Guidance on settlement of fully invalidated employment contracts that are concluded ultra vires or against regulations on employment contract conclusion in Vietnam

Guidance on settlement of fully invalidated employment contracts that are concluded ultra vires or against regulations on employment contract conclusion in Vietnam (Internet image)

Regarding this matter, LawNet would like to answer as follows: 

1. Guidance on settlement of fully invalidated employment contracts that are concluded ultra vires or against regulations on employment contract conclusion in Vietnam

Article 10 of Decree 145/2020/ND-CP stipulates the settlement of fully invalidated employment contracts that are concluded ultra vires or against regulations on employment contract conclusion in Vietnam as follows:

- When an employment contract is fully invalidated, the employer and the employee shall re-conclude the employment contract in accordance with regulations of law.

- Rights, obligations and interests of both parties during the period from first day on which the employee works under the fully invalidated employment contract to the day on which the contract is re-concluded shall be settled as follows:

+ If the rights and interests of the parties to the invalidated employment contract are not less beneficial than those prescribed by law or effective collective bargaining agreement, the former shall apply.

+ If the content about rights, obligations and interests of each party of the employment contract is not conformable with law does not affect other parts of the contracts, regulations of Clause 2 Article 9 of Decree 145/2020/ND-CP shall apply;

+ The work period under the invalidated employment contract shall be included in the actual work period as the basis for provision of benefits as prescribed by law.

- In case the fully invalidated employment contract is not re-concluded:

+ The employment contract will be terminated;

+ Rights, obligations and interests of the employee during the period from first day on which the employee works under the invalidated employment contract to the day on which the contract is terminated shall be settled in accordance with Clause 2 of Article 10 of Decree 145/2020/ND-CP;

+ Severance allowance shall be provided in accordance with Article 8 of Decree 145/2020/ND-CP.

- Other issues relevant to employment contracts that are fully invalidated because they are concluded ultra vires or against regulations on employment contract conclusion shall be settled by court in accordance with the Civil Procedure Code 2015.

2. Guidance on settlement of employment contracts that are fully invalidated because of unlawful contents or involvement of works banned by law in Vietnam

According to Article 11 of Decree 145/2020/ND-CP regulating the settlement of employment contracts that are fully invalidated because of unlawful contents or involvement of works banned by law in Vietnam:

- When an employment contract is fully invalidated, the employer and the employee shall conclude a new employment contract in accordance with law.

- Rights, obligations and interests of the employee during the period from first day on which the employee works under the invalidated employment contract to the day on which the new contract is concluded shall be settled in accordance with Clause 2 Article 10 of Decree 145/2020/ND-CP.

- In case a new employment contract is not concluded:

+ The employment contract will be terminated;

+ Rights, obligations and interests of the employee during the period from first day on which the employee works under the invalidated employment contract to the day on which the contract is terminated shall be settled in accordance with Clause 2 of Article 11 of Decree 145/2020/ND-CP;

+ The employer shall pay the employee an amount of money that is equal to at least a monthly region-based minimum wage for each year of work. The period of work under the invalidated employment contract as the basis for calculation of this amount shall be determined in accordance with Point a Clause 3 Article 8 of Decree 145/2020/ND-CP;

+ Provide severance allowance for employment contracts concluded before the invalidated employment contract in accordance with Article 8 of Decree 145/2020/ND-CP, if any.

-. Other issues relevant to settlement of employment contracts that are fully invalidated because of unlawful contents or involvement of works banned by law shall be handled by the court in accordance with the Civil Procedure Code 2015.

To Quoc Trinh

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