Company Incorporation Services In Vietnam

Key points of Labour Law 2019

Last modified: 25/02/2021

Labor Code is ratified by the 14th National Assembly of Socialist Republic of Vietnam during its 8th session on November 20, 2019 and enter into force as of 1st of January 2021.

Many new legal regulations of this Labor Code have direct effects on the rights and obligations of the employers and employees. There is some key update of this law brief by us for your reference:

Labor contracts. The amended labor code now lists only two types of labor contracts as compared to three earlier. Definite-term contracts, which cannot have a term longer than three years, and indefinite-term contracts.

The definite contract can only be renewed once. Foreigners who have work permits (valid for two years) will also be able to renew only once.

Seasonal contracts will no longer be permitted from 2021.


Probation Time. It is allowed for the employer to request high-level employees a longer probation period than others. In details, it is 180 days for the position of enterprise executive prescribed by the Law on Enterprises, the Law on management and use of state investment in enterprises;


Working hours. While the working hour limit remains the same as 48 hours per week, the new code states that normal working hours cannot exceed eight hours a day or 48 hours per week.

However, if the employer and employee agree on an overtime deal, the overtime cannot exceed 12 hours a day, 40 hours a month and 200 hours a year. Employee consent must be obtained if the employer plans overtime work in regards to the term, locations, and overtime work.


Salary Scheme. Employers are still required to set up salary schemes and consult with employee representative organizations. However, the schemes are no longer require registration and notification with the labor authorities.


Have 02 days off on Independence Day. From Independence Day 2021, employees shall have 02 days-off (instead of 01 day-off in current legal regulations). The Independence Day of Vietnam is observed on 2 September and employees can have one more day-off on 1 September or 3 September.

Therefore, employees shall have 11 holidays and a Tet holiday every year in accordance with the new regulations in the Labor Code 2020.


Labor Disciplinary Procedures. Sexual harassment at the workplace will be an additional ground for dismissal but must be specified in the internal labor regulations.


Retirement age: Vietnam will also increase the retirement age for men to 62 from the current 60 and increase the same for women to 55 from the current 50.


Termination: In a boost to employees, employees will be able to immediately terminate a contract for mistreatment, pregnancy and if the employer fails to pay salary on time.

In such case below, employers who want to unilaterally terminated contract must give prior notice of at least 120 days for labor contracts with indefinite term or a fixed-term contract of 12 months or more. For labor contracts less than 12 months, prior notice of at least a quarter of the term of the contract must be given:

….

b) Enterprise managers defined by the Law on Enterprises; the Law on Management and use of State Investment in Enterprises;


Labor supervision. Once a company begins operations, the employer must make a labor-management book at the head office or branch or representative office about the basic information about employees. Any changes to labor must be reported every six (6) months to the labor department.


Unions. Vietnam will now allow independent trade unions to operate as opposed to currently being supervised by the state-run Vietnam General Confederation of Labor (VGCL). The independent union will still be required to get permission from state authorities to operate.


Female employees. To make it easier for female employees, those that have children under 12 months of age, will be allowed to take a 60-minute break every day from work to breastfeed. Female employees will also be allowed a 30-minute break during their menstruation period. The number of days regarding the time off can be agreed by both parties but must be a minimum of three working days per month.

If female employees do not have time to take the aforementioned breaks and are allowed to keep working, the employee is required to pay additional wages for the work, which is separate from overtime pay.

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