Do You Have Employees in Vietnam? Become Familiar With the New Labor Regulations Entering into Force from January 2021

Starting from 2021, the new Vietnamese Labor Code will officially take effect. Accordingly, there’s a number of notable provisions that employees and employers need to be aware of and within this article, we would like to summarize the main amendments for your reference.

1. Contract Name is Not Relevant for Determining Whether a Labor Relationship Exists

In order to avoid the use of different contract names to evade obligations, the new Labor Code stipulates that an agreement is considered an employment contract if it includes two main elements: i) salaried employment, and ii) management, administration and supervision of one party, even if the parties agree to sign the contract under a different name (e.g., cooperation agreement).

2. Electronic Labor Contracts will be Validly Recognized

From 2021, labor contracts entered into via electronic means in the form of data messages will be deemed as valid as written labor contracts, provided that the data message meets the conditions specified in the law on electronic transactions.

3. Seasonal Contracts/Contracts for Specific Jobs Under 12 Months will be Repealed, but Fixed-Term Labor Contracts May Have a Duration Between 0 and 36 Months

According to the new Labor Code, a seasonal labor contract or a contract of a specific job with a term of less than 12 months will not be considered as a type of labor contract. Accordingly, the parties are only allowed to enter into a fixed-term contract or an indefinite-term contract. However, the minimum term for a fixed-term contract has been lowered to 0 months, so that the parties will be free to stipulate a fixed term labor contract with a duration comprised between 0 and 36 months.

4. An Employer Cannot Force Employees to Work to Repay Debts or Benefits

To ensure employees’ rights in labor relations, employers are not allowed to request employees to work for the purposes of the repaying of any debts or benefits, according to the new Labor Code.

5. The Probation Period Can be Specified in an Employment Contract

Instead of signing a separate probationary contract, from 2021, employees and employers can agree on a probation period within the labor contract. In addition, the probation period will not be applied to any labor contract with a duration of less than 1 month.

6. New Policy for Internal Working Rules

According to the new law Labor Code, all employers must issue internal labor regulations, irrespective of the number of employees, whilst previously this was not required in cases of Employers having less than 10 employees. However, the threshold of 10 employees is still relevant under the new Labor Code in such cases where the Internal Working Rules shall be in writing. Moreover, three new compulsory elements shall be outlined within the internal labor regulations, namely (1) the measures for preventing and combating sexual harassment in the workplace; order and procedures for handling sexual harassment in the workplace; (2) Cases of temporarily transferring an employee to perform other duties compared to the duties stipulated within the labor contract; (3) Competent person to handle labor discipline procedures.

We would recommend all Employers operating in Vietnam to ensure the overall compliance of their Human Resource system with the new regulations in order to avoid the risk of potential disputes with employees as well as penalties from the local authorities. Our professionals in Vietnam are available to support you in respect to such services.