Must-know things for foreign investors about employment law in Vietnam

Recruitment and compliance with labour terms in Vietnam are huge matters of concern for foreign investors. How to properly and fully comply with the provisions of employment law in Vietnam? What should be paid attention when recruiting labourers in Vietnam?

For labour contracts

Employment law in Vietnam provide that labourers have a probationary period of 1 to 2 months. If a labourer is eligible, he/she will enter into a labour contract with the employer.

The labour contract should clearly state the principal terms of the employment relationship, including: job position, scope of work, work hours and leaves, labour contract term, salary, social insurance particulars and other issues. The employer has the right to sign 02 definite-term labour contracts with the employee, where the contract term may not exceed 36 months. In case the contract is maintained beyond the said time limit, the employee may enter into an indefinite-term contract.

The employing company shall declare its employment to the Division/Department of Labour, Invalids and Social Affairs within 30 days from the date of operation commencement.

For a company using more than 10 employees, a Trade Union is usually required to protect the interests of both employees and the employer. The company shall also register its internal labour regulations, disciplines and payroll at the District Administration authority in order to comply with Vietnam's labour regulations. For those companies with less than 10 employees, it is not required to register the internal labour regulations, but they may select to issue internal labour regulations in writing.

The employing company shall specify benefits entitled to the employees, for examples, gasoline cost, parking fee, telephone charge allowances, and meals. As well, it shall carry out Social Insurance registration for both employees and employer, in accordance with applicable requirements and restrictions stipulated by the government.

Requirements in respect to probationary contract signing

The employee should provide the company with necessary documents when signing a probationary contract.

It is required by laws that a job has only one probationary period not exceeding 60 days, and the probationary salary must be at least 85% of the official salary for the questioned job.

Termination of contract based on the employment law in Vietnam

The labour contract may be terminated under one of the following cases:

• The labour contract expires and either party decides not to renew the contract        
• The specific jobs stated in the labour contract have been completed        
• Two parties actively agree upon the termination of contract        
• The employee is sentenced to prison, banned from work by the Court, died or declared missing by the Court.        

The employee may unilaterally terminate the labour contract by giving a written notice to the employer, provided that the following requirements are observed:

• The notice must be served at least 45 days in advance for an indefinite-term contract 
• The notice must be served at least 30 days in advance for a definite-term contract
• The notice must be served at least 3 days in advance for a seasonal labour contract

The content of this article is based on the current provisions of employment law in Vietnam. There are a number of matters for enterprises to take into account as pursuant to the Labour Code 2019, which took effect on January 01, 2021. Those enterprises using foreign labourers are allowed to sign labour contracts with a term of two years at maximum. Besides, in response to Covid-19 aftermath, the government issued a resolution to support employers. Enterprises affected by the pandemic, which had paid at least 50% of wages on ceasing work during the period from April to June 2020, would be entitled to unsecured loans from the Vietnam Bank for Social Policies at interest rate of 0% for the maximum term of 12 months to pay out the outstanding salary (the loan principal amount is up to 50% of the regional minimum wage applicable to individual employee as counted for the actual paid period yet not exceeding 3 months, and the payment shall be directly disbursed to the ceased employees) (pursuant to Clause 3, Article 98 of the Labour Code).

In conclusion, if you are still unsure about employment law in Vietnam, you can ask us for our help! Viettonkin is here to assist you and your business anytime.