Mazars Vietnam Tax Alert Draft Labor Code - May 2019 [ENG]

May, 2019
A number of new regulations in draft Labor Code 2019.
Draft 2 of Labor Code has recently been published by the Government for public inquiry. In comparison
with the current Labor Code, the Draft contains some notable points as follows:
Amending definition of “Employees”. Accordingly, employee is defined as a person working for an
employer under mutual agreement other than a labor contract as currently prescribed.
Supplementing a new approach to determine a labor contract: An agreement with title other than
“labor contract” but having contents of scope of work, salary, management, administration and
supervision from one side towards the other shall be considered as a labor contract.
Removing the category of seasonal or work-specific labor contract with term under 12 months and
amending the definition of definite-term labor contract as contracts with maximum term not
exceeding 36 months (without setting a minimum threshold). An employee can enter into multiple
labor contracts with different employers; however, with each employer, the employee is only
entitled to conclude 01 labor contract.
Recognizing labor contracts made under the form of data message established in accordance with
Law on E-transactions is a type of written labor contract. Verbal labor contract is only applicable to
labor contracts with term under 1 month, except for contracts concluded with employees aged
under 15 years old and housemaids.
Supplementing regulations that the parties are not allowed to sign annexes for the purpose of
amending the term of a labor contract.
Stipulating a probation term of up to 06 months for enterprise managers as defined in Law on
Enterprises. The statutory inclusion of probation term in the labor contract (without execution of
a separate probation contract) is being taken into consideration.
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Supplementing regulations that change of working place is also considered as assigning employees
to perform other works different from the labor contract.
Amending regulations on termination of labor contracts:
Removing provisions on the extension of a labor contract for non-specialized trade union
official who is in his/her trade union term but his/her labor contract has expired. For employees
in the age of retirement, the condition on term of social insurance contribution is removed and
simultaneously, the labor contract may not be terminated if otherwise agreed by both parties.
Taking into account the option where an employee is allowed to unilaterally terminate the
labor contract without any reason but only required to notify in advance within the prescribed
time limit. In some special circumstances, it shall not be compulsory for the employees to send
advance notice (maltreatment, sexual harassment, coercive labor, employers fail to make
salary payment in full or on time, etc.).
Specifying the circumstance where an employee regularly fails to complete the works according
to the labor contract and has being warned in writing at least twice within 60 days, the
employer shall be entitled to unilaterally terminate the labor contract.
Supplementing the definition of apprenticeship and on-the-job training, and simultaneously
stipulating a time limit of up to 06 months for an apprenticeship and up to 03 months for an onthe-job training. Removing the provision that the two parties have to enter into a labor contract
upon the completion of the apprenticeship and on the-the-job training.
10. Supplementing regulations on cooperation committee between the employees and the employers.
Accordingly, an employer employing at least 50 employees must establish a Cooperation
Committee as an intermediary between the two parties in order to share opinions and resolve
issues relating to rights and interests in labor relation.
11. Amending the definition of salary: Salary shall only include a monetary amount based on the work
or position, salary allowance(s), excluding other additional payments as per the current
12. Supplementing provisions on employers’ obligation to provide the employees with pay slip when
making salary payment as well as to pay fees for account opening and maintenance in cases of
paying via the employees’ bank accounts.
13. Removing regulation that salary scales and tables must be sent to the district-level state
management agency on labor.
14. Supplementing provisions on bonus forms of assets or in-kind allowances in addition to form of
monetary bonus.
15. Increasing the maximum overtime hours per year in some special cases from 300 hours to 400
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16. Removing regulation that break during working hour in cases of working consecutively is included
in the working hours. Accordingly, only in the circumstance where an employee works by
consecutive shift for 6 hours or more in a day, the break shall be calculated for salary payment.
17. Amending basis to calculate the increase of annual leave by work seniority from 5 years to 60
18. Supplementing the War Invalids and Martyrs’ Day (27th July of each Calendar year) as an additional
holiday. Taking into consideration the option that the employees are not entitled to take the
succeeding compensatory days-off if Tet holiday coincide with weekly days-off.
19. Supplementing provision that internal labor regulations is compulsory even for employers having
less than 10 employees. However, only employers employing 10 employees or more are obliged to
have internal labor regulations in writing and to register it with the district-level state management
agency on labor (instead of the provincial level as currently prescribed). If case of having branches,
units, production and business establishments in different localities, the employers shall have to
submit the effective internal labor regulations to the district-level state management agency on
labor where the branches, units, production and business establishments are located.
20. Amending regulations on dismissal:
Supplementing the provision that having act of sexual harassment is a basis to apply the
discipline form of dismissal.
Removing the provision that dismissal is applied to an employee who of his or her own accord
takes an aggregate of 05 days-off in one month or an aggregate of 20 days-off in 01 year without
proper reasons. Instead, if the employee of his or her own accord takes consecutive 06 daysoff consecutively or an aggregate of 20 days-off in 01 year from the first day of absence, he/she
shall be considered unilaterally terminating the labor contract illegally and not be entitled to
severance allowance, and must make compensation equivalent to half of monthly contractual
salary to the employer.
Amending the definition of “recidivism” in case where an employee being subject to the
disciplinary measure of prolonging the wage rise period or demotion commits recidivism when
the initial disciplinary measure has not been absolved. Accordingly, recidivism is defined as case
in which the employee continues to commit a violation to the extent that requires the
prolongation of salary rise period or demotion (instead of re-committing the same violation for
which he/she has been disciplined while the initial disciplinary measure had not been absolved
as per the current regulations).
21. Removing the prohibition on using the form of imposing a fine as labor discipline.
22. An employer may mobilize female employees who are in their 6th or 7th month of pregnancy or
who are nursing a child under 12 months to work at night, work overtime or go on a long business
trip in certain circumstances with the consent of the employees. Female employees who are
pregnant or nursing a child under 12 months and perform heavy work shall be entitled to be
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transferred to a lighter work but still enjoying full salary as well as other rights and benefits within
a specific duration.
23. Supplementing the regulation allowing both parties to enter into a definite-term labor contract for
multiple times in case of employing elderly employees.
24. Putting forward 2 options for the increase of retirement age: from 1st January 2021: (i) the
retirement age of an employee working in normal conditions is 60 years old and 03 months in full
for male and 55 years old and 04 months in full for female; after that, the age of retirement will be
annually increased by 03 months for male and 04 months for female until the employee reaches
62 years old and 60 years old in full, respectively; (ii) the age of retirement for an employee working
in normal conditions is 60 years old and 04 months in full for male and 55 years old and 06 months
in full for female; after that, the age of retirement will be annually increased by 04 months for male
and 06 months for female, until the employee reaches 62 years old and 60 years old in full,
25. Apart from Trade Union, the Draft provides employees with the right to establish an employees’
organization. Grassroots-level trade unions and employees’ organizations are generally defined as
organizations representing employees at grassroots-level. An employees’ organization is
established after having been registered with a competent state agency.
26. Amending regulations on work permit:
Foreign citizens who are owners or contributing members of limited liability companies,
Chairman or members of the Board of Directors of joint-stock companies with capital
contribution equivalent to at least 01 billion Vietnamese Dong shall be exempted from work
permit. Additionally, a foreign employee who is married to a Vietnamese citizen and lives within
the territory of Vietnam shall also subject to work permit exemption.
Supplementing the regulation that work permit can only be extended once with the maximum
term of 2 years.
27. Supplementing the regulation allowing the parties to reach an agreement on salary payment for
the period in which the employee is on leave and covered by social insurance regime.
28. Specifying basis for determination of the monetary amount paid to the employee who is not
covered by the regime of compulsory social insurance, health insurance and unemployment
insurance along with their salary is the amount equivalent to the employer’s contribution of
compulsory social insurance, health insurance and unemployment insurance in accordance with
the law on social insurance, health insurance and unemployment insurance.
Our support
We do trust the above points are notable and sufficient, but should you have any question or need a
deeper discussion on this issue, please do not hesitate to contact us.
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