Vietnam admitted the labor code that led to effect in early 2021. The amendment with regulations can be a step ahead aligning with foreign labor standards since our nation integrates into the global economy. Some of the codes and Vietnam laws are similar, but transformations can be referred to as compulsory work rules, and various provisions specifically met the staff.
1. Primary provisions of labor code
1.1. Application scope
The definition of "Employee" has been broadened under the New Labor Code. An employee is currently defined as someone who: (i) works under an agreement with an employer, (ii) works under the employer's control, and (iii) earns a wage. If a person has a contract that is not a "labor contract" (for example, an individual service contract), but the terms of the contract fulfill (ii) and (iii) above, the contract is a labor contract.
Furthermore, the scope of the New Labor Code has been expanded to cover a "worker without a labor relationship," or someone who does not work under a labor contract (for example, a freelancer). That is, someone who does not fit the three criteria listed in the preceding paragraph. The number of freelancers working in Vietnam has grown and now accounts for a sizable share of the labor force. The New Labor Code requires that their rights be protected. However, it is unclear which New Labor Code requirements would apply to a "worker without a labor relationship." The government will give guidelines in the rules that will put the New Labor Code into effect.
1.2. Working contracts
There are presently just two kinds of labor contracts: definite-term labor contracts of 36 months or fewer and indefinite-term labor contracts. An appendix can no longer be used to prolong a fixed-term work contract. The labor contract automatically becomes an indefinite-term contract after two definite-term labor contracts. However, in the following cases: (i) foreign employees; (ii) employees who have reached retirement age; (iii) members of executive boards of employee representative organizations; and (iv) directors of enterprises with the state capital, a definite-term labor contract can be signed multiple times without automatic extension to an indefinite-term.
The legitimacy of a labor e-contract completed in line with the Law on e-transactions is acknowledged for the first time. Some needs are that the labor e-contract be available (and useable for reference when needed) and that it stays unmodified after execution. This shift undoubtedly stimulates the use of technology and makes labor contract implementation easier. This is especially true for large firms with hundreds or thousands of employees, or employers with long distances between them.
The additional Labor Code adds two additional grounds for terminating a foreign employee's employment automatically: (i) the foreign employee is expelled from Vietnam by a court ruling or a competent authority, and (ii) his/her work permit expires. When an employee reaches retirement age, either the employer or the employee has the right to unilaterally cancel the labor contract.
An employer may unilaterally terminate a labor contract if the employee: (i) gives false information when hired, or (ii) is away from work for five consecutive working days without permission or justification. Such a unilateral termination is effective immediately.
An employee may terminate his or her job without cause, regardless of the terms of the labor contract, but must provide prior notice. The notice period is at least three working days (for a labor contract lasting less than 12 months), 30 working days (for a labor contract lasting between 12 and 36 months), and 60 working days (for an indefinite-term labor contract). Prior notification is not necessary in some cases, such as when his or her pay has not been paid on time or in whole.
In addition to the internal trade union (which is part of the state trade union), the New Labor Code permits employees to form one or more employee representative groups within the firm, which are independent of the state trade union. If there is no employee representative organization within the firm, the corporation is not required to communicate with the trade union at the district level before issuing internal labor rules, wage schemes, work performance policies, and so on.
1.5. Retirement Age
The New Labor Code raises the retirement age for men and women alike:
For male employees: The retirement age was changed to 60 years and 3 months as of January 1, 2021. Every year after that, the age rises by three months, until all male employees reach the retirement age of 62 in 2028.
For female employees: The retirement age was also changed to 55 years and 4 months as of January 1, 2021. Every year, the retirement age for all female employees rises by four months, until it reaches 60 in 2035.
The New Labor Code permits employees who perform (very) heavy, hazardous, or dangerous labor to retire at a younger age, but no earlier than 5 years before the regular gender retirement age.
1.6. Work time and Rest time
The New Labor Code raises the monthly overtime maximum from 30 to 40 hours per employee, and an employee may work up to 300 hours extra per year in certain circumstances. This update is designed to assist manufacturing organizations in better-optimizing production objectives, minimizing manufacturing costs, and coping with time limitations.
Break time is only included in an employee's working hours if the employee works a shift.
Employees now have two days off in September for National Independence Day. This implies that, in addition to the one day off on September 2, employees will have an extra day off. It takes place on September 1 or 3, as selected by the Prime Minister each year.
The parties to a work contract might choose to form a separate probationary agreement or insert a probationary clause in the labor contract. A probationary agreement can be terminated by any side without justification, prior warning, and compensation. The maximum probationary term for a management post has been expanded from 60 to 180 days. According to the Law on Enterprises, a management role is defined. This is a significant increase and a benefit for companies who have long said that the existing 60-day probationary term is insufficient to assess a manager's capabilities.
2. Executing the labor code
To assist the execution, the government proposed Decree 145 for instructing the execution of the labor code that can take effect in February.
When the decree is some sites long, we focus on other primary things below:
2.1. Sexual assault
Decree 145/2020 establishes new rules for avoiding sexual harassment in the workplace. More specifically,
Sexual harassment can take the form of a request, demand, suggestion, threat, or use of force to have sex in exchange for any work-related interests; or any sexual acts that create an insecure and uncomfortable work environment and affect the harassed person's mental, physical, performance, and life.
Sexual harassment in the workplace includes the following: (1) sexual or suggestive actions, gestures, or physical contact with the body; (2) verbal sexual harassment: sexual or suggestive comments or conversations in person, by phone, or through electronic media; and (3) nonverbal sexual harassment: body language; display, description of sex or sexual activities, whether directly or indirectly;
The company's internal labor standards must include restrictions on preventing and combatting sexual harassment in the workplace, as well as other rights and duties of the employer and workers related to preventing and combating sexual harassment in the workplace.
2.2. Working supervision
When the plant starts operations, the boss has to make the working management book around the headquarter or branch about the fundamental information of staff. Any transformations to labor could be claimed every 6 months by the working bureau.
Staff consent could be obtained if the staff implements overtime work regardless of the areas, and term.
2.4. Female staff
To create the opportunity for female staff, people who get kids below a year of age can be permitted to get an hour's break each day from work to breastfeed. Next, a female staff is even permitted a half an hour break throughout the menstruation time. The number of days relating to the day off might be accepted by all parties but might be at least three working days for a month.
3. Challenges due to Vietnam’s new labor code
Even though the Vietnamese government issued Decree 145 on work conditions and Implementation Decree 135 on retirement age, there is currently no mandate for forming employee representation organizations. There are no extra rules governing collective bargaining. The absence of the aforementioned necessary directives prohibits employees and companies from reaping the benefits of the 2019 labor code.
Authorities and employers must provide appropriate legal instruments to assist employees in being proactive and making the most of the new labor law, while also ensuring that workers' rights are respected.
4. Going forward
The amended working code can assist our nation in meeting foreign standards because it is an element of some free trade agreements containing the FTA.
On top of it, the new code has brought influence both managers and businesses that might seek to get help with their working practices to guarantee the policies can be legally compliant throughout 2021.
5. Closing Ideas
We believe that you gain a deeper understanding of the new labor code of Vietnam. Finally, if you have any questions, please put your comments below. Thanks!
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