Method of settlement of partially invalidated employment contracts in Vietnam

Cases of invalid employment contracts in Vietnam

Pursuant to the Labor Code 2019, 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.

Before recruiting an employee, the employer shall enter into an employment contract with such employee.

According to Article 49 of the Labor Code 2019, an employment contract shall be completely invalid in the following cases:

- The entire contents of the employment contract are illegal;

- A person concludes the employment contract ultra vires or against the rules for employment contract conclusion specified in Clause 1 Article 15 of the Labor Code 2019;

- The work described in the employment contract is prohibited by law;

An employment contract shall be partially invalid when part of its contents is illegal but does not affect its remaining contents.

Method of settlement of partially invalidated employment contracts in Vietnam (Internet image)

Method of settlement of partially invalidated employment contracts in Vietnam

Pursuant to Article 9 of Decree 145/2020/ND-CP, a partially invalidated employment contract prescribed in Clause 1 Article 51 of the Labor Code 2019shall be settled as follows:

- When part of the employment contract is invalidated, the employer and the employee shall revise the invalidated content to ensure its conformity with the collective bargaining agreement and the law.

- Rights, obligations and interests of both parties during the period from first day on which the employee works under the partially invalidated employment contract to the day on which the contract is revised shall be settled in accordance with the effective collective bargaining agreement or, if such a collective bargaining agreement is not available, in accordance with law.

In case the salary under the invalidated employment contract is lower than the minimum salary prescribed by labor laws or the effective collective bargaining agreement, both parties shall negotiate the salary to ensure conformity with regulations. The employer shall pay the difference between the initial salary and the re-negotiated salary for the actual work period under the invalidated employment contract.

- In case both parties cannot reach a consensus on revision of the invalidated content:

+ The employment contract will be terminated;

+ Rights, obligations and interests of both parties during the period from first day on which the employee works under the partially invalidated employment contract to the day on which the contract is terminated shall be settled in accordance with Clause 2 of Article 9 of Decree 145/2020/ND-CP;

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

+ 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.

- Other issues relevant to partially invalidated employment contracts shall be settled by court in accordance with the Civil Procedure Code

Mai Thanh Loi

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