Vietnam: New Labour Code 2019 Comes into Effect On 1 January 2021

Effective from 1 January 2021, the Vietnam Labour Code 2019 will officially replace Vietnam Labour Code 2012.

The changes will directly affect the obligations and rights of both employers and employees, so it is crucial for any business owner with operations in Vietnam to understand how it impacts them.

Key highlights and changes

Forms of Employment Contract

• • Employment contracts in the form of electronic data following electronic transaction laws will be recognized the same as physical contracts.
  • Employers and employees can only conclude an oral contract with terms of less than 1 month. Exceptions:
    • Signing an employment contract with a group
    • The employee is under 15 years old or a helper

Types of Employment Contract.

There are only two types of contracts:

• Indefinite term labor contracts
• Definite term labor contracts of 36 months or less

*Seasonal or specific jobs with a duration of under 12-months will be included indefinite-term labor contract.

Prohibited Acts

• • Requesting an employee to make a cash or property as security for their employment contract.

• • Forcing an employee to keep performing the employment contract to pay the debt owed to the employer.

Annex to Employment Contract

• • • Any addition to the employment contract must not change the duration of the contract.

Probation

• • Both parties can now sign a separate probation agreement or include a probation clause into the employment contract.
  • The probationary period for executive positions of enterprises can now reach up to 180 days.
  • Probation is not permitted if the employee works under an employment contract with a duration of less than 1 month.

Work Permit

• • • Foreigners who marry a Vietnamese citizen and reside in Vietnam will be exempt from a work permit.

Unilateral Termination of Employment Contract

• • Labor contracts can be unilaterally terminated by an employer if:

• • • The employee reaches retirement age
    • The employee provides falsified information during the conclusion of the employment contract
    • The employee is absent from work for 5 consecutive working days without plausible reason
  • Employees can terminate employment contracts without cause but must serve the required advance notice period.

Payment Responsibilities Upon Termination  

• • Employers are now required to pay termination benefits of 14 working days (previously 7 working days).
  • Employers are responsible for providing copies of documents relating to the employee’s working period upon request.

Salary

• • If salaries are paid by bank transfer, the employer must pay the account opening and transfer costs.
  • If the employee cannot receive their salary directly, the employer may pay it through a person authorized legally by the employee.
  • Employers must not restrict or interfere with the employee’s spending of their salaries.
  • Employers must set up a salary scheme/scale and discuss it with employee representative organizations (if any). However, enterprises are not required to send the scheme/scale to the district level labor department.

Overtime

• • The monthly overtime cap has been increased from 30 hours to 40 hours.

Public Holidays

• • Employees will receive 2 days off for National Independence Day instead of 1.

Retirement Age

• • The retirement age for men will gradually increase to 62 and 60 for women. 3 months will be added every year to the current retirement age for men and 4 months for women until the new retirement age is reached. For 2021 the retirement age for men will be 60 years and 3 months, while it will be 55 years and 4 months for women.

Labor Discipline

• • Employers with fewer than 10 employees are now required to have internal labor regulations.

• • Sexual harassment must be included in the internal labor regulations and is now defined as a legal ground for dismissal.