Labour Law

Vietnam’s labour legislation and its implementation in practice are well developed. In comparison to some other countries in the region, the position of employees is well protected. Vietnamese labour law is mandatory in a one-sided way: Employer and employee may not agree on terms that are less favourable to the employee than the conditions set out in labour legislation. They may, however, agree on terms that are more favourable.

Labour Contract

With the exception of short-term labour contracts (less than three months), labour contracts must be entered into in writing. It is recommended to use the standard labour contract issued by the Ministry of Labour, War Invalids and Social Affairs (“MOLISA”) as a template in order to avoid unnecessary explanations at its local departments, though this is not required by law. In principle, the labor contract must include certain major items including work to be performed, working hours and rest breaks, wages, location of job, duration of contract, conditions on occupation, safety and hygiene, and social insurance for the employee. In addition to the compulsory items, and depending on a particular industry, employers can include additional items or clauses such as those for the protection of intellectual property rights, confidentiality, the protection of trade secrets, and non-compete and non-solicitation undertakings. Any additional items must be in compliance with the labor laws and the Vietnamese laws in general.

The terms of labour contracts can be: indefinite, definite with a period between 12 and 36 months; or less than 12 months (for seasonal or contract work).

Termination of a labour contract must comply with provisions of the labour code. At will termination by employers is prohibited. The employer may only terminate a labour contract prior to its term under certain specific conditions as set out by the law. Depending on the ground for termination, the requirements for severance or job-loss allowance, notice periods and procedures differ.

Labour contracts may be terminated in cases of the employee’s failure to carry out tasks, breach of discipline or other misconduct, or serious injury or illness. Both employer and employee may unilaterally terminate a labour contract in certain circumstances specified in the labour code. However, regulations require a minimum notice period for each type of contract in which the minimum length is 30 days for definite labour contracts, 45 days for indefinite labour contracts and 3 days for seasonal or short term contract work.

Probation

The employer and the employee may reach agreement on a probationary (trial) period of work and the rights and obligations of the two parties within that period.

The duration of a probationary period depends on the nature and complexity of the work and must not exceed 60 days for jobs requiring professional or technical college qualification or above; 30 days for jobs requiring an intermediate-level qualification or for technicians or trained staff; and 6 days for any other work.

During the probationary period, the employer must pay a salary that corresponds to at least 85% of the ordinary salary for the job. Either party may terminate the employment relationship during the probationary period without providing advance notice and without paying compensation.

Minimum Wage

The laws provide for two categories of minimum wage: general minimum wage and regional minimum wage.

Contributions to compulsory social insurance are calculated on the basis of the salary stated in the labour contract. However, if the salary exceeds an amount above 20 times of general minimum wage, the basis of calculating the contributions is an amount appropriate to that wage. Currently, the general minimum wage is VND1,210,000 per month (approximately USD55 per month). As from 1 July 2017, the general minimum wage shall be VND1,300,000 per month (approximately USD60 per month).

The regional minimum wage is the minimum monthly salary to which an employee is entitled. Based on the level of development, the government divides the whole country into 4 regions (regions I, II, III, IV). The regional minimum wage depends on the place of employment.

Foreigner Employment

The employment of an expatriate by an enterprise is allowed but generally limited to a managerial position or to a position requiring a high level of expertise that Vietnamese workers are not yet able to satisfy.

Foreign employees, with definite exceptions, are required to obtain work permits when they work in Vietnam. Work permits are issued by the local Department of Labour, Invalid and Social Affairs (“DOLISA”) where the foreign employee is working. They are issued for a maximum period of 24 months and may be renewed if no qualified Vietnamese national has been found to replace the foreigner. A work permit is tied to the specific employer who applied for the employee’s work permit, and the foreigner may legally work only for that employer.

Foreign employees who work without work permits shall be forced to exit or be expelled from Vietnam. Employers employing foreign employees without work permits are subject to an administrative fine.

Annually, an employer is responsible to determine its need to employ foreigners for each working position for which Vietnamese workers are unable to satisfy the requirements, and report and explain the same to the chairman of the People’s Committee of the province or city in the locality where the employer has its head office. The chairman of the provincial people’s committee shall provide written consent to each employer regarding employment of a foreigner for each working position.

Related Chapters

Introduction to Vietnam

Culture and religion in Vietnam

Economy of Vietnam

The Government

Judiciary

Legal System

Regulatory Framework

Banking & Finance

Capital Markets

Land & Housing

Taxes

Intellectual Property

Selected Sector Regulations

Dispute Resolution



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