What are the differences between employment contract and service contract in Vietnam? What are the cases where service contracts can be unilaterally terminated?
What are the regulations on employment contract and service contract in Vietnam?
(1) Employment contract:
Pursuant to the provisions of Clause 1, Article 13 of the 2019 Labor Code:
An employment contract is an agreement between an employee and an employer on a paid job, salary, working conditions, and the rights and obligations of each party in the labor relations.
A document with a different name is also considered an employment contract if it contains the agreement on the paid job, salary, management and supervision of a party.
(2) Service contract:
Pursuant to the provisions of Article 513 of the 2015 Civil Code, contract for services means an agreement between parties whereby a service provider performs an act for a client which pays a fee for that act.
What are the differences between employment contract and service contract in Vietnam? What are the cases where service contracts can be unilaterally terminated? (Picture from internet)
What are the differences between employment contract and service contract in Vietnam?
Below are some criteria that distinguish between employment contract and service contract:
Criteria | Employment contract | Service contract |
Legal basis | Clause 1, Article 13 of the 2019 Labor Code | Article 513 of the 2015 Civil Code |
Content agreed in the contract | A employment contract must meet all the main contents according to the 2019 Labor Code to be considered a employment contract. | Contract for services means an agreement between parties whereby a service provider performs an act for a client which pays a fee for that act. |
Legal relations | The employment contract is legally binding between the employee and the employer. Accordingly, during the contract implementation process, the employee will be under the management, administration, and supervision of the employer as well as must comply with the rules and regulations issued by the employer. . | There is no legal binding between the service requester and the service provider, the intended result of the service contract is only the work result. |
Contract executor | A employment contract is an agreement between an employee and an employer regarding paid work and salary. It is understood that the employee "sells" his or her labor to get paid. Therefore, the employee will have to execute the employment contract himself and cannot transfer it to another person, unless otherwise agreed with the employer. | The service provider may change the person performing the contract with the consent of the service requester |
Duration of contract | The employment contract must be performed continuously for a certain or indefinite period of time as agreed in advance. The contract must not be arbitrarily interrupted, unless otherwise prescribed by labor law. | The contract performance period does not need to be continuous, the work only needs to be completed. Interruptions depend on the person performing the work. |
Performance | Must perform work continuously for a certain or indefinite period of time. | There is no need to do the work continuously, just complete it within the committed time period. |
Insurance | When signing a employment contract, it is mandatory to pay social insurance, health insurance, and unemployment insurance for employees. | It is not required to participate in any type of insurance for the person performing the work |
Annual leave regime | Employees who work for a full 12 months for an employer are entitled to annual leave with full salary according to the employment contract as follows: - 12 working days for employees working under normal conditions; - 14 working days for minor employees, disabled employees, employees doing heavy, toxic, and dangerous jobs; - 16 working days for employees doing extremely heavy, toxic, and dangerous jobs. | There are no regulations on annual leave, |
Sick leaves | Employees working under normal conditions are entitled to 30 days if they have paid social insurance for less than 15 years; 40 days if the payment has been made for 15 years to less than 30 years; 60 days if you have paid for 30 years or more. | There are no regulations on sick leave for the person performing the job |
When will related parties have the right to terminate unilaterally the performance of the service contract in Vietnam?
Pursuant to Article 520 of the 2015 Civil Code, it is stipulated as follows:
Unilateral termination of performance of contracts for services
1. Where the continued provision of services does not benefit the client, the client has the right to terminate unilaterally the performance of the contract but must provide reasonable prior notice to the service provider, in which case the client must pay a fee according to the portion of services already provided and [must] compensate for damage.
2. Where the client fails to perform its obligations or performs its obligations not as agreed, the service provider has the right to terminate unilaterally the performance of the contract and demand compensation for damage.
Thus, based on the above regulations, cases where service contracts can be unilaterally terminated include:
- Where the continued provision of services does not benefit the client, the client has the right to terminate unilaterally the performance of the contract but must provide reasonable prior notice to the service provider, in which case the client must pay a fee according to the portion of services already provided and [must] compensate for damage.
- Where the client fails to perform its obligations or performs its obligations not as agreed, the service provider has the right to terminate unilaterally the performance of the contract and demand compensation for damage.
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