‑term payroll commitments.
A bonus, by contrast, is a one‑year decision, recalculated annually based on business results and individual performance.
In other words, while bonus decisions focus on current‑year outcomes, salary increases must be made with future sustainability in mind.
Under Vietnamese labor law, once a base salary has been raised, it is extremely difficult to reduce it later. In practice, a salary increase is a one‑way decision that locks in higher fixed labor costs.
- Different Drivers
Bonuses are typically performance‑driven, reflecting how well the business — and its people - have performed in a given year.
A strong year brings higher bonuses; a loss means smaller ones.
Bonuses directly link corporate performance with employee rewards, reinforcing shared success and accountability.
Salary increases, on the other hand, are influenced less by company results and more by external economic factors such as market pay movements, inflation, and changes in statutory minimum wages.
In short, bonuses respond to company performance, while salary increases respond to broader economic and labor‑market trends.
Understanding this distinction enables HR leaders to make balanced, forward‑thinking pay decisions that maintain internal equity, external competitiveness, and long‑term financial health.
The risk of mixing up Raises and Bonuses
In strong financial years, many companies naturally think, “Business is thriving — let’s be generous with salary raises.”
However, being overly generous can lead to a permanent increase in fixed labor costs, reducing flexibility when the business environment changes.
Conversely, if salary increases are too conservative during tough years, pay levels may fall behind the market, increasing the risk of losing key talent or struggling to attract new candidates.
Even skipping raises for a single year can create lasting pay gaps, and repeated restraint over several years can significantly weaken competitiveness.
A salary increase is a long‑term commitment — both excessive and overly cautious approaches carry risk.
While budgets are always limited, it’s essential to keep increases reasonably aligned with market levels, based on a clear understanding of both external benchmarks and internal realities.
Where necessary, companies can maintain competitiveness by improving productivity or optimizing headcount, allowing them to support market‑level raises without inflating overall labor costs.
Approach salary negotiations with a broader perspective
When employees request a raise, it’s easy to treat the discussion as a simple approval or rejection decision.
In practice, however, salary increase decisions should be part of a broader, forward‑looking labor‑cost strategy - one that also considers bonuses, workforce structure, and productivity improvements.
As we enter this year’s salary‑review season, the key to constructive negotiation is to view salary increases not in isolation, but as one element within a cohesive, long‑term compensation strategy that balances business sustainability with employee growth.
Are you up to date with Vietnam’s salary and bonus trends?
ICONIC is now conducting the 2026 Vietnam Salary Increase & Bonus Survey (deadline: December 5).
Participate to gain exclusive, data‑driven insights into how companies across Vietnam are shaping their salary and bonus strategies - and use these insights to inform your own decisions.
👉 Join the survey (with exclusive respondent benefits)
🔔 Next Issue (Vol.2)
How to talk with Over-demanding Employees
What should you say when an employee insists,
“Other companies pay more,” or “My role deserves this salary”?
In our next issue, we’ll explore real‑world negotiation cases and practical communication techniques that help HR leaders and managers reach mutual understanding and build trust during tough salary discussions.
