Conslusion of a labor contract is a very important milestone marking the engagement of both the employee and the employer in an employment relationship in Vietnam. Due to its crucial nature, when concluding a labor contract, both the employee and the employer must exercise due diligence.
Article table of contents
Things shall be noted regarding conclusion of labor contracts from 2021 in Vietnam (Illustration)
From 2021, when the Labor Code 2019 comes into effect, employees and employers in Vietnam need to note the following points when concluding a labor contract:
1. Expansion of the scope of labor relations in Vietnam
According to Article 13 of the Labor Code 2019, a labor contract is an agreement between the employees and the employers regarding paid employment, wages, labor conditions, and the rights and obligations of each party in the labor relationship.
However, the same article also stipulates that if the two parties agree under a different name but with content indicating paid employment and the management, administration, and supervision of one party, it is considered a labor contract.
Thus, the scope of labor relations is expanded beyond those agreements formalized as labor contracts. This provision is to avoid situations where the parties use a different name to evade social insurance contributions.
2. Addition of forms of labor contracts in Vietnam
According to Article 14 of the Labor Code 2019, an additional form of labor contract can now be concluded through electronic means in the form of data messages as per the laws on electronic transactions, having the same validity as a written labor contract. From 2021, labor contracts can be concluded in the following three forms:
- In writing;
- Through electronic means in the form of data messages;
- Orally for contracts with a term of less than 01 month.
The addition of electronic means for labor contracts provides more convenience for parties to implement labor contracts, especially in the era of Industry 4.0.
3. Only 02 types of labor contracts remain effective in Vietnam
The Labor Code 2019 has eliminated the type of labor contracts for seasonal or specific jobs with a term of less than 12 months. Labor contracts are now to be concluded in one of the following two types:
- Indefinite-term labor contracts;
- Fixed-term labor contracts with a term of no more than 36 months.
Thus, if employees and employers want to conclude a seasonal job or a specific job with a term of less than 12 months, they can choose a fixed-term labor contract with a term of no more than 36 months.
4. No probation for labor contracts under 01 month in Vietnam
Clause 3, Article 24 of the Labor Code 2019, adds a provision that does not apply probation for employees concluding labor contracts with a term of less than 01 month. This provision replaces the previous one where employees working under seasonal labor contracts did not have to undergo probation. This change stems from the elimination of seasonal labor contracts in the Labor Code 2019.
5. Additional provisions on probation period in Vietnam
Clause 1, Article 25 of the Labor Code 2019, adds a provision regarding the probation period for enterprise managers as defined by the Law on Enterprises and the Law on Management and Use of State Capital Invested in Production and Business in Enterprises, which is not more than 180 days.
6. Employees has the right to unilaterally terminate a labor contract without a reason in Vietnam
This is a very significant point for employees. From the effective date of the Labor Code 2019, employees has the right to unilaterally terminate their labor contract without a reason, just by giving notice. The notice period for employers is as follows:
- At least 45 days for an indefinite-term labor contract;
- At least 30 days for a fixed-term labor contract lasting from 12 months to 36 months;
- At least 03 working days for a fixed-term labor contract lasting less than 12 months.
For certain industries, professions, and special jobs, the notice period is implemented according to the regulations of the Government of Vietnam.
This provision is very beneficial for employees because if they want to unilaterally terminate the labor contract, they only need to give employers notice to rearrange someone else for their position.
7. Additional cases where employees can unilaterally terminate a labor contract without notice in Vietnam
Under the new provisions of the Labor Code 2019, employees can unilaterally terminate a labor contract without notice if they fall into one of the following categories:
- Not assigned to the correct job, workplace, or labor conditions as agreed;
- Not paid fully or on time;
- Abused, beaten by employers, or if there is insulting language or behavior affecting health, dignity, honor; subjected to forced labor;
- Sexually harassed at the workplace;
- Pregnant female workers must cease work according to Clause 1, Article 138 of this Code;
- Eligible for retirement;
- Employers provides false information affecting the performance of the labor contract.
8. Additional cases where employers can unilaterally terminate a labor contract without notice in Vietnam
The following three additional cases allow employers to unilaterally terminate a labor contract without notice:
- Employees reaches the retirement age, unless otherwise agreed;
- Employees voluntarily leaves work without a legitimate reason for 05 consecutive working days or more;
- Employees provides false information during the conclusion of the labor contract that affects the recruitment.
The above are some of the notable new points related to entering into labor contracts between employees and employers from 2021. The parties in labor relations should note these changes to correctly and effectively enter into labor contracts.
Thuy Tram
- Key word:
- labor contract
- Vietnam
- employee
- employer
