Vietnam Labour Law Update (February 2015)

Vietnam Labour Law Update (February 2015)

March 26, 2015

On 12 January 2015, the Government has issued the Decree No. 05/2015/ND-CP (Decree 05) provides guidance on the implementation of a number of contents of the Labor Code and come into effect from 01 March 2015.

Vietnam Labour Law Update (February 2015)

On 12 January 2015, the Government has issued the Decree No. 05/2015/ND-CP (Decree 05) provides guidance on the implementation of a number of contents of the Labor Code and come into effect from 01 March 2015. Below are some important notes in Decree 05:

I. Amendment to the term of employment contracts with the appendix

The term of the employment contract may be amended only once in employment contract Appendix and not be changed in the type of the signed contract, except when the term of employment contracts with elderly employees and those who are part-time unionists. 

II. Employment contract with elderly employees

  1. If the employers have a need and elderly employees are healthy enough in accordance with the conclusions of healthcare establishments established and operated under the provisions of the law, both parties may agree to extend the term of employment contracts or enter into new employment contracts.
  2. If the employers have no need or the elderly employees are not healthy enough, both parties may terminate the employment contracts. 

III. Notice of probation results

Within 03 days before the end of the probation period for the employee whose probation period is 30 days or 60 days, the employer may immediately conclude the employment contract with the employee at the end of the probation period.

IV. Employee’s unilateral termination of employment contracts

The employee will have the right to unilaterally terminate the employment contract at Point d, Clause 1, Article 37 of the Labor Code (the employee and their families are in special trouble that can’t continue to execute the employment contract) in the following cases: 

  • Quit the job to take care of their spouse, father , mother, father-in-law, mother-in-law, natural children and adopted children who are sick or involved in accidents
  • Leave for foreign countries to live or work;
  • Help their families that are in trouble with natural disasters, conflagration, hostility, enemy-inflicted destruction, epidemics or relocation which the employee tries to overcome but cannot continue to execute the employment contract. 

V. Employer’s unilateral termination of the employment contract

The right to unilaterally terminate the employment contract that the employer is granted at the points a and c, Clause 1, Article 38 of the Labor Code is prescribed as follows:

Other force majeure in one of the following cases

  1. Point a: (The employee often fails to perform his/her job stated in the labor contract)
    The employer must specify the criteria for assessing the work completion under the regulations of enterprises, as a basis for assessing the employees who often do not complete the work according to contract labor. Such assessment regulations will be issued by the employer after consultation with the representative organizations of labor collectives at the company.
  2. Point c (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)
    Other force majeure in one of the following cases
    • Enemy-inflicates destruction, epidemics
    • Relocation or narrowing of the production and business sites, at the request of competent State agencies

VI. Change of structure, technology and economic reasons

The economic reason in clause 2 of Article 44 of the Labor Code will be one of the following cases: 
a) Economic crisis or recession;
b) Implementation of the governmental policy on restructuring the economy or implementation of international commitments

VII. Severance redundancy payments

The employer will give redundancy pay to employees regularly working for 12 months or more but losing their jobs due to technological, structural change or economic reasons or a merger, amalgamation, split or separation of enterprises or cooperatives as specified in Clause 10, Article 36, Article 44 and Article 45 of the Labor Code. 
Working time serving as the basis for calculating severance allowance, redundancy pay will be the total of actual working time subtracting the time when the employees pay unemployment insurance contributions as prescribed by law, and the working time when severance pay is offered by the employer. Of which:
a. The actual time when employees work for employers will include the following periods such as time of employee’s working for the employer; probation, internship and apprenticeship that take place at the employer’s enterprise; time of the employer’s sending employees on courses
b. The time when employees pay for unemployment insurance will include: the time when employers have paid for the unemployment insurance in accordance with the law, and the abovementioned time corresponding to the time when employees are paid a sum of salary equal to such unemployment insurance premiums in accordance with laws.
Salary identified in the employment contract will be agreed with the employer by the employee to perform certain jobs, including:

  • Work or position-based salary will be the salary rates in salary scale, salary table defined by the employer under the provisions of the Labor Code. Salary for the most simple jobs in normal working conditions and business hours (exclusive of extra payments for overtime and overnight work) will not be less than the region-based minimum salary defined by the Government;
  • Salary allowance
  • Other extra payments

The salary in the employment contract and the salary paid to employees will be specified in Vietnam Dong except salaries and allowances paid to non-residents, foreigner residents under provisions of the law on foreign exchange

IX. Overtime and nightshift salary 

Employees who work overtime on holidays falling on the weekly days-off will be paid overtime salary. Employees who work overtime on compensation days off will be paid overtime salary on weekly rest day

X. Salary used as the basis for calculating the pay for employees in annual, public holiday, paid leaves 

  1. The salary used as the basis for calculating the pay for employees in the annual leave days; increased annual leave days according to their seniority; public holidays and the paid leave will be the salary in the employment contract of the preceding month, divided by the number of normal working days in months defined by employers, multiplied by the number of days employees take annual leave, increased annual leave according to seniority, public holidays, paid leave days
  2. The salary on which employers base to pay for employees in untaken leave days or fully untaken annual leave days will be prescribed as follows: 
    a.   If employees have worked for 06 months or more, it will be the average salary of the employment contract of the preceding 06 months before the employees terminate or lose their jobs.
    b.   If employees have not taken or fully not taken annual leave due to other reasons, it will be the average salary of the employment contract of the preceding 06 months before the employers pay annual untaken leave day;If employees have worked less than 06 months, it will be the average salary under employment contracts of full working time.
  3. The salary paid to employees in untaken leave days or fully untaken annual leave days will be the salary prescribed above (X.2) divided by the number of normal working days prescribed by employers of the preceding month before the employers pay , and multiplied by the number of annual untaken leave days or fully untaken annual leave days

XI. Registration of labor regulations and the effect of labor regulations

Within 10 days after the date of issue of labor regulations, the employers must submit labor regulation registration dossiers to the state management agencies of the province where their business is registered.
If amending and supplementing the effective labor regulations, the employers must consult with organizations representing labor collective at the facilities and re-regist the labor regulations.
The labor regulation will take effect after 15 days after the provincial State management agencies receive the registration dossiers or re-registration dossiers of the labor regulations.
The employer having branches, units, business production facilities in many central-affiliated cities and provinces will submit the effective labor regulations to the provincial State management agencies where branches, units, business production facilities are located. 

XII. Handling violations against labor discipline imposed on the employees raising children under 12 months of age

The employer don’t have the right to handle violations against labor discipline for the employees being the fathers or mothers or legal adoptive fathers or mother raising children under 12 months of age

XIII. Dismissal imposed on employees being absent from work without permission

Dismissal may be applied by an employer as a form of discipline for an employee who has been absent from work without permission for a total of 5 working days within 30 days or 20 days within 365 days since the first day of being absent from the work without permission without plausible reasons
The reasonable reasons are as follows:

  • Natural disasters, conflagration;
  • Illness of employees or their mother, father, adoptive mother, adoptive father, mother-in-law, father-in-law, husband, wife, children or adopted children with certification by a health facility founded and operated as prescribed in law
  • Other cases defined in the labor regulations.

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