New Labour Code for Vietnam from 2021

December 19, 2019

HANOI - The National Assembly of Vietnam has adopted a new Labour Code after an amendment process lasting nearly four years. It will take effect from January l,  2021.

Lawyers Baker McKenzie say the New Labour Code revises and supplements several provisions across all chapters of the current Code, and that these are expected to have a significant impact on enterprises and organisations that recruit labour in Vietnam.

BM highlights the main changes in the Code as follows:

It expands the scope of application of certain regulations to "workers without labour relations", defined as workers who are working on a non-employment basis.

The definition of an employee has been broadened. In particular, any person working under an agreement who satisfies the following three factors: (i) having a job, (ii) getting paid and (iii) working under the supervision of an employer, will be considered an employee under the scope of the new Code, regardless of the names and forms of the agreements.

The new Code provides changes to the forms, types and contents of labour contracts -

It recognises the validity of labor e-contracts that are established in the form of data messages in accordance with e-transactions laws.

There are now only two types of labour contracts -- definite term labour contracts, with terms of 36 months or less; and indefinite term labour contracts.
Definite-term labour contracts can be signed multiple times for directors of enterprises having State capital, elderly employees, foreign employees and members of executive boards of employee representative organisations.
Definite-term labour contracts can no longer be extended by using appendices.
Employers and employees can now sign a separate probation agreement or include a probation clause in labour contracts. In addition, the probationary period applied to managerial positions of enterprises can now reach 180 days.

Termination: The new Code provides more bases for both employers and employees to unilaterally terminate labour contracts

BM says the new Labor Code continues to regulate the monthly overtime cap, which has been increased from 30 hours to 40 hours.

In addition, the Code supplements cases where employers are permitted to organise overtime work of up to 300 hours in a year.

The Code also limits the term of work permits and extensions. In particular, the term of a work permit is limited to a maximum of two years. Work permits can now only be extended once for a further two-year term.

Expatriates who want to continue working in Vietnam after the expiry of the extended work permit will have to apply for a new work permit. (ATI).