Highlights of the 2019 Labor Code

From the effective date of the 2019 Labor Code (i.e. January 01, 2021), any contents of signed labor contracts, collective labor agreements and other legal agreements which are not contrary to regulations of, or grant the employee benefits more favorable than the ones provided by, the 2019 Labor Code remain in full force and effect, unless otherwise agreed to by the parties concerning any amendment to comply with and implement the 2019 Labor Code.
New terminology
a. Worker without a labor relationship means a person who does not work on the basis of a labor contract.
b. Labor discrimination means any distinction, exclusion or preference made on the basis of race, color, national extraction or social origin, nationality, gender, age, pregnancy status, marital status, religion, belief, political opinion, disability, family responsibilities, HIV infection, or for the reason of establishing, joining and participating in the activities of trade unions or organizations of employees at enterprises, which affects the equality of opportunity in employment or occupation. Such distinction, exclusion or preference based on the inherent requirements of a particular job, or acts of maintaining and protecting employment for vulnerable workers, shall not be deemed to be discrimination.
c. Sexual harassment at the workplace means any sexual behavior of any person towards another person at the workplace without its being desired or accepted by that person. “Workplace” is any place where the employee actually works as agreed upon or assigned by the employer.
Probation
a. Parties can include the probation clauses in a labor contract or enter a separate probation contract.
At the end of the probationary period:
If having probation clauses included in a labor contract | If entering a separate probation contract | |
Satisfying probationary requirements | Continuing to perform under the signed labor contract. | Signing a new labor contract. |
Not satisfying probationary requirements | The signed labor contract is terminated. | The signed probationary contract is terminated. |
b. Employees working under labor contracts having a term of less than 01 month are not subjected to probation.
c. A probationary period of up to 180 days is applied to enterprise managers as prescribed by the Law on Enterprises and the Law on management and utilization of State capital invested in the enterprise’s manufacturing and business activities.
Labor Contracts
a. Regardless of the name given to the contract agreed to by the parties, if its contents relate to a paid job, salaries and management, administration and supervision of one party, it shall be considered as a labor contract.
b. A labor contract established via electronic means in the form of data messages in accordance with the law on electronic transactions is valid as a written labor contract.
c. The parties may enter into a verbal labor contract for jobs with a duration of less than 01 month, except in the 03 following cases:
- Entering into a labor contract with a representative of a group of employees who are at least 18 years old or more for seasonal jobs or specific jobs with a term of less than 12 months;
- Entering into a labor contract with a person under 15 years old;
- Entering into a labor contract with a domestic employee.
d. There is no longer a recognized distinction between labor contracts for “seasonal jobs or specific jobs with a definite term of less than 12 months”. There are only 02 types of labor contracts, comprising:
- Definite-term labor contracts with a duration not exceeding 36 months; and
- Indefinite-term labor contracts.
e. After the definite-term labor contract expires but the employee continues working for the employer, during the period of negotiations for a new labor contract which is a maximum of 30 days from the expiry date of the signed contract labor, the rights and obligations and interests of both parties shall be complied with under the expired labor contract.
f. An annex is not allowed to change a labor contract’s duration.
g. A definite-term labor contract may be entered into with an elderly employee several times.
Termination of Labor Contracts
a. There are 03 new cases where the termination of a labor contract is recognized:
- A foreign employee working in Vietnam is expelled under a valid and effective judgment or decision of the Court or competent State agencies.
- The work permit of a foreign employee working in Vietnam expires.
- In case of having probation clauses included in a labor contract: The employee does not satisfy the probationary requirements or either party cancels the probationary agreement.
b. A labor contract will not be terminated when the employee fully meets the requirements concerning the time of payment of social insurance premiums and the age of retirement.
Employees unilaterally terminating labor contracts
a. An employee can unilaterally terminate the labor contract with advance notice with no cause.
b. Period for giving advance notice:
At least 45 days | Indefinite-term labor contracts. |
At least 30 days | Definite-term labor contracts with a term of from a full 12 months to 36 months. |
At least 03 working days | Definite-term labor contracts with a term of less than 12 months. |
c. An employee may unilaterally terminate the labor contract without advance notice in the either of following cases:
- He/she is not assigned to the job or workplace or is not provided with the working conditions as agreed to;
- He/she is not paid in full or on time;
- He/she is maltreated, beaten or verbally and physically humiliated with effects on his/her health, dignity and honor; he/she is subjected to forced labor;
- He/she is sexually harassed at the workplace;
- A female employee who is pregnant may take leave with a certificate of a competent health treatment and examination establishment which states that continued work will adversely affect her pregnancy;
- He/she reaches retirement age;
- He/she is provided by the employer with false information before entering into the labor contract, which affects the performance of the labor contract.
Employers unilaterally terminating labor contracts
a. There are 03 new cases that are recognized where an employer may unilaterally terminate a labor contract:
- The employee reaches retirement age;
- The employee is absent from his/her job without permission for 05 consecutive working days or more without a plausible reason;
- The employee provides the employer with false information before entering into the labor contract, which affects the performance of the labor contract.
b. Period for giving advance notice:
At least 45 days | Indefinite-term labor contracts. |
At least 30 days | Definite-term labor contracts with a term of from a full 12 months to 36 months. |
At least 03 working days | Definite-term labor contracts with a term of less than 12 months;
or The employee is sick or has an accident and remains unable to work after having received treatment for 12 consecutive months, when he/she is working under an indefinite-term labor contract; or for 06 consecutive months, when he/she is working under a definite-term labor contract with a term of from a full 12 months to 36 months; or more than half the term of the labor contract, when he/she is working under a definite-term labor contract with a term of less than 12 months. |
No advance notice is required | The employee is absent from the workplace after the period of suspension of the labor contracts expires; or
The employee is absent from his/her job without permission for 05 consecutive working days or more without a plausible reason. |
c. The notice of termination of a labor contract must be made in writing.
d. If the employer illegally unilaterally terminates a labor contract but then reinstates the employee, the employee shall reimburse the employer for any received severance allowances or job-loss allowances.
e. A labor utilization plan must be announced publicly to the employees within 15 days from the date of adoption (if creating a labor utilization plan is required when laying off employees).
Salaries, bonuses
a. The employer may proactively establish salary scales, salary tables and labor norms without oversight by the State.
b. The employee may authorize others to receive his/her salary.
c. Salaries in labor contracts and paid to employees must be stated in Vietnamese Dong, except for foreign employees working in Vietnam whose salaries may be in foreign currencies.
d. At the time of each salary payment, the employer must provide the employee with the payroll detailing his/her salary, overtime, night-shift salary, deducted amounts (if any) with the reason(s) for deduction.
e. If the employee has to suspend his/her work due to the following events, his/her salary shall be paid as agreed to by both parties provided that his/her salary for the first 14 days of work suspension must not be lower than the minimum salary stated by the Government:
- Due to power or water incidents rather than the fault of the employer;
- Due to natural calamity, fire, dangerous epidemic, enemy sabotage, relocation of the operation place upon request of a competent State agency;
- Due to economic reasons.
f. The employer must not restrict or interfere in the employee’s autonomy of spending his/her salary; not force the employees to spend their salary on the purchase of goods or services of the employer or other third parties designated by the employer.
g. The employer incurs all fees related to opening of employees’ bank accounts and transferring salaries to his/her personal bank accounts, if applicable.
h. Bonuses may be in the form of a sum of money or property or others.
Overtime work, public holidays, annual leave
a. The cap for monthly overtime hours is increased to 40 hours.
b. Working overtime up to 300 hours per year is allowed in the following cases:
- Producing and processing for export textiles, garments, leathers, footwear, electrical, electronic products; processing agricultural, forestry, salt-producing and aquatic products;
- Power generation and supply, telecommunications services, oil refining; water supply and drainage;
- Handling tasks requiring the workforce equipped with high-level professional and technical qualifications which the labor market cannot provide sufficiently and in a timely manner;
- Solving urgent work that cannot be delayed due to seasonality or short-term existence of raw materials or products, or solving problems arising due to unpredictable objective factors, consequences/damages caused by weather conditions, natural disasters, fire, enemy sabotage, power shortages, shortages of raw materials, and technical problems of production lines;
- Other cases prescribed by the Government.
c. National Day: 02 days-off (the second day of September of each calendar year and 01 day immediately preceding or after).
d. For every full 05 years of working for an employer, the employee will receive 01 additional day of annual leave.
Internal labor regulations, labor discipline and material responsibilities
a. The employers must prepare internal labor regulations regardless of the number of employees employed. The internal labor regulations must be made in writing if the employer employs 10 or more employees.
b. There are 03 new compulsory contents for internal labor regulations:
- Prevention and combating sexual harassment at the workplace; procedures for handling sexual harassment at the workplace;
- Temporary transfer of employees to jobs other than ones agreed to in the labor contract;
- Persons competent to handle violations of labor discipline.
c. Employers may impose discipline on employees who commit any violation regulated in internal labor regulations or labor contracts or labor laws.
d. There are 04 separate methods provided for handling violations of labor discipline:
- Reprimand.
- Suspension of the salary increase period for no more than 06 months.
- Demotion.
- Dismissal.
e. The employee committing any act of sexual harassment at the workplace prescribed in the employer’s internal labor regulations will be subject to dismissal.
f. The participation of a representative from the employees’ representative organization at the grassroots-level in the discipline process is required if the involved employee is its member.
g. The disciplinary record of an employee will be automatically written off/closed from his/her record if the employee does not commit the same violation or a different violation within the probationary period (i.e. 03 months from the date of being reprimanded, or 06 months from the date of being disciplined by suspending the salary increase period, or 03 years from the date of being demoted). This is changed from the former rule where committing a different violation did not prevent the record from being written off/closed.
h. Material responsibilities may be applied in accordance with the employers’ internal labor regulations.
i. After the expiry date of the period that the employer is not allowed to impose labor discipline on the employee, if the statute of limitations for labor discipline has remained valid but there is less than 60 days before expiry, it may be extended for another 60 days.
Retirement age of employees working under normal working conditions
a. The retirement age is increased to a full 62 years old for male employees, and a full 60 years old for female employees.
b. Road map for the gradual increase of the retirement age:
From January 01, 2021 | Male employees: a full 60 years and 03 months of age.
Female employees: a full 55 years and 04 months of age. |
Every following year | Male employees: the age increases by 03 months until reaching a full 62 years old in 2028.
Female employees: the age increases by 04 months until reaching a full 60 years old in 2035. |
Foreign employees working in Vietnam
The term of a work permit can be extended once for another 02 years.
Periodic dialogue at the workplace
a. At least once a year;
b. There are some new cases where conducting a dialogue is required:
- Creation of criteria for assessing job performance;
- The employer lays off the employees due to changes in structure, technology or economic reasons;
- Creation of a labor utilization plan;
- Creation of salary scales, salary tables and labor norms;
- Creation of bonus policies;
- Creation of internal working regulations;
- Suspension of the employee’s work.
The employees’ representative organizations at the grassroots level
a. Besides grassroots trade unions, employees can additionally establish other independent representative organizations which have the following differences:
Comparative criteria | Grassroots trade unions | Other representative organizations |
Establishment procedure | Establishment complies with the Law on Trade Unions and is recognized by the Labor Federation. | Establishment complies with the 2019 Labor Code and is registered with the competent agencies (the 2019 Labor Code does not specify the competent agencies). |
Operation constitution | Compliance with the Vietnam Trade Union Constitution. | Creation of an operation constitution of their own. |
Operation budgets | Utilization of trade union funds (paid by employers) and membership fees (paid by employees who are trade union members) in accordance with the law on trade unions. | Not specified. |
b. Grassroots trade unions and other representative organizations of the employees have equal rights and obligations in representing and protecting the lawful rights and legitimate interests of employees in labor relations.
If you have any questions or concerns about the labor regulations in Vietnam, our experienced labor and employment lawyers are always available at info@letranlaw.com.