Vietnam: Is it true that an employee may sign official employment contract after the probationary period?

Through the Government electronic information portal, Ms. Cao Thanh Van (Bac Giang) requested guidance on the following legal situation:

After the probationary period ended, the company did not sign a employment contract with the employee (E). The employee continued working until the 45th day after the end of the probationary period when the company suggested terminating the labor relationship with the employee.

The employee reacted, asserting that according to Clause 4, Article 4 of Decree No. 44/2003/ND-CP of the Government of Vietnam, if the company does not sign a new employment contract within 30 days from the end of the probationary period, the contract automatically becomes an indefinite-term employment contract.

However, the company argued that Article 4 of this Decree does not apply to probation contracts. Ms. Van wants to know whether the company's response is conformable.

Lawyer Le Van Dai from Khanh Hung Law Office - Hanoi Bar Association answered Ms. Van's question as follows:

According to Article 32 of the Labor Code of 1994 (expired from May 1, 2013), it is stipulated that: Employers (ER) and employees shall agree on trial jobs, the probationary period, and the rights and obligations of both parties. The employee’s salary during the probationary period must be at least 70% of the wage level of that job. The probationary period must not exceed 60 days for highly specialized jobs and must not exceed 30 days for other jobs.

During the probationary period, either party has the right to terminate the trial job agreement without prior notice and without compensation if the trial job does not meet the requirements agreed upon. If the trial job meets the requirements, the employer must officially employ the employee as agreed.

According to the regulations in Clause 4, Article 7, Decree No. 44/2003/ND-CP dated May 9, 2003 (still valid), at the end of the probationary period, the employer in Vietnam must notify the results of the probation to the employee. If the requirements are met, both parties must sign an employment contract, or if the employee is not notified and continues working, they will automatically be considered officially employed.

Articles 27, 28, and 29 of the 2012 Labor Code (which comes into force in Vietnam from May 1, 2013) stipulate: The probationary period shall depend on the nature and complexity of the job, but only one probationary period is allowed for one job, ensuring these conditions:

- No more than 60 days for jobs requiring collegial or higher technical expertise;- No more than 30 days for jobs requiring intermediate technical expertise, technical workers, or professional staff;- No more than 6 working days for other jobs.

The employee’s salary during the probationary period is subject to mutual agreement but must be at least 85% of the job’s wage level.

If the probationary job meets the requirements, the employer must enter into an employment contract with the employee.

During the probationary period, either party has the right to terminate the trial job agreement without prior notice and without compensation if the probation does not meet the agreed requirements.

Regarding Ms. Cao Thanh Van’s question, according to probation policies, if, at the end of the probationary period, the company does not sign an employment contract with the employee and does not notify the employee of the probationary results but the employee continues working, they will automatically be considered officially employed.

However, the law does not specifically stipulate which type of employment contract the automatic employment will correspond to, so it is necessary to refer to the probation contract agreement to understand the type of employment contract both parties will sign once the probation meets the requirements, serving as the basis to determine the responsibilities under the automatically established employment contract after the probationary period.

In Ms. Van’s case, when the probationary period ended, the company did not sign an employment contract with the employee, but the employee continued to work for the company, establishing an automatic employment contract.

On the 45th day after the end of the probationary period, the company suggested terminating the labor relationship with the employee. If the employee agrees, both parties agree to terminate the labor relationship. If the employee does not agree and the company unilaterally terminates the automatically established employment contract after the probationary period, they must comply with Article 38 of the Labor Code 2012 of Vietnam. The unilateral termination of the employment contract must have grounds and comply with the notice period for the employee.

The notice period corresponds to the type of employment contract established after the probationary period: 3 days for employment contracts under 12 months; 30 days for employment contracts with a duration of 12 to 36 months; 45 days for indefinite-term employment contracts.

Issues related to probation policies are not governed by the provisions of Article 4 of Decree No. 44/2003/ND-CP but by the provisions of Article 7 of this Decree.

Lawyer Le Van Dai

Khanh Hung Law Office – Hanoi Bar Association

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