Vietnam Labor Code 2019: what changes for employers

Vietnam labor code 2019 is now law. The National Assembly passed the new Labor Code, Law No. 45/2019/QH14, on 20 November 2019. It replaces Law No. 10/2012/QH13 and takes effect on 1 January, a little more than a year from now. Employers have time, but not much. Contracts, pay rules and staff policies all need a check against the new text.

What the law changes at a glance

The new Code keeps many of the old rules. Normal hours stay at 8 a day and 48 a week. Overtime pay stays at 150 percent, 200 percent and 300 percent. The changes that matter most to employers sit in five areas.

• The meaning of a labor contract is wider.
• Fixed-term contracts and probation have firmer limits.
• Notice periods for ending a contract are set by contract type.
• The monthly overtime cap is higher.
• Workers may form their own groups inside a company.

Date of passage, the old law it replaces and the start date are all stated in the law itself.

Source: Labor Code, Law No. 45/2019/QH14, preamble and final provisions.

Contracts: a wider definition and firm limits

Article 13 defines a labor contract by what it does. It is an agreement about paid work, wages, working conditions and each side's rights and duties. If the arrangement has another name but involves paid work, wages and one side managing or supervising the other, it still counts as a labor contract. Companies that use service or cooperation agreements for what is really regular work should review them.

Contracts may also be made by electronic means as data messages. Otherwise they must be in writing.

Article 20 leaves two contract types: indefinite and fixed-term. A fixed term may not be longer than 36 months. If the worker keeps working after the term ends, the two sides must sign a new contract within 30 days. A fixed-term contract may be renewed only once. After that, the next contract must be indefinite.

Article 21 lists what each contract must cover. This includes job and workplace, term, pay, working hours, rest, protective equipment, social insurance and training. Article 21 asks for the pay level by job or title, the pay method and the pay date.

Source: Labor Code, Law No. 45/2019/QH14, Articles 13, 14, 20 and 21, Chapter III.

Probation rules

Probation is not allowed for contracts shorter than one month. A job can be put on probation only once. Article 25 sets these top limits.

• Enterprise managers: up to 180 days.
• Jobs that need a college degree or higher: up to 60 days.
• Intermediate, skilled or clerical jobs: up to 30 days.
• Other jobs: up to 6 working days.

Probation can be written into the contract or set in a separate agreement. Employers should match their offer letters to these limits before the Code applies.

Source: Labor Code, Law No. 45/2019/QH14, Articles 24 and 25, Chapter III.

Ending a contract: notice periods

Articles 35 and 36 tie notice to the type of contract. When a worker resigns, the minimum notice is:

• 45 days for an indefinite contract.
• 30 days for a fixed term of 12 to 36 months.
• 3 working days for a fixed term under 12 months.

The same periods apply when an employer ends a contract on a lawful ground, with some exceptions. No notice is needed in two cases. One is a worker who is not back at the workplace after a period of suspension set in Article 31. The other is a worker who leaves the job without good reason for five or more working days in a row. Other lawful grounds, such as repeated failure to meet work standards, a long illness, a disaster or false information given when hired, still need notice.

A worker may also leave without notice in set cases, such as unpaid or late wages, mistreatment, forced labor or sexual harassment at work. Employers should keep payroll on time, because late pay can remove the notice protection.

Source: Labor Code, Law No. 45/2019/QH14, Articles 35 and 36, Chapter III.

Overtime and pay

Under Article 107, overtime still needs the worker's consent. Daily overtime may not pass 50 percent of normal daily hours. On a weekly schedule, normal plus overtime hours may not pass 12 a day. The monthly cap is now 40 hours. The yearly cap stays at 200 hours.

Some sectors may reach 300 hours a year. The law names examples such as export garments and electronics, electricity and telecoms, and urgent work caused by events outside the employer's control. The employer must tell the provincial labor authority in writing.

Article 98 keeps the pay minimums. Overtime pays at least 150 percent on a normal day, 200 percent on a weekly rest day and 300 percent on a public holiday or paid leave day. Night work adds at least 30 percent. Night overtime earns a further 20 percent of the normal daytime rate, on top of the overtime and night pay.

Under Article 96, wages may be paid in cash or into the worker's personal bank account. If paid by bank, the employer bears the account and transfer fees.

Source: Labor Code, Law No. 45/2019/QH14, Articles 96, 98 and 107, Chapters VI and VII.

Worker organizations inside the company

Article 170 lets workers form, join and take part in an enterprise-level organization, as set out in Articles 172 to 174. These groups have equal rights and duties to a trade union when they represent workers' lawful interests.

The group may operate legally only after a competent state agency grants it registration. It needs a minimum number of members who work at the company, and the Government will set that number and the registration steps. Members elect the leaders, who must be Vietnamese employees of the company. The charter must set out the name, purpose, membership rules, structure and finances.

Employers should expect these groups to appear, so they need a plan for dialogue with staff representatives.

Source: Labor Code, Law No. 45/2019/QH14, Articles 170 to 174, Chapter XIII.

A simple plan for employers

Start with a contract audit. List every contract and mark the fixed-term ones that were renewed more than once. Check the probation periods in your offer letters. Update your notice clauses, overtime tracking and pay dates. The law leaves several details, such as worker group registration, to the Government, so watch for its rules. This article is general information, not legal advice.

Sources

• Labor Code, Law No. 45/2019/QH14, passed by the National Assembly on 20 November 2019, official Vietnamese text.
• Labor Code, Law No. 10/2012/QH13, the 2012 law that the new Code replaces.