The current Labor Code (Labor Code) was ratified by the 13th National Assembly, during its 3rd session on June 18, 2012, and came into effect from May 1, 2013. Since its inception, this code has addressed many limitations of the old law. However, after nearly six years of practical application, the Labor Code has revealed numerous inadequacies, causing difficulties in the implementation of the law as well as affecting the legal rights and interests of employees. To be specific:
Article table of contents
1. On the Right to Unilaterally Terminate the Labor Contract by the Employee
Article 37 of the Labor Code 2012 currently stipulates that the employee’s right to unilaterally terminate the labor contract must include two conditions: (1) In certain cases, such as: Not being assigned the agreed job or workplace, or not being guaranteed the working conditions agreed in the labor contract; not being paid in full or not being paid on time as agreed in the labor contract; being mistreated, sexually harassed, forced to work... and (2) Compliance with the notice period. For employees working under indefinite-term labor contracts, only a 45-day notice is required without any need for a reason.
The process of summarizing the implementation of the BLLD has shown that the imposition of the above two conditions creates difficulties for employees, especially in cases where employees exercise their right to unilaterally terminate the labor contract. In some cases, it is very difficult for employees to prove that they are mistreated, forced to work; not assigned the agreed job... Therefore, the unilateral termination of labor contracts in these cases is often challenging. Hence, the BLLD needs to be amended towards only requiring a notice period to allow employees to unilaterally terminate the labor contract. Eliminating this regulation will ensure better job selection rights for employees and prevent forced labor: whenever employees believe that the employer is involved in forced labor or feel dissatisfied with their current job or find a better job opportunity, they should have the right to unilaterally terminate the labor contract without any reason. Employees only need to give a certain notice period for enterprises to actively find replacements.
2. On Overtime Hours
Clause 2, Article 106 of the BLLD 2012 stipulates: “Employers may use employees for overtime work when the following conditions are met: Obtaining the employees' consent; Ensuring that overtime hours do not exceed 50% of the normal working hours in one day, and if the weekly working regime is applied, the total normal working hours and overtime hours do not exceed 12 hours in one day; not more than 30 hours in one month and not more than 200 hours in one year, except for certain special cases as stipulated by the Government of Vietnam, where overtime may not exceed 300 hours in one year.”
This regulation, when applied in practice, has faced opposition from both employees and employers, because: In some localities, a significant portion of employees wish to increase the overtime limit to raise their income. For businesses, the monthly overtime regulation (not more than 30 hours/month) is rigid and does not fit the business cycle of enterprises producing, processing goods, and seafood processing for export, which depend on orders and business seasons. Furthermore, compared with working hours in the region, the maximum overtime hours for Vietnamese workers are currently low: China is 36 hours/month, Indonesia is 56 hours/month, Singapore is 72 hours/month; Thailand is 36 hours/week; Malaysia is 104 hours/month; Laos is 45 hours/month; Cambodia and the Philippines depend on mutual agreements without restrictions. Thus, to enhance business production efficiency, increase employee income, and improve the competitiveness of the Vietnamese labor market compared to regional countries, it is necessary to extend the agreement framework on overtime hours between employers and employees beyond the current limit. The regulation limiting overtime hours needs to be flexible based on the nature of each industry...
Illustrative Image (source internet)
3. On Minimum Wage
Clause 1, Article 91 of the Labor Code 2012 stipulates: “The minimum wage is the lowest rate paid to an employee doing the simplest work in normal working conditions and must ensure the minimum living needs of the employee and their family. The minimum wage is determined by month, day, hour, and is established by region and industry.”
Practical implementation over the past time shows that determining the minimum living needs is very difficult to quantify. Surveys on living needs often yield inaccurate results because respondents tend to over-report their needs compared to their actual needs. Moreover, the living needs of respondents differ significantly among subjects (material needs and spiritual needs). Meanwhile, surveys on people's living standards and households are usually easier to determine and provide more reliable results for quantifying the minimum living standard of an individual based on the market prices of essential items, basic services such as: essential necessities (food, drink,...), essential services (lighting electricity, domestic water, housing, renting accommodation...), basic medical services... Therefore, the minimum wage regulation needs to be amended to ensure "the minimum living standard of the employee and their family" to guarantee feasibility in implementation. Besides, criteria need to be added for the National Wage Council to base on to determine the minimum wage.
4. On Salary Scales, Payrolls, and Labor Norms
Article 93 of the BLLD 2012 stipulates: “Based on the principles of constructing salary scales, payrolls, and labor norms prescribed by the Government of Vietnam, employers are responsible for creating salary scales, payrolls, and labor norms as a basis for recruiting, using labor, negotiating salary levels stipulated in the labor contract, and paying salaries to employees. When constructing salary scales, payrolls, and labor norms, employers must consult with the representative organization of the labor collective at the workplace and publicly announce at the workplace before implementation, and send it to the local labor authority at the district level where the employer's production/ business facility is located.”
Constructing and submitting salary scales, payrolls, and labor norms to district-level labor authorities face many practical difficulties because: (1) Most enterprises believe that salary payment, constructing salary scales, payrolls for employees is the enterprise's decision as it is the enterprise's freedom to do business, thus it does not need to be submitted or registered with state management agencies. The law requires enterprises to construct salary scales, payrolls but only to inform the state agency and to use as a basis for negotiating wages with employees (in reality, employees' salaries and income are usually 2 to 4 times higher than the salary in salary scales, payrolls), which many enterprises consider a formalistic measure, impractical, and increasing compliance costs for enterprises; (2) The salary scales, payrolls, and labor norms system of enterprises is changed annually to fit production, management models, revenue realities, and technological levels annually; many enterprises produce items with various varieties frequently changing monthly, according to orders, thus constructing and submitting labor norms to district-level labor management authorities is challenging; (3) The law requires that constructing salary scales, payrolls need to be consulted by the grassroots Trade Union or higher-level Trade Union, while many enterprises have not established a grassroots Trade Union and (4) The guidelines on the principles of constructing salary scales, payrolls, labor norms (according to Decree 49/2013/ND-CP) are rigid and difficult to apply to different types of enterprises, multi-industry production and business enterprises.
Given the aforementioned shortcomings, the BLLD needs to gradually reduce the direct intervention of the State in constructing salary scales, payrolls, labor norms - moving towards enterprises autonomously deciding salary scales, payrolls relevant to production organization, labor management, payment ability, and the market salary of employees; at the same time, build a legal framework for employees and representative organizations to voluntarily participate in negotiating and agreeing on salary levels in the enterprise's salary scales, payrolls, and labor norms. Concurrently, eliminate administrative procedures in practice (submitting to district-level state management agencies) to reduce enterprise costs, while also establishing a legal framework for employees and representatives to supervise the implementation process.
5. On Retirement Age
Article 187 of the Labor Code 2012 stipulates that the retirement age of employees in normal conditions is 60 for men and 55 for women.
The stipulation on retirement age mentioned above appears to be unsuitable for practical circumstances because: The average life expectancy of the national population is currently 73.4 years, with men at 70.8 years and women at 76.1 years(1); while the average retirement age is 54.2 years for men (the law states 60 years) and 52.6 years for women (the law states 55 years). This means that the period during which retired employees can still work is very long (on average, 16.6 years for men; 23.5 years for women). It is a waste of resources for socio-economic development if this experienced, trained workforce is not utilized. Moreover, labor market practices show that many people continue to work post-retirement, and they are still healthy enough to continue labor participation. Therefore, raising the retirement age is feasible.
Meanwhile, our country’s population is transitioning from a young population phase to an aging population phase(2), in the future, the young labor force will become insufficient. Labor economic experts point out that most countries have 40 to 60 years to prepare for an aging population phase, whereas Vietnam only has about 15 years; the preparation time for the aging population phase is too short, requiring Vietnam to adjust socio-economic development policies swiftly and appropriately... Raising the retirement age is also preparation for the future labor force, helping to utilize the experienced and trained elderly workforce amid improving employee health. Experiences from many countries worldwide show that to cope with the aging population and labor shortages, it is necessary to increase the retirement age, with some countries setting it at up to 67 years. This is also an important solution to ensure long-term balance of the Retirement and Survivorship Fund. Therefore, it is necessary to study and adjust the retirement age to adapt to the aging population trend and the socio-economic development situation of the country.
Source: Nguyen Phuong Thao - Central Committee of Internal Affairs
