Some Notable New Provisions Of Labour Laws

By Vision & Associates Legal

Recently, the Government of Vietnam has issued several Decrees to amend or supplement existing Decrees providing guidelines for implementation of Labour Code 2012 and/or provide new guidelines. The following are some noteworthy points in such Decrees:

  • Contents of the labour contract: It is no longer necessary by the virtue of Article 1.2 of Decree No.148/2018/ND-CP dated 24 October 2018 (“Decree 148) to specify salary increase policy, working time and rest time, personal protective equipment, and compulsory insurances in the labour contract. The parties may now simply refer to internal rules of the employer, collective labour agreement between the employer and its employees, and laws.
  • Obligations of the employer in the event of retrenchment due to a change of structure, change of technology or for economic reasons: There are new regulations in Decree 148 on the employer’s notification of above-mentioned changes to the provincial-level labour management authority (accordingly, the notification must be made in writing with main statutory contents).
  • Regulations on the length of time the employee has actually worked for the employer when calculating the severance allowance or job-loss allowance: It should note that Decree 148 removes the period of probation, vocational training or apprenticeship of the employee from the working period for calculation of these allowances.
  • Salary as the basis for payment to the employee during the day off: Salaries taken by Decree 148 as a basis for payment to employees for annual leave, public holidays and paid leave are those under their labour contracts (instead of the preceding month’s wage stated in the labour contract as previously prescribed) divided by the number of normal working days in the month fixed by the employer, multiplied by the number of days of employee’s annual leave, public holidays, or paid personal leaves.
  • Additional provision on the salary as the basis for compensation when the unilateral termination of a labour contract is unlawful: which shall be the salary under labour contract at the time of the unlawful termination according to Decree 148.
  • Registration of internal working rules, pay scale & payroll, and labour productivity norms: Decree 148 does not require the provincial-level State management agency on labour to notify in writing (only notify) the employer when the internal working rules are contrary to the provisions of law.

In addition, an enterprise employing fewer than 10 workers is exempted by Decree No.121/2018/ND-CP dated 13 September 2018 (“Decree 121”) from submitting its pay scale, payroll, and labour productivity norms to the labour authority of district where its business facilities are located.

  • Order of dealing with a violation of labour discipline: The process of dealing with a violation of labour disciplines is now specified by Decree 148 in a way that is more convenient for the employer. The dealing with a violation of labour discipline must still be carried out through a meeting dealing with a violation of labour discipline (hereinafter referred to as the “Disciplinary Meeting“). However, the procedures for organizing the Disciplinary Meeting under the new Decree will be much quicker:
    • Employer must ensure that notice of invitation is sent to participants before the Disciplinary Meeting (not required at least 5 working days as previously prescribed).
    • Within 3 working days from the date of receipt of the notice, participants are obliged to reply to confirm their attendance.
    • If any participant is absent without legitimate reason, the employer has the right to conduct the Disciplinary Meeting for dealing with a violation of labour discipline; instead of waiting until the notification has been made at least 3 times as previously prescribed.
    • In addition, in the case where a worker has been caught red-handed during committing an offense, the employer must immediately make a written minutes of the violation, then proceed with holding the Disciplinary Meeting.

Accordingly, violations of labour discipline can fully be dealt with in 5 working days.

  • Participation in compulsory social insurance scheme by foreign employees and their employers: According to the Law on Social Insurance 2014, foreign employees working in Vietnam and their employers would be covered by compulsory social insurance since 1 January 2018. However, such provision has not been carried out in reality due to lack of detailed guidelines on contribution process and procedures, which have only just arrived with Decree No. 143/2018/ND detailing the provisions of Law on Social Insurance and Law on Occupational Safety and Hygiene regarding compulsory social insurance for employees who are foreign nationals working in Vietnam, which was issued on 15 October  2018 and has taken effect on 1 December 2018. Accordingly, foreigners working in Vietnam are subject to compulsory social insurance when they have a work permit, practising certificate or practising licence issued by the competent Vietnamese agency and an indefinite term labour contract or a definite term employment contract for one full year or more with an employer in Vietnam. The employer who hires foreign employees shall, on a monthly basis, make a social insurance contribution in proportion to the employee’s payroll in the social insurance payment month as follows: 3% of the abovementioned payroll paid into the sickness and parental insurance benefit fund; 0.5% of the abovementioned payroll paid into the occupational accident and disease benefit fund; 14% of the abovementioned payroll paid into the retirement and death insurance benefit fund, in effect from 1 January 2022. And as from 1 January 2022, the foreign employees shall monthly make a social insurance contribution accounting for 8% of his/her monthly pay to the retirement and death benefit fund.
  • Increase of minimum wage levels: Decree No. 157/2018/ND-CP dated 16 November 2018 increases the region-base minimum wage levels (Used to determine wages agreed with employees working under the employment contracts; to set up the wage scale and payroll, and to determine the minimum amount of payment for social insurance premium and the amount of payment for unemployment insurance premium) to: VND4,180,000 (approximately USD182); VND3,710,000 (approximately USD161); VND3,250,000 (approximately USD141); and VND2,920,000 (approximately USD127) per month (from VND3,980,000 (approximately USD173); VND 3,530,000 (approximately USD153); VND3,090,000 (approximately USD134) and VND2,760,000 (approximately USD120) per month as previously prescribed) to be applicable to enterprises operating in areas of Regions 1, 2, 3 and 4 respectively as from 1 January 2019. This Decree also (i) added Cat Hai and Kien Thuy districts of Hai Phong City, Dau Tieng and Phu Giao districts of Binh Duong province, Phu My town in Ba Ria – Vung Tau province to the list of areas in Region I; and (ii) moves Le Thuy, Quang Ninh, Bo Trach, Quang Trach districts and Ba Don town in Quang Binh province; and Tan Phuoc district of Tien Giang province from Region VI to Region III; Gia Binh and Luong Tai districts of Bac Ninh province, and Chau Thanh district of Tien Giang province from Region III to Region II.

In addition, base wage level (Used to calculate wages for those receiving salaries funded by the national budget and pensioners, to determine the maximum amount of payment for social insurance premium not exceeding 20 times of that wage, and to calculate payment for health insurance premium and trade union expenses) is increased by Decree No.72/2018/ND-CP dated 15 May 2018 to VND1,390,000 (approximately USD60) per month (from VND1,300,000 (approximately USD56) per month as previously prescribed) since 1 July 2018.