Labor contract under Labor Code 2019

How to Determine Labour Relationship under Labour Code 2019? 

During Covid pandemic, many companies face economic challenges that need to reduce the high paid workers’ cost. There are situations which dispute arisen and the employee started to realize that the contract he or she signs with the company he or she spends eight hours each day, follows instructions of work from supervisors, and receives monthly payment at the end of the month, seems to be a consulting contract on the face instead. Is this a consulting contract or a labour contract? It is suggested the disputants engage the dispute lawyers to help resolve the potential conflict or help provide legal opinions if a labor relationship is established or not.

 

 Labor contract under Labor Code 2019

A labour contract is essentially a civil transaction, whereby the employer and the employee enter into it on the basis of voluntarity, equality, goodwill, cooperation and honesty. According to the provisions of the Vietnam Labor Code 2019, “a labor contract is an agreement between an employee and an employer on a paid job, salary, working conditions, and the rights and obligations of each party in the labor relations”. In addition, the agreements which are not under the name of a labor contract but have content showing paid employment, salary and the management, administration and supervision of one party are considered as labor contracts.

An employee is allowed to enter into many labor contracts, but the employee must ensure compliance with signed contracts, this provision creates conditions allowing employees to use their full working capacity and have additional sources of income.

Contents of the labor contract must contain information about the employer and employee; Specific information about the job and workplace; Duration of the employment contract; Job- or position-based salary, form of salary payment, due date for payment of salary, allowances and other additional payments; Regimes for promotion and pay rise; Working hours, rest periods; Personal protective equipment for the employee; Social insurance, health insurance and unemployment insurance; Basic training and advanced training, occupational skill development, these are basic but very important contents that employees need to pay attention to negotiating closely and fully to ensure the interests of employees in the process of contract performance. Besides, depending on the job and job position, the employer and the employee can agree in writing on issues related to information confidentiality, however, the employer needs to pay attention to building an appropriate system of internal labor documents to ensure the practical and effective application of information confidentiality.

Regarding the probationary contract, Labor Code 2019 allows employees and employers to agree on the content of the probationary period in the labor contract itself or sign a separate probationary contract. The agreement on the content of the probationary period in the labor contract will cause some insurance obligations to the insurance agency, therefore, the employer and the employee need to carefully search relevant legal provisions in order to negotiate and agree on the contents of the labor contract to ensure compliance with the law and the rights and obligations of both parties.

In addition, in case the employee and the employer wish to amend, supplement or replace the agreed contents in the labor contract, the two parties sign an addendum to the labor contract to amend the respective contents. However, if the term of the labor contract is changed, the parties must agree to terminate the old labor contract and enter into a new labor contract. The labor contract appendix is ​​an integral part of the labor contract and has the same effect as the labor contract.

Employees as well as the labor collective and employers should pay attention to selecting the most appropriate and optimal resolution solution when labor disputes occur.  It is also suggested to consult with labour lawyers of Labour dispute law firm in Vietnam speacializing in employment matters for efficiency.

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Can Employer Terminate the Labour Contract in Vietnam with Employee Due To Covid 19 Outbreak?

Due to intricate occurrence of Covid 19, many enterprises are forced themselves to reduce the number of employees for maintaining the operation financially. Specifically, the employer has to make difficult decision to terminate the labour contract with the employee. The termination of the labour contract has to be considered carefully because of potential legal risks brought up which dispute lawyers in labour should be consulted before execution. Within this post, we are not trying to resolve all cases but only aiming to brief some matters of concern for preparation.

 

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The employer could refer to the regulation in the Labor Code which allows “an employer may unilaterally terminate a labor contract if as a result of natural disaster, fire or another force majeure event as prescribed by law, the employer, though having applied every remedial measure, has to scale down production and cut jobs. Force majeure in this case is understood as (i) Enemy-inflicates destruction, epidemics (ii) Relocation or narrowing of the production and business sites, at the request of competent State agencies.

In particular, after applying corrective measures, over the time, considering enterprise’s financial potential is insufficient as well as the business production is reduced significantly due to epidemic, the employer may consider unilaterally terminate labor contract with employee. However, employer still have to abide by or ensure the rights to employee regarding the interests which employee is entitle to receive when being unilaterally terminated labor contract includes salary, severance allowance, social insurance, payment for untaken leave days, the tax payment which employer must paid for employee. Besides, employer also is subject to pay a compensation if consented by both sides are employer and employee.

Firstly, employer is obliged to pay salary to employee timely and fully as in the agreed labor contract by both parties;

Secondly, employer is responsible for paying the severance allowance to employee whom has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year.

Thirdly, social insurance, employer is responsible for the fulfill payment of social insurance and perform the closing insurance book for employee after terminate the labour contract according to the law of social insurance.

Fourthly, if the income of employee subject to personal income tax, employer must extract from the income of employee to submit the tax to tax agency according to law on personal income tax.

ANT Lawyers – A labour dispute law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or service request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

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How to Terminate the Employment Contracts in Vietnam Due to Economic Reasons

Termination of a labor contract is an event that terminates the employment relationship between the employee and the employer. In particular, there are many cases of termination of labor contracts such as the labor contract expires, the work stated in the labor contract has been completed, both parties agree to terminate the labor contract, the employer lays off the employee due to structural or technological changes or because of economic reasons, merger, consolidation or division of the enterprise or cooperative,…

 

In case more than one employee face the risk of unemployment for economic reasons, the employer shall propose and implement a labor utilization plan in accordance with labour code. Specifically, the labor utilization plan must contain the following main contents: list and number of employees who continue to be employed, employees sent for re-training to continue using; list and number of retired employees; list and number of employees transferred to work part-time; employees must terminate labor contracts and measures and financial sources to ensure the implementation of the plan.

In case the employer cannot employ and have to dismiss employees, the employer shall pay job-loss allowances to the employees. Accordingly, the employer shall pay a job-loss allowance to an employee who loses his/her job and has worked regularly for the employer for 12 months or longer. The job-loss allowance is equal to 1 month’s wage for each working year, but must not be lower than 2 months’ wage.

The working period used for the calculation of job-loss allowance is the total time during which the employee actually works for the employer minus the time during which the employee benefits from unemployment insurance in accordance with the Law of Social Insurance and the working period for which the employer has paid a severance allowance to the employee. The wage used for the calculation of job-loss allowance is the average wage in accordance with the labor contract during 6 months preceding the time the employee loses his/her job.

The dismissal of more than one employee in accordance with this regulation may be implemented only after discussion with the representative organization of the grassroots-level employees’ collective and notification 30 days in advance to the provincial-level state management agency of labor.

It is important for the employer to consult with dispute lawyers specializing in labour matters for the avoidance of potential dispute with the employee, and cause negative social impact when deciding to terminate contract due to economic reasons.

ANT Lawyers in a law firm in Vietnam, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 jurisdictions. The firm provides a range of legal services to multinational and domestic clients. For advice or services request, please contact us via email ant@antlawyers.vn

 

 

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What Are the Order of Disciplining Employee in Vietnam?

Labour discipline is the provisions on compliance matters relating to work time, technology and production and business management in labor regulations. It can be understood simply that when an employee violates the labor regulations, depending on the extent and regulations of the company, he or she will be subject to disciplinary action. The order of disciplining labor is conducted in accordance with the provisions of labour code in Vietnam. Failing to follow the order of discipline would lead to potential disputes which both employer and employee should consult with dispute lawyers in Vietnam for advice to protect their best interests.

 

Firstly, the employer must confirm the employee’s violations

In the cases where an employee found committing a violation, the employer shall issue an offence notice, inform the employee representative organization (or the employee’s parent or legal representative if the employee is under 18) in order to hold a disciplinary meeting.

Secondly, issuing notice of the disciplinary meeting

This step is only carried out in case the employer detects violations of labor discipline after the time when the violation has occurred, there are sufficient grounds to prove the fault of the employee and the statute of limitations for disciplining.

The employer sends the notice with the content, time and place of the meeting to handle the labor discipline to the organization representing the labor collective at the grassroots level; workers; In the case of a person under 18 years old, there must be the participation of a parent or legal representative.

The employer must ensure these recipients receive notice before the meeting takes place and conduct a labor discipline meeting with the participation of the notification components.

Thirdly, conducting a disciplinary meeting

It is mandatory to have the minutes of the disciplinary meeting, which have to be approved by the participants before the end of the meeting. The minutes shall bear the participants’ signatures. If any participant that refuses to sign the minutes, there should be explanation.

Fourthly, disciplinary decisions

The person that concludes the employment contract on the employer’s side also has the power to issue the disciplinary decision. The disciplinary decision shall be issued before expiration of the original or extended time limit for penalty imposition specified the labour code.

The disciplinary decision shall be sent to the employee (or his/her parent or legal representative if the employee is under 18) and the employee representative organization.

ANT Lawyers is an employment dispute law firm in Vietnam, recognized by Legal500, IFLR1000. We are an exclusive Vietnam member of Prea Legal, the global law firm network covering more than 150 jurisdictions. The firm provides a range of legal services to multinational and domestic clients.

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When Should the Employer Send Notice of Termination of Labour Contract to Employee Before Contract Expiration?

Expiration is one of the circumstances which permit termination of labor contract under the Labor Code 2012. Accordingly, the employer must inform in writing to the employee of the terminating date of labor contract at least 15 days prior to the expiration. Termination of labor relationship in each circumstance must follow different conditions and procedures to ensure the interests and obligations of both employee and employer and avoid potential labour disputes.

 

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Previously, an administrative penalty was applied to violations of the labor contract termination notice mentioned above. If the employer fails to inform the employee, the employer will be subject to a warning or a fine with amount from VND 500,000 to VND 1,000,000. However, the Decree 28/2020/ND-CP issued on March 1st, 2020 by the Government has repealed sanction for this behavior.

If the employee continues to work upon expiration of labor contract, both parties will be required to sign a new labor contract within the next 30 days, otherwise the signed contract will become an indefinite-term. Failure of the employer to inform the labor contract termination to the employee does not mean that the labor relationship is automatically extended after the expiration. If both parties fail to sign a new labor contract within the next 30 days, but the employee still do normal assigned job and is paid a full monthly salary, an indefinite-term labor contract is deemed as entered into by them. Any disputes arising out then will be settled based on provisions of indefinite term labor contract and laws.

The Labor Code 2019 repealed the employer’s informing responsibility upon expiration of labor contract except in a few circumstances such as the employee being sentenced to imprisonment, disciplined, expelled, ..., the employer is required to inform the employee in writing the termination of the labor contract.

We are a law firm in Vietnam with international standard, local expertise and strong international network. We focus on customers’ needs and provide clients with a high quality legal advice and services. For advice or services request, please contact us via email ant@antlawyers.vn, or call us +84 24 730 86 529.

 

 

 

 

 

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How Mediation and Labor Arbitration Councils Work in Settlement of Labor Disputes?

During and after the Covid-19 pandamic, the financial health of enterprises have been negatively impacted leading to management’s decision to reduce cost through termination of labour contract with employee. The illegal termination of labour contract could lead to disputes between employer and employee which sometime would cost the employer more than it gains. It is important for the employer to engage with labour lawyers to consult before taking the decision to consder factors that would involve. After disputes arise, mediator or labour arbitration councils could be used for resolving disputes.

Individual labor disputes shall be settled through mediation by labor mediators before being brought to the Labor arbitration council or the Court, except for the following labor disputes which mediation is not mandatory: disputes over disciplining under dismissal or unilateral termination of employment contracts; disputes over damages and allowances upon termination of employment contracts; disputes between a domestic worker and his/her employer; disputes over social insurance in accordance with social insurance laws, disputes over health insurance in accordance with health insurance laws, disputes over unemployment insurance in accordance with employment laws; disputes over insurance for occupational accidents and occupational disease in accordance with occupational safety and hygiene laws; disputes over damages between an employee and enterprises, organization that dispatches the employee to work overseas under a contract; disputes between the outsourcing employee and the employer using outsourcing employee.

The mediator shall complete the mediation process within 05 working days from the receipt of the request from the requesting parties or the authority. Both disputing parties must be present at the mediation meeting. The disputing parties may authorize another person to attend the mediation meeting.

In case the two parties reach an agreement, the labor mediator shall make a written record of successful mediation which bears the signatures of the disputing parties and the labor mediator. In case the two parties do not reach an agreement, the labor mediator shall recommend a mediation option for the disputing parties to consider. Where the two parties do not agree with the recommended mediation option or where one of the disputing parties is absent for the second time without a valid reason after having been legitimately summoned, the labor mediator shall make a record of unsuccessful mediation which bears the signatures of the present disputing parties and the labor mediator.

The disputing parties shall be entitled to request the settlement from Labor arbitration councils in the following cases: a disputing party fails to perform the agreements specified in the record of successful mediation; mediation is not mandatory; the labor mediator fails to initiate the mediation by the deadline; the mediation is unsuccessful.

After the Labor arbitration council has been requested to settle a dispute, the parties must not simultaneously request the Court to settle the same dispute.  If within 07 working days from the receipt of the request, an arbitral tribunal is not established; or within 30 working days from the establishment of the arbitral tribunal, it fails to issue a decision on the settlement of the labor dispute, parties shall be entitled to request the settlement from the Court. In case a disputing party fails to comply with the decision of the arbitral tribunal, the parties are entitled to bring the case to Court.

If the client needs any other information or requires for further advice, our lawyers at ANT Lawyers in Vietnam will be available for service.

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What Are Advantages Resolving Disputes by Commercial Arbitration?

Commercial arbitration is a method of settling disputes selected by the parties and conducted in accordance with law. Compared with other method of dispute resolution such as mediation, negotiation, court litigation, dispute resolution by commercial arbitration also has advantages and disadvantages.

In accordance with Vietnamese law and international law, the method of dispute resolution by commercial arbitration also stems from the agreement of the parties on a voluntary basis. However, the difference between these methods is that the settlement of disputes through arbitration will be governed by the Commercial Arbitration Law. The parties are allowed to agree on appropriate arbitration selection, either before or after the dispute arises.

The practice of applying commercial arbitration law in resolving disputes presents some advantages:

Firstly, this is a method of resolving disputes on the principle of confidientiality if the parties do not agree otherwise. This is an advantage that all claimants respect because it limits the disclosure of business secrets, and keeps the credibility of the parties.

Secondly, the decision of the arbitrator is final, binding on the parties and the right to appeal in this case is invalid. The trial at Commercial Arbitration takes place only at one trial level, which the trial at the Court is at two levels. Therefore, it creates a premise for the following advantages.

Thirdly, the settlement of disputes arising through commercial arbitration shows flexibility while shortening the proceedings thereby contributing to saving time and effort of the parties.

Fourthly, the settlement of disputes by arbitration is not territorially limited so the parties may agree to choose any arbitrator to resolve their disputes.

However, the competing parties also need to pay attention that the choice of arbitration method also reveals some disadvantages such as: The enforcement of arbitral awards depends heavily on the willingness of the parties to the dispute. If the party who is serving the judgment does not voluntarily follow the arbitral awards and does not request to cancel the arbitral award after the expiration of the time limit for enforcing the arbitral award, the judgment-executing party may send a written request to the civil judgment enforcement agency for judgment execution.

In addition, one of the disputing parties may submit a request to the Court to cancel the arbitration award when encountering one of these following conditions: (i) There is no arbitration agreement or the arbitration agreement is invalid; (ii) The arbitration council’s composition or procedures of arbitral proceedings does not comply with the parties’ agreement or regulations; (iii) The dispute falls beyond the arbitration council’s jurisdiction: when an arbitral award contains the details falling beyond the arbitration council’s jurisdiction, such details shall be cancelled; (iv) The evidence provided by the parties on which the arbitration council bases to issue the award is counterfeit: an arbitrator receives money, assets or other material benefits from one disputing party, thus affecting the objectivity and impartiality of the award; (v) The award contravenes the fundamental principles of Vietnamese law.

Finally, when the parties choose to resolve their disputes by arbitration method, the costs are relatively higher than in the proceeding of court litigation.

At ANT Lawyers - a law firm in Vietnam our trial lawyers with accreditation in national and international arbitration practice could help providing legal advice in disputed matters, and guide the clients through out the process.  The lawyers could also advise the clients on various matters from choice of arbitrator, choice of arbitration rules, ad-hoc or institutional arbitration, place of arbitration, enforcement of arbitral award.

Employees as well as the labor collective and employers should pay attention to selecting the most appropriate and optimal resolution solution when labor disputes occur.  It is also suggested to consult with labour lawyers of law firm speacializing in employment matters for efficiency.

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How Law Regulates Employing People with Disabilities in Vietnam?

Disabled people are those who have one or more body parts or functional impairments which are manifested in the form of disability, which makes it difficult for labor, living and learning. The State sponsors the right to labor and creates jobs for disabled workers, has policies to encourage and give incentives to employers to create jobs and to accept workers with disabilities to work in Vietnam.

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The disabled people are inherently disadvantaged compared to other ordinary people, so to compensate for the unfortunate disabled people, the government has established mechanisms and policies for disabled employees and enterprises employing disabled laborers, being regulated in the law as following.

Corporate Income Tax

The company will enjoy corporate income tax exemption for income from goods and services of enterprises with an average number of disabled employees in the year accounts for 30% or more of the total labor of the enterprise.

Financial Support to Improve Work Conditions

Enterprises are provided with financial support to improve working conditions and environment for disabled workers, the support level is based on the proportion of people with stable employment at production and business establishments. The President of the provincial People’s Committee decides the level of funding to support the improvement of working conditions and environment for production and business establishments employing 30% or more of the disabled employees.

Land, Ground, Water Surface Rentals

Enterprises are exempted from land rents, ground and water surface rents for land, ground and water surface in service of production and business activities for production and business establishments employing 70% or more of their disabled employee. Enterprises are entitled to a 50% reduction of land rents, grounds and water surface for production and business activities for production and business establishments employing from 30% to less than 70% of laborers are disabled employees. During the period of exemption or reduction of land rents, premises, water surface, business and production establishments must not convert, transfer, donate, give or lease land use rights, ground and water surface and must not mortgage, pledge, guarantee, contribute capital in, joint venture with land use rights, ground and water surfaces in accordance with the Law on land.

Loan Support

The enterprises which have disabled employees may borrow capital from the national fund for employment when meeting conditions such as: having feasible capital borrowing projects competitions in the locality, in line with business and production lines, attracting more workers to work stably; loan project with certification of the competent agency, organization where the project is implemented; secured loan.

Besides, the enterprises which have disabled employers have to follow a number of requirements.  i) do not distinguish between disabled workers and other workers.  The violation of such would be sanctioned from 3 – 5 million VND; ii) ensure that the labor conditions are suitable for people with disabilities, specific businesses must ensure the labor conditions, labor tools, occupational safety, hygiene and labor appropriate for people with disabilities and regularly take care of their health by organizing periodic health check at least 06 months/time; must consult with the defective labor when deciding on the policy relating to them. The violations of such activities will be fined from 1 – 15 million VND; iii) do not use disabled workers who have reduced labor capacity from 51% or more to overtime, working at night, doing heavy, malicious, dangerous or exposed work with hazardous substances.  In the event of a breach of such regulations, the enterprise will be fined from 1 – 15 million VND; iv) arranged for workers with disabilities who are allowed to take leave for 14 days for disabled workers with full 12 working months.

The above provisions are the basic labour regulations applicable to enterprises employing disabled workers.  While there are benefits, there are also challenges in terms of labour regulations compliance.  Consulting with labour lawyers would be needed to help the employer complying including drafting labour contract, drafting internal labour regulations, terminating the employment relationship to best manage the work force in the most effective ways. From the management point of view, the employers need to understand, and be aware of the policies that the state offers for their business as well as the obligations that the business needs to do for disabled workers to utilize and follow.

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New laws on labor dispute mediators

ANT Lawyers employment practice offers counseling service in the Vietnam labour and employment compliance and dispute matters. Our Vietnam employment lawyers often keep track with changes in the Vietnam labour code, the Vietnam employment laws to provide the clients with the best advice. The recently issued Circular 08/2013/TT-BLDTBXH is guiding the selection, appointment, re-appointment for mediators for solving labour disputes and dismissal of labour conciliators as prescribed in Decree No. 46/2013/ND-CP of the Government which details the implementation of a number of articles of the Labor Code on labour disputes in Vietnam.

1.Each district, town and provincial city shall have labour mediators. Based on the number of firms and the level of labour disputes in the area, the Department of Labour, Invalids and Social Affairs shall determine the amount of the labour mediators;

2.Department of Labour, Invalids and Social Affairs is responsible for receiving requests for the mediation of labour disputes, disputes over contracts of labour. The party that is requesting mediation can suggest a labour mediator and the Department of Labour, Invalids and Social Affairs will appoint the mediator to involve in the labour dispute.

3.Dismissal of labour conciliators in one of the following cases:a) There is an application for resignation under the labour mediator model No. 05/HGV attached to this Circular. b) Having 2 years of continuous assessment tasks that are not completed in accordance with Article 8 of this Circular. c) In case there are violations of law, an abuse of their credibility or authority. His responsibility is detrimental to the interests of the parties or the interests of the state during the reconciliation process in one of the following cases: i) One of the provisions of Article 3 of the Law on Anti-Corruption; ii) Perform reconciliation duties not impartial or not objective The Chairman of the District’s People’s Committee, representing the Department of Labour, Invalids and Social Affairs in the district level, shall preside over the meeting to consider the level of illegal labor mediation in the presence of the labour mediator and the parties relating to the violations of labour mediation. Minutes of the meeting must be signed by the labour mediator and the representatives of the involved parties. This Circular takes effect from July 1, 2013.  If Circular 22/2007/TT-BLDTBXH of October 23^rd 2007 of the Ministry of Labour, Invalids and Social Affairs is guiding on the organization and operation of this department and the mediators and labour regulations in a contrary way to this Circular, this Circular shall be effective as from the date when it is effective.

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