Settlement of invalidated employment contracts in Vietnam

Settlement of invalidated employment contracts in Vietnam (Internet image)

1. Cases of invalid employment contracts in Vietnam

- 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.

(Article 49 of the Labor Code 2019)

2. Settlement of invalidated employment contracts in Vietnam

2.1. Settlement of partially invalidated employment contracts in Vietnam

- 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.

(Article 9 of Decree 145/2020/ND-CP)

2.2. Settlement of fully invalidated employment contracts in Vietnam

* Settlement of fully invalidated employment contracts that are concluded ultra vires or against regulations on employment contract conclusion

- 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.

(Article 10 of Decree 145/2020/ND-CP)

* Settlement of employment contracts that are fully invalidated because of unlawful contents or involvement of works banned by law

- 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.

(Article 11 of Decree 145/2020/ND-CP)

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