Vietnam's Workforce Blueprint: Navigating Employment Law

Vietnam’s Workforce Blueprint: Navigating Employment Law

In the dynamic landscape of Vietnam’s workforce, a comprehensive understanding of employment law is not only beneficial but imperative. This legal insight aims to shed light on the intricacies of Vietnamese employment laws, providing invaluable insights for both employers and employees. By adhering to these regulations, businesses can foster a compliant and harmonious workplace environment, while employees can safeguard their rights and interests.

Historical Context

Vietnam’s commitment to upholding international labor standards is deeply rooted in its historical context. The nation’s dedication to the International Labor Organization (ILO) conventions underscores its proactive stance towards labor rights and standards. This commitment serves as the foundation upon which Vietnam’s contemporary employment laws are built, emphasizing fair treatment, equity, and the well-being of its workforce.

Vietnam’s journey towards progressive labor laws began with its independence. Post-liberation, the government recognized the necessity of comprehensive labor regulations. The adoption of the Labor Code in 1995 marked a significant milestone, aligning Vietnamese labor laws with international standards. Since then, Vietnam has consistently revised and updated its legal framework, exemplifying its commitment to maintaining a modern and equitable employment landscape.

Labor Contracts

Vietnam’s employment landscape encompasses various types of labor contracts, each designed to address specific employment scenarios. From definite and indefinite contracts to seasonal or specific job contracts, understanding the nuances of each category is of imperative importance.

An indefinite-term contract is an agreement between two parties where the duration and termination time are not specified. On the other hand, a definite-term contract is a mutual agreement wherein the parties establish a duration, typically not exceeding 36 months, and set a specific time for its conclusion. It’s important to note that a definite contract may be extended only once. Besides, there are also seasonal or specific job contracts cater to roles with predefined durations or duties, ensuring legal compliance in project-based employment.

Termination procedures, a critical aspect of employment law, dictate the circumstances under which contracts may be concluded. Both employers and employees must be aware of these conditions to navigate the termination process with transparency and legality.

Working Hours, Rest Periods, and Overtime

Efficiently managing working hours and rest periods is fundamental to maintaining a balanced and productive work environment.

The labor code dictates that regular working hours should not surpass eight hours per day or 48 hours per week. However, if an agreement is reached between the employer and employee, overtime can be extended to a maximum of 12 hours per day, 40 hours per month, and 200 hours per year.

In accordance with Resolution No. 17/2022/UBTVQH15, there is provision for employers and employees to mutually consent to overtime work exceeding 200 hours but not surpassing 300 hours annually. Nevertheless, certain exceptions apply:

  • Employees between the ages of 15 and under 18.
  • Employees with mild disabilities resulting in a work capacity reduction of at least 51%, or those with severe or extremely severe disabilities.
  • Employees engaged in arduous, hazardous, dangerous, or extremely demanding and hazardous tasks.
  • Female employees in their 7th month of pregnancy onwards (or 6th month onwards in highlands, remote areas, bordering regions, or islands).
  • Female employees nursing children under 12 months.

For employers permitted to assign overtime work up to 300 hours annually, they may extend monthly overtime hours from 40 to a maximum of 60, provided that both parties, employer, and employees, concur.

In specific industries like textile, clothing, footwear, and electronics, where seasonal surges in orders necessitate heightened workloads, a ceiling of 300 overtime hours has been established.
Furthermore, for employees engaged in strenuous or hazardous roles, employers bear the responsibility of imposing restrictions on their working hours to mitigate exposure to hazardous substances or chemicals, as per national technical regulations and pertinent laws. Employees are entitled to annual leave, the duration of which is contingent on their length of service. Recognizing the significance of rest and recuperation, these provisions aim to strike a harmonious balance between work and personal well-being.

If a worker surpasses the specified limits, this will initiate overtime, and appropriate compensation will be granted.

Prior consent from the employee is imperative if the employer intends to schedule overtime work, encompassing details regarding duration, location, and nature of the additional work.

Apart from exceeding predefined work hour thresholds, overtime pay may be activated and influenced by the timing and dates of employee engagement. Significant factors for overtime consideration include weekends, public holidays, and nighttime shifts, classified as the period between 22:00 and 6:00.

Salary and Benefits

The government does not directly oversee the specific salary arrangements made between employers and employees at individual companies. However, it is imperative for companies to adhere to the prescribed regulations concerning minimum wage standards.

Minimum wage regulations are established by the Vietnamese government, taking into account regional disparities and sector-specific considerations. This approach ensures that employees receive fair compensation relative to their geographic location and industry.

Vietnam maintains two categories of minimum wages.

The initial category, referred to as the standard minimum wage, stands at VND 1,490,000. This figure is employed in determining salaries for individuals working in state-owned entities and businesses. Additionally, it serves as the basis for calculating social contributions across all enterprises, with the highest allowable contribution set at 20 times the standard minimum wage.

The second type of minimum wage pertains to employees in non-state enterprises, and it varies according to specific zones designated by the government.

Performance and earnings-based bonuses serve as incentives for employees, reflecting the company’s financial performance and encouraging heightened morale and productivity. Throughout the year, companies may offer various types of bonuses to their staff.

In Vietnam, all salaries and bonuses are subject to Personal Income Tax (PIT).

Employees may be eligible for a range of allowances and both monetary and non-monetary benefits, strategically designed to retain valuable staff. According to Circular No. 92/2015/TT-BTC, some of these benefits are exempt from taxation. They include:

  • Payments covering housing rent, power, water, and related services, accounting for over 15 percent of the employee’s total taxable income.
  • Life insurance and optional insurance.
  • Payments for membership cards (without the user’s name) for exclusive clubs such as golf, tennis, etc.
  • Payments for membership cards (without the user’s name) for healthcare, entertainment, and similar services.
  • Telephone allowance.
  • Stationery allowance.
  • Uniform allowance in kind or in cash, not exceeding 5 million VND.
  • Lunch allowance, not exceeding 730,000 VND.
  • Funeral payments, not surpassing one month’s actual salary in the year.
  • Wedding payments, not exceeding one month’s actual salary in the year.
  • Transportation allowances.
  • Training allowances.
  • Employer support for fatal diseases or illnesses.
  • Round-trip flight tickets for foreign employees or Vietnamese employees working abroad to return to their home country once a year.
  • Tuition fees for children of foreign workers studying in Vietnam and children of Vietnamese workers working abroad studying overseas from kindergarten to high school.
  • Personal incomes received from associations and organizations if the employee receiving the grant is a member of these associations and organizations and the funding is derived from the State budget or managed in accordance with State regulations.
  • Payments made by the employer for the deployment and rotation of foreign workers to work in Vietnam in compliance with labor contract regulations, following the standard labor schedule as per international practices in certain industries like oil and gas and mining.

Occupational Health and Safety

A safe and secure workplace is a fundamental right of every employee, thus, employers bear the responsibility of ensuring occupational health and safety. Simultaneously, it delineates the rights of employees in matters pertaining to health and safety, creating a comprehensive framework for a secure work environment.

Vietnamese labor laws dictate that employers must provide a safe and healthy working environment, free from hazards that may endanger the well-being of employees. This encompasses a range of measures, including the provision of protective equipment, regular safety assessments, and the implementation of emergency protocols.

Employees, in turn, are granted the right to refuse work in conditions that pose an immediate threat to their health or safety. This empowerment fosters a culture of mutual respect and accountability, underscoring the importance of collaborative efforts in maintaining a secure workplace.

Labor Disciplines and Dismissals

Maintaining discipline and, when necessary, effecting dismissals are delicate processes that must be executed with precision and fairness.

As per Article 125 of the Vietnam Labour Code 2019, employers have the authority to implement dismissal as a disciplinary measure under specific circumstances. Consequently, employees may face dismissal if they engage in any of the following behaviors:

  • Committing acts such as theft, embezzlement, intentional harm, or illicit drug use within the workplace.
  • Revealing technological or business secrets.
  • Infringing upon the employer’s intellectual property rights.
  • Causing significant harm or posing a serious threat to the employer’s assets or interests.
  • Engaging in sexual harassment at the workplace, as defined by internal work regulations.
  • If subject to deferred wage increase or demotion for disciplinary reasons, reoffending before the period of labor discipline concludes.
  • Accumulating unexcused absences of 5 days within a 30-day period or 20 days within a 365-day period, starting from the first day of absence.

Nevertheless, it is essential for employers to adhere to specific principles, a defined sequence, and prescribed procedures when addressing labor discipline:

  • Establishing the worker’s culpability.
  • Ensuring the involvement of the worker’s representative organization at the grassroots level, of which the disciplined worker is a member.
  • Providing the opportunity for workers to be physically present and defend themselves. They also have the right to seek assistance from a lawyer or the worker’s representative organization. In cases where the worker is below 15 years old, their legal representative must be present.
  • Documenting any resolutions related to labor disciplinary regulations in writing.

In cases where dismissal becomes unavoidable, employers are obligated to follow due process. The process and protocol for employee dismissal are outlined in accordance with Article 22 of The Labor Code 2019 and Article 70 of The Decree No.145/2020/ND-CP:

Recording Violations and Gathering Evidence

Upon discovering that a worker has breached labor disciplinary regulations, the employer is required to create a written record and inform the Workers’ Representative Organization (WRO) at the grassroots level, or the legal representative in the case of an under-18 worker. If the violation is detected after the fact, the employer must collect evidence substantiating the worker’s misconduct.

Convening a Meeting for Addressing the Violation

Within the legally defined timeframe for handling breaches of labor disciplinary regulations, the employer will conduct a meeting to address the violation as follows:

The employer must provide notice of the meeting’s details, including date, time, and location, along with the full name of the offending worker and the nature of the violation, to all required participants at least 5 working days prior to the meeting. This ensures that participants have ample information about the meeting.

Upon receiving the employer’s notification, the necessary participants are expected to confirm their attendance. If any of the required participants are unable to attend at the specified time or place, the employer and worker will agree upon an alternative arrangement. In the event of a failure to reach an agreement, the employer will make the final decision regarding the time and location.

The employer will conduct the meeting to address the violation of labor disciplinary regulations at the scheduled time and place. If any required participant fails to confirm attendance or is absent, the employer will proceed with the meeting as scheduled.

In case of Unfair Dismissal

Employees, in the event of an alleged unfair dismissal, have recourse through legal channels. They may seek redress through labor dispute resolution mechanisms, thereby ensuring that their rights are protected and upheld.

When employees believe that the dismissal imposed by the employer is unjust and unlawful, they have several avenues to safeguard their interests:

First Option: Lodging a Complaint Regarding the Dismissal Decision

  • Initial Appeal. The employee may request the employer to revoke the dismissal decision.
  • Subsequent Appeal. If the initial complaint is not resolved satisfactorily or there is disagreement with the resolution, the employee can escalate the matter to the Chief Inspector of the Department of Labor – Invalids and Social Affairs, located at the employer’s headquarters.

Second Option: Mediation through a Labor Mediator

In cases of dismissal discipline disputes, the employee has the choice to opt for this method or not.

Third Option: Seeking Resolution through the Labor Arbitration Council

Fourth Option: Initiating Legal Proceedings in Court

The employee retains the right to directly approach the district-level People’s Court where the enterprise is based to address disputes related to labor discipline resulting in dismissal. If the business acknowledges an erroneous dismissal, prompt rectification is imperative. Should resolution remain unattainable, the enterprise must rescind the dismissal decision, issue an apology, and provide appropriate compensation to the affected workers.

Female Employees and Gender Equality

Vietnamese labor laws include provisions specifically tailored to safeguard the rights of female employees. These provisions encompass various aspects, including maternity leave entitlements, health protections, and measures to combat gender-based discrimination.

To support female employees, those with children under 12 months old are entitled to a one-hour break each workday for breastfeeding.

Additionally, female employees receive a 30-minute break during their menstrual period. The specific number of days for this time off can be mutually agreed upon, but it must be a minimum of three working days per month.

In instances where female employees are unable to take these breaks and choose to continue working, the employer must provide extra compensation for this additional work, distinct from overtime pay.

Vietnam’s commitment to gender equality extends beyond legal mandates. Initiatives and programs aimed at promoting diversity and inclusivity within the workplace exemplify the nation’s dedication to creating an environment where all employees, regardless of gender, have equal opportunities for growth and advancement.

Dispute Resolution

Inevitably, labor disputes may arise, necessitating efficient mechanisms for resolution. This section explores the avenues available, including mediation, arbitration, and court proceedings. Additionally, it sheds light on the pivotal role played by labor unions in the dispute resolution process, facilitating fair and just outcomes.

Dispute resolution mechanisms serve as vital tools in maintaining workplace harmony. Mediation offers a collaborative approach, allowing parties to work towards a mutually acceptable resolution with the assistance of a neutral third party.

Arbitration provides a structured forum for resolving disputes, guided by an impartial arbitrator’s decision. This process offers a formal and legally binding framework for reaching a resolution.
In instances where alternative methods prove insufficient, court proceedings offer a final avenue for dispute resolution. Legal proceedings ensure that matters are adjudicated in accordance with established laws and principles.

Labor unions, as representatives of employees, play a significant role in advocating for their rights and interests. Their involvement in dispute resolution processes adds an additional layer of oversight and ensures that employees receive fair treatment.

Staying abreast of evolving labor regulations is paramount for both employers and employees in Vietnam. By adhering to the guidelines outlined in this legal insight, businesses can ensure compliance, while employees can safeguard their rights and interests. Together, we contribute to a thriving and harmonious workforce, propelling Vietnam towards a future of prosperity and equitable opportunities. If you have any inquiries or uncertainties regarding this matter, our team of skilled corporate attorneys can be reached at Feel free to contact us at any time for expert guidance and assistance.