Labour Matters
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Legislation

In replacement of the former Labour Codes of 1994 and 2012, the current Labour Code which was passed by the NA on 20 November 2019 and took effect on 1 January 2021 (“Labour Code 2019”), currently serves as the principal legal base for all the labour matters in Vietnam. The Labour Code 2019 applies to both employee and employer including foreign organizations that employ local and foreign staff working in Vietnam.

Since November 2019, a number of decrees, decisions, circulars, directions and other regulations have been issued from time to time, by the GoV and various ministries and agencies, to replace those guiding for the implementation of the former Code and bring the provisions of the Labour Code 2019 into practice.

Recruitment

Formerly, foreign invested enterprises must recruit employees first from individuals recommended by the local labour supplier(s). Now, foreign invested enterprises, and foreign traders’ representative offices and branches when the time-limit of 15 working days is expired but the Vietnamese employee recruiting agencies cannot select and introduce any Vietnamese employee at their request, can do direct recruitment.

Employees must be at least full 15 years old, except for certain jobs provided for by the MOLISA. Employee who is a foreigner entering Vietnam to work must satisfy the following conditions:

  • The worker is a full 18 years of age and has full legal capacity for civil acts;
  • The worker has professional qualifications, technical and other skills, work experience and good health as stipulated in regulations of the MOH;
  • The worker is a manager, chief executive officer, expert or technician;
  • The worker is not a person currently serving a sentence or with a criminal conviction which has not yet been absolved/removed from the record, and not subject to prosecution for criminal liability in accordance with the law of the foreign country or the law of Vietnam;
  • The worker obtains a work permit issued by competent State authority of Vietnam, except for cases entitled to exemption from work permit.

Preference in employment should be given to Vietnamese citizens. However, if a Vietnamese person with appropriate qualifications is not found, foreign employees can be hired. The employer is responsible to determine the demand for foreign workers for every job position in which Vietnamese workers are incompetent and send explanation of such demand to the MOLISA or the People’s Committee of the province or centrally-run city where the planned working place of foreign workers is located in order to obtain the latter’s written approval for the recruitment of foreign worker for every job position.

It is worthy of note that according to Decree No.152/2020/ND-CP dated 30 December 2020 of the GoV, on foreign workers working in Vietnam, and recruitment and management of Vietnamese workers working for foreign employers in Vietnam (“Decree 152/2020”), the foreign workers are exempt from work permits in the following cases:

  • Capital contributing member or owner of a limited liability company with a value of his or her capital contribution of at least VND3 billion;
  • Chairperson or member of the board of management of a joint stock company with a value of his or her capital contribution of at least VND3 billion;
  • Head of a representative office or of a project or person mainly responsible for the operation of an international organization or foreign non-governmental organization in Vietnam;
  • Entering Vietnam for a period under 3 months in order to offer services;
  • Entering Vietnam for a period under 3 months in order to resolve an incident breakdown or technically or technologically complex situation arising and affecting, or with the risk of affecting production or business, with which Vietnamese experts or foreign experts currently in Vietnam are unable to deal;
  • A foreign lawyer issued with a certificate to practice law in Vietnam in accordance with the laws on lawyers;
  • Other cases in accordance with an international treaty of which Vietnam is a member;
  • Foreigners married to Vietnamese and living in the territory of Vietnam;
  • A student studying in Vietnam at a foreign school or training institution which has a probation agreement with an agency, organization or enterprise in Vietnam; or a probationer or apprentice on a Vietnam sea-going ship;
  • The workers are internally reassigned in the companies which engage in 11 service industries in the Vietnam’s WTO commitments on services, including: business, communication, construction, distribution, education, environment, finance, health, tourism, culture, entertainment and transportation;
  • The workers enter Vietnam to provide professional and technical advisory services or perform other tasks serving the research, construction, appraisal, assessment, management and execution of programs and projects funded by ODA according to the International Treaties on ODA between the competent authorities of Vietnam and other countries;
  • The workers are issued with the licenses for the practice of communications or journalism in Vietnam by the Ministry of Foreign Affairs (“MOFA”);
  • The workers are appointed by foreign agencies or organizations to teach or do research in international schools under the management of foreign diplomatic missions or the United Nations; or of a facility established under an agreement to which Vietnam is a signatory;
  • The workers are volunteers who are unpaid foreign workers who voluntarily work in Vietnam to implement an international treaty to which Vietnam is a signatory and have obtained the certification of the foreign diplomatic missions or international organizations in Vietnam;
  • The workers enter Vietnam to hold the positions of experts, managers, chief executive officers or technicians for a period of under 30 days and up to 3 times a year;
  • The workers enter Vietnam to implement international agreements to which central or provincial agencies and organizations are signatories in accordance with the law;
  • Relatives of members executing their functions in foreign missions in Vietnam, who are exempt from work permits under the international treaties to which Vietnam is a signatory;
  • Workers are holders of official passports for working in state agencies, political organizations or socio – political organizations;
  • Foreigners certified by the Ministry of Education and Training (“MOET”) as a foreign worker entering Vietnam for teaching and research purpose;
  • Workers are responsible for establishing the commercial presence.

The employer shall request the MOLISA or the DOLISA of the locality where the planned working place of foreign workers is located or the Management Board of IZs, EPZs, EZs and HTZs authorized by the DOLISA of the province or centrally-run city where the Board is located (collectively called “State management authority on labour”) to certify that such foreign workers are eligible for exemption from work permits at least 10 working days before the day on which they start to work. Within 5 working days from the day on which the sufficient application is received, the State management authority on labour shall send a written certification to the employer, which is valid for up to 2 years but coincides with the validity period of any relevant contract, agreement, document, license, etc. in the cases mentioned above; and may be re-issued for up to 2 years more.

However, for any of cases stated in (i), (ii), (iv), (vi), (vii), (xv) and (xvii) above, the employer is not required to apply for the certification of exemption but it must report the State management authority on labour at least 3 days before such foreign worker starts to work in Vietnam, on the following: full name, age, nationality, passport number, name of employer, starting date and completion date.

While at least 15 days before the day on which the foreign worker intends to start his/her employment, the employer shall submit the application for the work permit to the State management authority on labour. Within 5 working days from the day on which the sufficient application is received, the State management authority on labour shall issue the work permit to the foreign worker. The duration of a work permit coincides with the validity period of any relevant contract, agreement, document, license, etc. in the cases mentioned above but shall not exceed 2 years. After the foreign worker is issued with the work permit, the employer and the foreign worker shall sign a written labour contract in accordance with the Vietnam law before the intended working day of such foreign worker. The employer must send the original or a certified copy of the signed labour contract to the State management authority that issued such work permit.

Labour Contracts

A labour contract must be in writing and directly signed in 2 originals between the employee and the employer’s legal representative, the employee shall keep 1 original and the employer shall keep 1 original, except for the employment which will last less than one month the parties may conclude verbal contracts in eligible circumstances. A labour contract entered into by electronic means in the form of data messages in accordance with the law on electronic transactions has the same value as a written labour contract.

The entering into the labour contract must obtain a written consent from his/her legal representative if the worker is from full 15 years up to under 18 years of age; and signatures of the worker under 15 years old of age and his/her legal representatives.

A group of workers who are full 18 years of age may authorize one of the workers in their group to enter into a written labour contract for a seasonal work or specific job with a duration of less than 12 months and in this case, the labour contract has the same validity as if it was signed with each worker.

A labour contract must be in conformity with the Vietnamese laws and labour collective agreements (if any), with maximal two definitive term contracts to be first permitted, then indefinite term contract to be applied.

A labour contract must have main clauses relating to: Name and address of the enterprise, and full name and title of the signatory on the employer’s side; Full name, date of birth, sex, residential address, and number of identity card/ citizen’s identification card/ passport of the signatory on the employee’s side; Job and workplace; Term of the labour contract; Wage rate in accordance with the job or title/position, method of and time of payment of wages, allowances and other additional payments; Regime for wage increases and promotion; Working hours and rest breaks; Personal protective equipment of the employee; Social and health insurances for the employee; Training and skill improvement for the employee.

An addendum to a labour contract may elaborate in detail or may amend or supplement some of the articles of the labour contract, but may not amend the term of the labour contract.

When an employee does a job, which is directly related to business or technological secrets as defined by law, the employer has the right to a written agreement with the employee on contents and term of confidentiality of business secrets and protection of technology, of interests or benefits and on payment of compensation if the employee breaches such agreement.

Probationary agreements may be separate from or included in the labour contracts. The probationary length varies, and subject to the nature and complexity of assigned jobs; but there may only be probation on one occasion for one job, and the probationary period must not exceed:

  • 180 days in the case of the job being enterprise manager pursuant to the Law on Enterprises, and the Law on Management and Use of State Capital Invested in Production and Business in Enterprises;
  • 60 days for working in a position requiring high level specialized or technical expertise;
  • 30 days for working in a position requiring intermediate level specialized or technical expertise or for technical workers and professional staff; and
  • 6 working days for other work.

The wage of an employee during a probationary period shall be as agreed by the two parties but must be at least 85% of the scale wage rate for the relevant working position/job.

An employee working pursuant to a labour contract with a term of less than 1 month is not engaged in a probationary period of work.

Statutory Minimums

Normal working hours are limited to 8 hours per day and 48 hours per week. Employers have the right to stipulate that employees work on an hourly or daily or weekly basis but must notify the employee thereof; if on a weekly basis, then normal working hours must not exceed 10 hours in one day and must not exceed 48 hours in one week. Working hours shall not exceed 6 hours in one day for workers who perform extremely heavy, toxic or dangerous work as stipulated in the list issued by the MOLISA after presiding over coordination with the MOH.

Working hours may be extended by mutual agreements, but total daily overtime shall not exceed 50% of the normal working hours in 01 days; in case of application of working regulation on weekly basis, the total normal working hours and the overtime hours shall not exceed 12 hours in a day, 12 hours in one day when working overtime on public holidays or weekly days off, and 40 hours in 01 months; and the total of not more than 200 hours in 01 year, except for some special cases stipulated by the GoV for the overtime working but shall not be more than 300 hours in 01 years, provided that the respective provincial-level State management authority on labour has been notified thereof.

Employees who have worked in the enterprise for 12 months in full are entitled to have a fully-paid annual leave in accordance with the wage stated in labour contract, which shall be:

  • 12 working days for employees working in normal conditions,
  • 14 working days for employees doing heavy, toxic or dangerous works, or those working in the places with harsh living conditions according to a list issued by the MOLISA after presiding over coordination with the MOH, and minor or handicapped labour, or
  • 16 working days for employees doing extremely heavy, toxic or dangerous works, or those working in the places with specially harsh living conditions according to a list issued by the MOLISA after presiding over coordination with the

An employee who have worked in the enterprise for less than 12 months is entitled to annual leave at the ratio corresponding to the number of months for which he or she worked.

For every full 5 years working for the employer, the number of annual leave days of the employee as mentioned above shall be increased by 1 day.

An employee may reach agreement with the employer on taking annual leave in instalments or combining leave for a maximum 3 years at one time.

Female employees are entitled also to prenatal and postnatal leave of six months in which the maximum period of prenatal leave shall be 2 months, with an allowance funded by social insurance agency and equal to 100% of salary. If a female employee gives birth to more than one child at the one time, she is entitled to an additional 1 month’s leave for each child counted from the second child.

Salary rates must conform to the collective labour agreement (if any) and must not be less than the legally-regulated minimum regional wage rates in accordance with Decree No.90/2019/ND-CP dated 15 November 2019 of the GoV, stipulating region-based minimum wage levels for labourers working under labour contracts (“Decree 90/2019”). According to which, there are currently four levels applicable to employees, which come down from VND4,420,000 (about US$192.2) regarding enterprises, agencies and organizations operating in Region I, including: the inners and most of suburb of HCMC, the inners and the mains of suburb of Hanoi and Hai Phong, Bien Hoa City and some rural districts of Dong Nai Province, Thu Dau Mot City and some rural districts of Binh Duong Province, and Vung Tau City and Phu My Town of Ba Ria – Vung Tau Province; VND3,920,000 (about US$170.4) regarding those operating in Region II, including: Can Gio district of HCMC, the remaining of suburb of Hanoi and Hai Phong, the inner and suburb of Da Nang, and the inner of some smaller cities including Hai Duong, Hung Yen, Vinh Yen, Phuc Yen, Bac Ninh, Ha Long, Cam Pha, Uong Bi, Mong Cai, Thai Nguyen, Song Cong, Viet Tri, Lao Cai, Nam Dinh, Ninh Binh, Dong Hoi, Hue, Da Nang, Hoi An, Tam Ky, Nha Trang, Cam Ranh, Da Lat, Bao Loc, Tay Ninh, Dong Xoai, Phan Thiet, Ba Ria, Tan An, My Tho, Ben Tre, Can Tho, Rach Gia, Ha Tien, Long Xuyen, Chau Doc, Tra Vinh, Ca Mau, and some tows including My Hao, Tu Son, Pho Yen, etc.; VND3,430,000 (about US$149.1) regarding those operating in Region III, including: the other provincial cities and towns, and rural districts; to VND3,070,000 (about US$133.5) regarding those operating in Region IV: the rest.

Based on the production organization, labour organization, enterprises will formulate and decide:

  • the wage scale & payroll for labourers, meeting certain statutory requirements on the lowest wage level and gap between two consecutive wage grades;
  • the labour norms formulated on the basis of the job or title ranks and in compatibility with the grades and trained qualifications of labourers, technological process, and technical standards of machines, equipment and ensuring the labour standards; notified to labourers at least 15 days before applying experimentally; applied experimentally for a duration of not more than 3 months before being officially promulgated;

The wage scale & payroll and labour norms must be consulted with organizations representing employees at grassroots level; publicly published at the working places of laborers before implementation.

Collective Labour Agreement

Representatives of both employer and labour collective in a foreign-invested enterprise may negotiate and sign a collective labour agreement (“CLA”). The labour collective’s representative at grassroots level is the executive committee of the enterprise’s grass-roots trade union or of a direct superior trade union when the grassroots trade union is not yet established.

Contents of a CLA must not contrary to the laws and be more favourable for the employees than the provisions of the laws. A CLA shall have the effective date depending on the parties’ agreement recorded in the CLA. If the parties are unable to reach agreement, then the effective date of such CLA shall be the date of signing. Before being signed/entered into, the draft CLA negotiated by the parties must be provided to obtain opinions in favour from all the employees in the enterprise. An enterprise CLA may only be entered into when more than 50% of the employees of the enterprise vote in favour of it. The employer has to send a copy of the CLA to the provincial-level State management authority on labour within 10 days from the date of signing.

The term of the collective labour agreement is between one and three years. The parties may reach agreement on different effective terms for different contents of a CLA.

Within 90 days prior to the expiry of the CLA, both parties may negotiate to extend the term of such CLA or sign a new CLA. If the term is extended, then opinions in favour from the employees must be obtained as described above. When a CLA expires and the parties are continuing to negotiate, the old CLA shall continue to be implemented for a period not to exceed 90 days after the date of expiry of the CLA, unless otherwise agreed by the parties.

Internal Working Rules

Every employer must issue their own internal working rules after consulting the opinion of the organization representing the employees at the grassroots level in the cases of such an organization has been established in the enterprise, or its superior in the cases of such an organization has not yet been established in the enterprise.

A foreign-invested enterprise employing 10 or more employees must have its written internal working rules registered with provincial-level State management authority on labour in the locality where its headquarters is located within 10 days after the date of issuing such rules. Internal working rules must include compulsory items such as working hours and rest breaks; rules and order in the work places; occupational safety and hygiene in the work places; prevention of sexual harassment in the workplace; and the sequence and procedures for dealing with a breach being an act of sexual harassment in the workplace; protection of assets and confidentiality of business secrets, technological secrets and intellectual property of the employer; cases in which an employee may be temporarily transferred to undertake work different from that specified in his or her labour contract; conducts which are in breach of labour rules, and penalties imposed for those breaches; liability for material damage; who is the person authorized to impose disciplinary penalties; etc.

Within 7 working days after the date of receipt of the file for registration of the internal working rules, if such rules contain any provision contrary to law, the provincial-level State management authority on labour shall notify and guide the employer to amend or supplement such rules and re-register them.

An employer with a branch, unit or production and business establishment in a different locality shall send the registered internal working rules to the provincial-level State management authority on labour in the locality of such branch, unit or establishment.

Internal working rules must be notified to all employees and its main contents have to be displayed at necessary locations in the work places, and shall be the legal basis for employees to follow and for employer to apply disciplines in case of breaches by employees.

Written regulations are not required if the employer has fewer than 10 employees but labor discipline and material responsibility must be included in the contents of the labour contracts.

Social, Healthcare, Occupational Accidents & Diseases, and Unemployment Insurances, and Trade Union Expense and Fee

The compulsory insurances have recently been merged into one system being managed by Social insurance agency. These insurances cover illness, pregnancy, retirement, death, occupational accidents and diseases; medical examination and treatment expenses; and unemployment.

Foreign-invested enterprises are required to comply with the social insurance scheme. In general:

  • employers must pay 3% of total wages to the illness and pregnancy fund, 0.5% of total wages to the occupational accidents & diseases fund, and 14% of total wages to the retirement and death fund; and Vietnamese employees working under definite-term labour contracts with a term of full 1 month or more or indefinite-term labour contracts will make a payment of 8% of their monthly wages (including wages and salary allowances; wages, salary allowances, and other allowances & subsidies) to the retirement and death fund; and
  • employers must pay 3% of total wages to the illness and pregnancy fund, 0.5% of total wages to the occupational accidents & diseases fund, (and 14% of total wages to the retirement and death fund from 1 January 2022); and foreign employees working under definite-term labour contracts with a term of full 1 year or more as from 1 January 2022) will make a payment of 8% of their monthly wages.

With respect to health insurance, both sides of employer and employees (regardless of being Vietnamese or foreigners working under definite-term labour contracts with a term of full 3 months or more) have to pay to the health insurance fund, of which 3% of total wages are paid by employers and 1.5% of the monthly wages are paid by employees.

Unemployment insurance is effective from 1 January 2009, which requires 1% of total wages to be paid by the employer and 1% of monthly wage to be paid by the Vietnamese employee working under definite-term labour contracts with a term from full 12 months to 36 months or indefinite-term labour contract. Having benefit from this type of insurance, the employee shall not be beneficial in terms of time for calculation of the job loss allowance or severance allowance when the employment relation is terminated.

Trade Union Expense payable by the employer would be 2% of the total payroll of the Vietnamese employees, and Trade Union Fee payable by the Vietnamese employees who are trade union members would be 1% of the monthly salary.

Labour Disputes

It should be first noted that Vietnamese laws allow employees to strike works against employers. Before holding a strike, the organization representing the employees with the right to conduct collective bargaining, which is one of the parties to the collective labour dispute, shall be entitled to organize and lead the strike and shall be responsible to obtain opinions from all of the employees or from members of the leadership of the organizations representing employees participating in the collective bargaining. The organization representing the employees shall make a decision on the time, location and method for obtaining opinions on the strike, and must provide at least one day’s advance notice thereof to the employer. When there are opinions in agreement from more than fifty per cent (50%) of the employees on the proposal to strike, then the organization representing the employees shall issue a written decision to strike.

With some exceptions, attempts must be made to settle labour disputes through conciliation between the employer and employee held by a labour conciliator or labour arbitration council.

For individual labour disputes and collective labour disputes about rights, they must pass through procedures for conciliation by a labour conciliator prior to a petition to the labour arbitration council or a court to resolve the dispute, except for certain cases. If the dispute cannot be settled through conciliation, or if one of the parties fails to implement the agreement set out in the minutes of successful conciliation, or if on expiry of the time-limit of 5 working days after receipt of a party request for dispute resolution, the labour conciliator has not conducted a conciliation; then, the parties in dispute have the right to request on the basis of consensus a labour arbitration council or to petition a court to resolve the dispute. If such request is made, the parties are not permitted to also petition the court to resolve the matter, except in the following cases: (i) If the time-limit of 7 days after receipt of a request to resolve a dispute expires without a tribunal being established or the time-limit of 30 days after a tribunal establishment expires without a decision on resolution, or (ii) If one of the parties fails to enforce [comply with] the decision resolving the dispute made by the labour arbitration tribunal, then the parties have the right to petition the court to resolve the dispute.

For collective labour disputes about interests, they must be resolved via conciliation procedures of a labour conciliator prior to requesting the labour arbitration council to resolve the matter or before conducting procedures to strike. If the conciliation is unsuccessful or if on expiry of the time-limit for conciliation within 5 working days after receipt of a party’s request for dispute resolution, the conciliator has not conducted a conciliation or one of the parties has failed to implement the agreements set out in the minutes of successful conciliation, then the disputing parties may select either of the following methods to resolve the dispute: (i) Request on the basis of consensus a labour arbitration council to resolve the dispute; or (ii) The organization representing employees has the right to conduct procedures prescribed for holding a strike. Where the parties select dispute resolution via the labour arbitration council, the organization representing employees is not permitted to hold a strike while the labour arbitration council is resolving the dispute. If on expiry of the time-limit of 7 working days after receipt of a request the tribunal has not been established; or if on expiry of the time-limit of 30 days after its establishment, the tribunal has not issued a decision resolving the dispute; or the employer being a party to the dispute has failed to implement a decision resolving the dispute of the tribunal, then the organization representing employees being a party to the dispute has the right to conduct procedures to hold a strike as prescribed.

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