LEGAL UPDATE: Did you know that a new labour law just came into effect?
The new Labour Law of Vietnam came into effect on 1 January of this year. It contains 45 new changes compared to the old law of 2012. The Government also issued a number of decrees and circulars to guide the implementation of the new law.
The link below contains a detailed comparison between the old and new law.
Most of the changes are not controversial. They reflect the delicate balance between rights of employers and employees.
We highlight some of these below for your attention.
- For the first time, the law protects employees from discrimination based on race, colour, national or social origin, ethnicity, sex, age, maternity status, marital status, religion, political belief, disability, family responsibilities, HIV status or participation in trade unions.
- Also significant is the protection against sexual harassment in the workplace.
- Employees may terminate their contracts unilaterally without any cause provided that proper notice is given (45 days (indefinite contracts); 30 days (definite contracts from 12-36 months) and 3 days (contracts under 12 months). The notice periods are longer in some special industries such as airline (at least 120 days for definite term contracts of 12 months, for example).
- Employers may terminate unilaterally if an employee does not show up to work for 5 days without a proper reason or is not present at work after a certain time limit. In other cases, however, employers must still show cause.
- Employers are no longer required to submit their salary scales for each position in the company to the authorities.
- Overtime (OT) wages are set out in the new law: 150% for normal days, 200% on weekends and 300% on holidays. Night shift work also has its own OT compensation scheme. OT may not exceed 40 hours/month (previously 30). See link below.
- Foreigners (unless married to VN) must have work permits to work in Vietnam. The maximum duration of a work permit is 2 years. Extension may be granted one additional time for another 2 years. At the expiry of the extension, a new application must be made for a new work permit.
- Strikes are allowed under collective labour agreements the they relate to the terms of the same if conciliation cannot be reached.
CHANGES RELATING TO LABOUR CONTRACTS
- A person does not need to have an agreement labelled as a ‘labour contract’ to be deemed as an employee. Any agreement where a person is paid compensation for work done and is supervised suffices. Such agreement can be made electronically. Thus, the new law recognizes appropriately substance over form to ensure that employees are protected.
- Along the same line, the new law also abolishes the concept of a ‘seasonal’ labour contract. The reason is that employees hired seasonally in practice do not work under labour contracts as employers do not see them as permanent employees. Therefore, they did not have the protections of the labour law. Under the new law there are only two forms of contracts: an indefinite term contract or a definite term contract not to exceed a maximum period of 36 months.
- Labour contracts cannot be amended to reduce the term (duration) of employment.
- Probation periods can be agreed in the labour contract or the parties can sign a separate probation contract.
CHANGES REGARDING EMPLOYMENT RELATIONSHIP
- An employers may not force an employee to continue to work to repay a debt to the employer.
- Probation periods for managers or highly skilled workers may not exceed 180 days.
- Bonuses can be paid in forms other than cash.
- Procedures are set out for how to deal with a breach of an employment contract. See link.
- Employers must report submit a report on labour use electronically within 30 days from the commencement of operation and thereafter on a semi-annual basis. There is an online form (see link below).
- Employers can sign more than one definite term contracts with senior, retirement-age workers when they expire.
DN Legal, 21 April 2021