Vietnam Labour and Employment Comparative Guide

1 Legal framework

1.1 Are there statutory sources of labour and employment law?

The primary statutory source that governs labour and employment is the 2019 Labour Code.

Other domestic sources include:

• the 2013 Law on Employment;
• the 2014 Law on Social Insurance;
• the 2015 Law on Occupational Safety and Health;
• the 2014 Law on Vocational Education; and
• the 2012 Law on Trade Unions.

In addition, the governmental decrees and documents issued by the Ministry of Labour – Invalids and Social Affairs governing labour and employment are as follows:

• Decree 145/2020/ND-CP dated 14 December 2020 detailing and guiding the implementation of several articles of the Labour Code regarding working conditions and industrial relations;
• Decree 152/2020/ND-CP dated 30 December 2020 on foreign workers in Vietnam and recruitment and management of Vietnamese workers working for foreign organisations and individuals in Vietnam;
• Decree 38/2022/ND-CP dated 12 June 2022 prescribing region-based minimum salary levels applicable to employees working under labour contracts;
• Decree 135/2020/ND-CP dated 18 November 2020 prescribing retirement ages;
• Decree 12/2022/ND-CP dated 17 January 2022 providing penalties for administrative violations in the fields of labour, social insurance and overseas workforce supply under contract;
• Ministry of Labour – Invalids and Social Affairs Circular 10/2020/TT-BLDTBXH dated 12 November 2020 detailing and guiding the implementation of several articles of the Labour Code regarding the contents of a labour contract, collective bargaining councils and occupations and jobs that are harmful to reproduction and parenting functions; and
• Ministry of Labour – Invalids and Social Affairs Circular 09/2020/TT-BLDTBXH dated 12 November 2020 detailing and guiding the implementation of several articles of the Labour Code regarding minor workers.

The 2019 Labour Code applies to:

• employees, trainees, apprentices and persons working without industrial relations;
• employers;
• foreign workers in Vietnam; and
• other agencies, organisations and individuals directly involved in industrial relations.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

The 2019 Labour Code governs labour contracts and collective bargaining agreements. A collective bargaining agreement is reached through collective bargaining, established in writing and signed by the parties.

In addition to the statutory sources, collective bargaining agreements apply to the employer and all employees of an enterprise, with the following aims:

• the harmonisation of interests;
• the prevention of conflicts in employment relationships; and
• the establishment of a legal basis for the resolution of labour disputes.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

A labour contract is required for all employment relationships and may be entered into in writing or verbally. A verbal labour contract is allowed for contracts with a term of under one month, with the following exceptions:

• for seasonal work or specific jobs with a duration of under 12 months, in which case a group of employees aged 18 or older may authorise the representative of the group to conclude the employment contract;
• when employing a person under 15, in which case a written contract with the employee and his or her legal representative is required; and
• for domestic workers.

Under the 2019 Labour Code, there are two categories of labour contract terms: indefinite term and fixed term. Within 30 days of the expiry of a fixed-term labour contract, the two parties may sign a new labour contract; otherwise, the fixed-term labour contract will become an indefinite-term labour contract.

A labour contract must contain the following information:

• the name and address of the employer and the full name and title of the person entering into the contract on the employer’s side;
• the employee’s full name, date of birth, gender, place of residence and serial number of his or her citizen identity card, people’s identity card or passport;
• the job and the workplace;
• the term of the contract;
• the salary, the form and time of salary payment, salary-based allowances and any other additional payments;
• the regimes for salary-grade promotions and salary raises;
• working time and rest time;
• labour safety equipment for the employee;
• social insurance, health insurance and unemployment insurance; and
• training, further training and improvement of occupational qualifications and skills.

In principle, all of the above terms must be included in the labour contract. However, there are also some implied clauses that the parties are required to observe to even if they are not explicitly included in the labour contract. For instance, the employment contract must not be contrary to the law, the collective bargaining agreement or social ethics.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

The employee is entitled to family leave on full pay in the event of:

• the employee’s marriage;
• the marriage of his or her offspring or adopted child; or
• the death of his or her:

• blood parent or adoptive parent;
• blood parent-in-law or adoptive parent-in-law;
• spouse; or
• offspring or adopted child.

Employees are entitled to one day’s unpaid leave in the event of:

• the death of their paternal or maternal grandparent or sibling; or
• the marriage of his or her parent or sibling.

2.2 How long does it last and what benefits are given during this time?

The duration of family leave on full pay is as follows:

• The employee’s marriage: three days.
• The marriage of his or her offspring or adopted child: one day.
• The death of his or her blood parent or adoptive parent, blood parent-in-law or adoptive parent-in-law, spouse, offspring or adopted child: three days.
• Unpaid family leave: one day.

2.3 Are trade unions recognised and what rights do they have?

Employees have the right to establish, join and participate in trade union activities in accordance with the 2012 Law on Trade Unions.

Trade unions have the following rights:

• representation and protection of the rights and legitimate interests of employees;
• participation in state management and socio-economic management;
• submission of draft laws, ordinances, policy making and legislative proposals;
• participation in sessions, meetings and congresses;
• participation in inspection, examination and supervision of activities of agencies, organisations and enterprises;
• advocacy, mobilisation and education for employees; and
• development of trade union members and grassroots-level trade unions.

2.4 How are data protection rules applied in the workforce and how does this affect employees’ privacy rights?

The 2019 Labour Code does not specify personal data protection rules in the workplace. Currently, there is no statutory source specifically governing personal data protection. The government is drafting a Decree on Personal Data Protection; once enacted, this draft will be the first comprehensive legislation in Vietnam on personal data.

The draft decree is comprehensive in its scope of application, aimed at applying to all types of activities relating to personal data in Vietnam. Therefore, the collection and processing of personal data in the workplace will fall within the scope of application of the draft decree. The draft decree outlines principles for processing personal data and imposes penalties on the illegal collection and processing of personal data.

2.5 Are contingent worker arrangements specifically regulated?

In Vietnam, there is no specific employment contract for contingent workers. The recently enacted Labour Code 2019 has eliminated the previous contract category of ‘seasonal/specific job’ employees, which had previously applied to employees with contract terms of under 12 months.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

There is no national minimum salary that must be adhered to. Minimum salary levels are determined by region and set monthly and hourly. As of June 2022, only a monthly minimum salary is in place. From 1 July 2022, the government will provide an hourly minimum salary in addition to the minimum monthly salary.

There are four regions with a corresponding minimum salary:

• Region 1: VND 4.8 million per month/VND 22,500 per hour.
• Region 2: VND 4.16 million per month/VND 20,000 per hour.
• Region 3: VND 3.64 million per month/VND 17,500 per hour.
• Region 4: VND 3.25 million per month/VND 15,600 per hour.

Details on the localities of each region may be found in the appendix attached to Decree 38/2022/ND-CP dated 12 June 2022, prescribing region-based minimum salary levels applicable to employees working under a labour contract.

The region-based minimum salary varies from time to time, based on:

• the minimum living conditions of employees and their families;
• the relationship between minimum salary and market salary levels;
• the consumer price index and economic growth rate;
• the labour supply-demand relationship;
• employment and unemployment;
• labour productivity; and
• the payment ability of enterprises.

3.2 Is there an entitlement to payment for overtime?

In principle, the average working time must not exceed eight hours per day and 48 hours per week.

Employees are entitled to work overtime for no more than 50% of their regular daily working hours. The average overtime working hours must not exceed 12 hours per day, 40 hours per month, and 200 hours per year.

Employees are entitled to payment for overtime work based on the salary paid for their current job as follows:

• at least equal to 150% on regular workdays;
• at least equal to 200% on weekends; and
• at least equal to 300% on public holidays and paid leave days.

Employees who perform night work will be paid an additional amount equal to 30% of their salary, calculated based on the salary unit or compensation paid for during regular workdays. Employees who perform overtime work at night shall be paid an additional amount equal to 20% of their salary, calculated based on the salary unit or compensation for a job performed during the daytime of regular workdays or on weekends or public holidays.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

Employees who have been working for their employer for the full 12 months are entitled to fully paid annual leave. For employees who have worked for their employer for less than 12 months, the number of annual leave days shall be calculated in proportion to the number of months worked.

The minimum annual leave that employees are entitled to receive is:

• 12 days for employees working in normal conditions;
• 14 days for juvenile employees and employees with disabilities; and
• 16 days for persons doing heavy, hazardous or dangerous jobs.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

To obtain sick leave, the certification of a competent health establishment is required for the following situations:

• for employees who must take leave due to sickness other than labour accidents; and
• for employees who must take leave to care for sick children under seven years.

The period of sick leave in a year for employees shall be counted in working days, excluding public holidays, New Year holidays and weekends. In particular:

• the maximum sick leave is 60 days and the minimum is 30 days for employees working under normal conditions; and
• the maximum sick leave is 70 days and the minimum is 40 days for:

• ·  employees doing heavy, hazardous or dangerous occupations or jobs that are extremely heavy or unsafe;
• employees in dangerous careers or positions on a list issued by the Ministry of Labour, War Invalids and Social Affairs; or
• employees working in areas with a region-based allowance coefficient of 0.7 or higher.

Employees are entitled to sick leave with a monthly allowance equal to 75% of their monthly salary preceding their leave on which social insurance premiums are based.

3.5 Is there a statutory retirement age? If so, what is it?

The retirement age for employees working under normal conditions will be adjusted according to a roadmap until it reaches 62 for male workers by 2028 and 60 for female workers by 2035.

From 2021, the retirement age of employees working under normal working conditions will be a full 60 years and three months for male workers, and a full 55 years and four months for female workers; subsequently there is an annual increase by three months for male workers and four months for female workers.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

‘Labour discrimination’ covers acts which affect equality in employment or career opportunities and involve the practice of discrimination, exclusion or preference based on:

• race, skin colour, national origin or social origin, nationality, gender, age, pregnancy status, marital status, religion, belief, political views, physical disability or family responsibility;
• HIV infection status; or
• the act of establishing, joining or operating a trade union organisation or an employees’ organisation at an enterprise.

4.2 Are there specified groups or classifications entitled to protection?

Specified groups or classifications entitled to protection include:

• female employees;
• people with disabilities;
• the elderly; and
• minors.

4.3 What protections are employed against discrimination in the workforce?

Employees are entitled to file a discrimination claim with the employer, the competent authority for labour mediation or the court.

In addition, employees may file a complaint with the competent authority regarding illegal actions of the employer regarding the discrimination. An employer may be subject to administrative penalties as follows:

• a fine of between VND 3 million and VND5 million for discriminating between temporary workers and its regular workers regarding working conditions;
• a fine of between VND 5 million and VND 10 million for discriminating against workers or between workers doing jobs of equal value based on sex; and
• a fine of between VND 15 million and VND 30 million for discrimination against workers in terms of salary, working time or other rights and obligations in industrial relations when the bias is attributable to the employee joining or operating a workers’ representative organisation.

4.4 How is a discrimination claim processed?

A discrimination claim may be filed with the employer first and be settled through mediation before being brought to the labour arbitration councils or court for settlement.

4.5 What remedies are available?

Employees may:

• make a claim for loss or damage that they have suffered due to discrimination; and
• request that the employer apologise for the discrimination.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

In the case of disputes between an employer and employee, the employee may:

• file a complaint with the employer or the competent authority for labour mediation;
• initiate a lawsuit against an employer that commits a civil or criminal violation; or
• unilaterally terminate the labour contract without prior notice if he or she has been:

• ill treated, beaten or verbally or physically humiliated by the employer in a way that has affected his or her health, dignity or honour;
• subject to forced labour; or
• sexually harassed in the workplace.

In the case of disputes between employees:

• the employee who committed the act(s) may be subject to corresponding administrative fines; and
• an employee may initiate a lawsuit against an employee committing acts in violation of the civil or criminal law.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

The 2019 Labour Code requires employees to comply with the notice period when they wish to terminate the labour contract. The employer may not force the employee to provide a valid reason for termination because the employee is not obligated to do so.

An employer is subject to the requirements set out in the 2019 Labour Code when it wishes to terminate the labour contract with the employee. The employer may unilaterally terminate a labour contract based on any of the following grounds listed in the 2019 Labour Code:

• The employee has frequently failed to accomplish the job as stated in the contract, based on the criteria for evaluating job performance set out in the employer’s regulations;
• The employee has been sick or suffered an accident and remains unable to work after receiving treatment for:

• 12 consecutive months if he or she is employed under an indefinite-term labour contract;
• six consecutive months if he or she is employed under a labour contract with a term of between 12 months and 36 months; or
• for more than half of the time of the agreement if he or she is employed under a labour contract with a term of under 12 months;
• There has been a natural disaster, fire, dangerous epidemic or enemy sabotage, the relocation of the place of production or business, or the downsizing of production and business activities as required by a competent state agency, and the employer – having taken every possible remedial measure – must cut jobs as a result;
• The employee remains absent from the workplace after the time limit specified;
• The employee reaches the retirement age as prescribed, unless otherwise agreed;
• The employee has given up working at his or her discretion without a plausible reason; or
• The employee provides untruthful information as prescribed when entering into the contract, affecting the ongoing work.

5.2 Is a minimum notice period required?

The employee may unilaterally terminate the labour contract as long as he or she notifies such termination to the employer:

• at least 45 days in advance if he or she works under an indefinite-term labour contract;
• at least 30 days in advance if he or she works under a labour contract with a term of between 12 months and 36 months; or
• at least three working days in advance if he or she works under a labour contract with a term of under 12 months.

The period for which the employer should notify the employee of the termination of a labour contract is similar to the above notice period, except where the employee is not present at work without valid reason for at least five consecutive working days, which allows the employer to terminate the labour contract without prior notice.

5.3 What rights do employees have when arguing unfair dismissal?

In case of unfair dismissal, the employee shall be entitled to:

• the salary and social insurance, health insurance and unemployment insurance premiums for the days the employee did not work, plus an amount at least equal to two months’ salary stated in the labour contract;
• reinstatement to work under the signed labour contract;
• a severance allowance should the employee not wish to return to work; and
• additional compensation of two months’ salary if the employer does not wish to reinstate the employee and the employee agrees.

5.4 What rights, if any, are there to statutory severance pay?

Where the employer has paid unemployment insurance for the employee, the unemployment benefits will be paid by the Social Insurance Fund, not the employer. To benefit from this payment, the following conditions must be satisfied:

• The labour contract has been terminated legally;
• The employee has paid unemployment insurance premiums for at least 12 full months in the 24 months before termination of the labour contract;
• The employee has submitted a dossier for receipt of an unemployment allowance to an employment service centre within three months of the date of termination of the labour contract; and
• The employee has not yet found a new job within 15 days of the date of submission of the dossier for receipt of unemployment allowance.

If the employer has not paid unemployment insurance for the employee, it must pay severance pay to the employee if:

• the termination of the employment contract is legal; and
• the employee has worked for the employer continuously for 12 months or more.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

The employment-related complaint procedures are as follows:

• The employee submits his or her complaint to the employer.
• If the complainant does not agree with the first complaint settlement decision or if the time to resolve the complaint exceeds the time limit specified and the complaint has not yet been settled, the complainant may have the right to initiate a lawsuit in a competent court or submit a second complaint to the chief inspector of the Department of Labour, War Invalids and Social Affairs at the place where the employer’s headquarters are located.

The complaint may be made in written or verbal form.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

Except for certain labour disputes (eg, those relating to wrongful termination, compensation, severance allowance and social insurance), individual labour disputes must first progress through conciliation procedures conducted by labour conciliators before being brought to labour arbitration councils or the courts for settlement.

The disputing parties may unanimously request that a labour conciliation council settle the dispute. Within seven working days of receiving a request for labour dispute settlement, a labour conciliation board must be established to settle the dispute. Within 30 days of its establishment, the labour conciliation board must issue a decision on dispute settlement and send it to the disputing parties.

If the time limit expires but the labour conciliation board has not yet been established or has not yet issued a decision on dispute settlement, the disputing parties may request dispute settlement by a court.

If either party fails to implement the dispute settlement decision issued by the labour conciliation board, the parties may request dispute settlement by a court.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The Labour Code provides favourable terms to protect employees in terms of labour relations. Employees are entitled to unilaterally terminate the labour contract without a valid reason as long as they comply with the notice period. However, employers are not entitled to unilaterally terminate the labour contract without a valid reason. Even if the employer has a valid reason, it must follow a very strict procedure. Failure to comply with the substantive and procedural laws under the Labour Code may cause a significant amount of damage to the employer. Therefore, in the long run, it is likely that the labour law may balance the interests of employers and employees more equally by allowing employers to terminate a labour contract without a valid reason as long as they fully compensate the employee in an amount sufficient to allow him or her to improve his or her qualifications while seeking a new job.

The fact that either party may cancel a signed probation contract or a labour contract without prior notice and compensation during the probation period to some extent poses a risk to new employees whose previous labour contract was recently terminated. The termination of probation without a valid reason presents a risk of loss of income for the new employee during his or her search for another job. As such, the labour laws should provide that if employers do not wish to enter into an official labour contract with a new employee, they should also be required to provide the employee with a valid reason.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

To avoid non-compliance – which may result in compensation for employees and, in some cases, affect their reputation – employers should be fully aware of the terms of all labour laws on substantive and procedural issues. Failure to comply with the labour laws – even through a minor misstep – can present significant risks for the employer. Hence, employers should retain an experienced lawyer to consult on both the substantive and procedural provisions of the labour laws.

Given that the time limits and procedures of the labour laws are very strict, employees in labour disputes should engage an attorney to protect their legitimate interests and appropriately exercise their rights. Failure to comply with the time limits and procedures under the labour laws may cause the employee to lose his or her right to sue the employer.