NEW VIETNAMESE LABOR CODE 2019

NEW VIETNAMESE LABOR CODE 2019

On 20 November 2019, the National Assembly of Vietnam adopted the new Labor Code (Labor Code 2019) to replace the Labor Code

2012.1 The Labor Code 2019 will come into effect from 1 January 2021. The table below cover notable points of the Labor Code 2019 in

comparison with the Labor Code 2012. This post is written by Nguyen Hoang Duong and edited by Nguyen Quang Vu.

No. Issues Labor Code 2012 Labor Code 2019 Discussion

1. Form of

employment

contract

1.1. Except for temporary jobs

with a term of less than three

months, an employment contract

must be made in writing.2

1.2. An employment contract,

which is executed by mean of

electronic in the form of a data

message in accordance with Law on E-

transactions, will be considered as an

employment contract made in written

form.3

1.3. Thanks to the new regulation of

the Labor Code 2019, without

maintaining a complicated personnel

management system, an organizational

employer will be able to directly execute

employment contracts with employees,

who are not based in its headquarters.

2. Type of

employment

contract

2.1. There are three types of the

labor contract in total, including: 4

2.1.1. Indefinite term labor contract;

2.2. There are only two types of

the labor contract in total, including:5

2.2.1. Indefinite term labor contract;

2.3. The Labor Code 2019 now

removes the seasonal labor contract as a

type of labor contract. Given this

change, an employer may have fewer

options to repeatedly sign short-term

1 Labor Code of National Assembly dated 18 June 2012 (Labor Code 2012). 2 Article 16 of Labor Code 2012. 3 Article 14.1 of Labor Code 2019. 4 Article 22 of the Labor Code 2012. 5 Article 20.1 of the Labor Code 2019.

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2.1.2. Definite term labor contract

in which the time limit for the

contract effectiveness lasts for

between 12 to 36 months; and

2.1.3. Seasonal or specific job

labor contract with a term less than

12 months (generally, seasonal

labor contract).

and

2.2.2. Definite term labor contract in

which the term for the contract

effectiveness lasts for no more than 36

months.

employment contracts with the same

employee. This is because the Labor

Code 2019 still maintains restriction that

prohibits the employer to repeatedly

sign definite term contracts with the

same employee for more than two

times.6

3. Right to

unilaterally

terminate labor

contract of

employees

3.1. Under the Labor Code

2012, employees may unilaterally

terminate:

3.1.1. a definite term labor

contract or seasonal labor contract

in some specific circumstances by

giving an advance notice;7 and

3.1.2. an indefinite labor contract

3.2. Under the Labor Code 2019,

employees may unilaterally terminate:

3.2.1. any types of labor contract

without cause by providing an

advance notice;9 and

3.2.2. any type of labor contract

without being required to provide

advance notice in some specific

3.3. It is reasonable that the Labor

Code 2019 allows an employee to

immediately terminate a labor contract

without being subject to the requirement

of giving advance notice. This amended

regulation may support employees in

promptly protecting themselves from

the disadvantageous working conditions

(e.g., sexual harassment or wrongful

misconducts by employer) without

6 Article 20.1(c) of the Labor Code 2019. 7 Article 37.1 and 37.2 of the Labor Code 2019.

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without cause by providing 45-day

advance notice.8

circumstances.10 concern about violating labor law.

3.4. However, allowing an employee

to unilaterally terminate any type of

labor contract without cause by merely

giving an advance notice may give rise

to the instability in labor relations.

4. Applicable

entities

4.1. The applicable entities

under the Labor Code 2012

include:11

4.1.1. Vietnamese employees,

people studying trades or

practicing trades (trainees and

apprentices), and other employees

stipulated in such Labor Code;

4.2. The applicable entities under

the Labor Code 2019 include:12

4.2.1. Employees, trainees,

apprentices and persons working

without labor relationship;

4.2.2. Employers;

4.2.3. Foreign employees working in

4.3. Under the Labor Code 2019, the

applicable entities are extended to

include persons working without labor

relationships.

4.4. The persons working without

labor relationships are defined to mean

“those whose work is not based on a

labor contract.”13

9 Article 35.1 of the Labor Code 2019. 8 Article 37.3 of the Labor Code 2012. 10 Article 35.2 of the Labor Code 2019. 11 Article 2 of the Labor Code 2012. 12 Article 2 of the Labor Code 2019. 13 Article 3.6 of the Labor Code 2019.

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4.1.2. Employers;

4.1.3. Foreign employees

working in Vietnam; and

4.1.4. Other agencies,

organizations, and individuals

directly related to the labor

relationship.

Vietnam; and

4.2.4. Other agencies, organizations,

and individuals directly related to the

labor relationship.

4.5. While it is not clear how the

Labor Code 2019 will govern non-

employment contracts, it appears likely

that the Labor Code 2019 is designed to

override parties’ contractual agreement

on the acknowledgment of no

established employment relationship.

5. Definitions of

“Labor

discrimination”

and “Sexual

harassment at

workplace”

5.1. There is no clear definition

of “labor discrimination” and

“sexual harassment at the

workplace”.

5.2. Labor discrimination means

the acts of discriminating, excluding or

preferring based on race, skin color,

national or social background, ethnic,

gender, age, pregnancy status,

marriage status, religion, belief,

opinion, disability, family liability or

based on HIV infection status or for

the reasons of establishing, joining and

operating trade unions, employers’

organizations at enterprises which

have the impact on affecting job and

5.4. Article 3.8 of the Labor Code

2019 provides further that “the acts of

discrimination, exclusion or preference

[regarding labor] resulting from specific

requirements of employment, and

maintenance and protection of

employment for vulnerable employees

will not be considered as

discrimination.” In this regard, to avoid

the risk of committing labor

discrimination, an employer may design

its preference for specific kinds of

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professional opportunity equality; and

5.3. Sexual harassment at the

workplace means the acts of sexual

nature of anyone towards other(s) at

the workplace that is not expected or

accepted by the recipient(s). The

workplace is any place that the

employee de facto works according to

agreement or assignment of the

employer.

employees as crucial qualifications for

relevant jobs.

5.5. Regarding the wording of the

definition of “sexual harassment at

work”, it is not clear which types of

behavior could be considered as an “act

of sexual nature”. Probably, this will be

defined under guidelines of the Labor

Code 2019.

6. Retirement age 6.1. Under the Labor Code

2012,14 an employee who satisfies

the conditions on period of

payment of social insurance

contributions stipulated in the law

on social insurance is entitled to

pension benefits as from sixty (60)

years of age in the case of a male,

6.2. The Labor Code 2019 increases the

retirement age of employees in

accordance with the following

schedule:15

6.2.1. from 1st of January 2021, the

retirement age of an employee

working in normal working conditions

is full 60 years and 03 months of age

6.3. The changes to retirement age

under the Labor Code 2019 might lead

to other changes in regulations on the

social insurance contributions. In

particular, the employee might have to

participate in a social insurance scheme

with a longer period in accordance with

the timeline of the increase in retirement

14 Article 187 of the Labor Code 2012. 15 Article 169 of the Labor Code 2019.

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and fifty-five (55) years of age in

the case of a female.

for males and full 55 years and 04

months of age for females;

6.2.2. After 2021, the retirement age

of an employee working in normal

working conditions will increase 03

months per year for males and 04

months per year for females; and

6.2.3. From 2028, the retirement age

of male employees working in normal

working conditions is full 62 years of

age; and from 2035, the retirement age

of a female employee working in

normal working conditions is full 60

years of age.

age.

7. Definition of

“labor contract”

7.1. A labor contract means an

agreement between an employee

and an employer on a paid job, on

working conditions, and on the

7.2. A labor contract means an

agreement between an employee and

an employer on a paid job, on working

conditions, and on the rights and

7.3. Given the new definition of

“labor contract”, the odds are that the

court and labor authority will look into

the economic substance of the

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rights and obligations of each party

to the labor relationship.16

obligations of each party to the labor

relationship.

In case two parties have an agreement

with different names, but containing

the contents relating to a paid job,

wages, and the management and

supervision of one party, such

agreement shall be considered as a

labor contract.17

relationship between the employer and

employee rather than just its legal form.

7.4. However, it is not clear to what

degree of “management” (quản lý, điều

hành) and “supervision” (giám sát) by

one party, an agreement could be re-

characterized as a labor contract.

Probably, the guidelines of the Labor

Code 2019 will clarify this issue to avoid

misclassifying every employer’s

independent contractor working under

service agreement as an employee.

8. Work permit of

foreign employees

8.1. Before the employment of

foreigners, an employer must

obtain written approval on the

employment of foreign employees

from Chairman of Provincial

8.3. Under the Labor Code 2019, a

work permit of foreign employees will

have a maximum term of two years

and may be extended once for another

two-year term.20

8.4. Under current labor law, a work

permit could be re-issued (cấp lại) (but

not “extended” (gia hạn)) without

limitation on re-issuance. While it is not

entirely clear at law, in practice, the re-

16 Article 15 of the Labor Code 2012. 17 Article 13 of the Labor Code 2019.

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People’s Committee (generally,

employment approval).18

8.2. A foreign employee must

obtain a work permit to work in

Vietnam. Such a work permit will

have a maximum term of two

years.19

issuance procedures of work permit

usually involve obtaining new

employment approval. This is because

employment approval only approves a

working term consistent with the term

of relevant work permit (i.e., no more

than two years).21

8.5. It is not clear whether the

extension of a work permit under the

Labor Code 2019 will be subject to

another employment approval. Since a

work permit could be extended only

once, the requirement on employment

approval should only apply to a newly

issued work permit.

9. Labor contract 9.1. Signing a labor contract 9.2. An employer can repeatedly 9.3. The regulation under the Labor

20 Article 155 of the Labor Code 2019. 18 Article 4.2 of Decree 11 of Government dated 3 February 2016 on foreign employees working in Vietnam (Decree 11/2016). 19 Article 173 of the Labor Code 2012. 21 Form no. 3 of Schedule III of Circular 8 of Ministry of Labor, War invalids, and Social Affairs (MOLISA) dated 30 October 2018 on amendment of Circulars of relating to administrative procedures under MOLISA’s authority.

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with foreign

employee

with a foreign employee will

comply with the same requirements

applied to Vietnamese employees.

sign definite term labor contracts with

the same foreign employee.22

Code 2019 is to ensure the consistency

between the term labor contract and the

relevant issued work permit of a foreign

employee.

10. Labor contract

with elderly

employee.

10.1. An employer may reach an

agreement with an elderly

employee in good health to extend

his/her labor contract or to enter

into a new labor contract in

accordance with strict requirements

on labor contract under labor law.23

10.2. When employing an elderly

employee, the employer may

repeatedly sign definite term labor

contracts with the same elderly

employee for more than two times

without any restriction.24

10.3. The new regulation of the Labor

Code 2012 will provide a certain degree

of flexibility for employers to arrange

employment relationships with elderly

employees.

11. Number of fully

paid days off on

public holidays

and new year

(generally, public


2012,25 a local employee is entitled

to 10 fully paid days off in total on

public holidays.

11.2. Under the Labor Code 2019, a

local employee will be entitled to have

11 fully paid days off in total on public

holidays. The additional day off is

schedule on the occasion of the

22 Article 151.2 of the Labor Code 2019. 23 Article 167.1 of the Labor Code 2012.

25 Article 115.1 of the Labor Code 2012.

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holidays) National Day.

12. Overtime hours 12.1. Under the Labor Code

2012,26 employers must ensure the

total overtime hours of an

employee do not exceed 30 hours

per month.

12.2. The employer may

organize working overtime up to

300 hours per employee per year in

limited cases regulated by the

Government,27 including:28

12.2.1. Production and processing

for export of textiles, garments,

leather, shoes, agricultural,

silvicultural, and aquaculture

12.3. Under the Labor Code 2019,29

employers must ensure the total

overtime hours of an employee do not

exceed 40 hours per month.

12.4. In addition to the cases

mentioned at 12.2.1 and 12.2.2, the

Labor Code 2019 now regulated

further circumstances that employer

may organize working overtime up to

300 hours per employee per year,

including:30

12.4.1. In case of handling tasks

requiring employees with highly

professional and technical

qualifications, which the labor market

12.5. The increase in overtime hours

will provide employers with flexibility

in arranging the production plan,

especially during the peak periods of

their business.

26 Article 106.2.(b) of the Labor Code 2012. 27 Article 106.2(b) of the Labor Code 2012. 28 Article 4.2(a) of Decree 45 of Government dated 10 May 2013, implementing the Labor Code 2012 on working hours, rest hours. 29 Article 107.2.(b) of the Labor Code 2019. 30 Article 107.3 of the Labor Code 2019.

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products;

12.2.2. Production and supply of

electricity, telecommunication

services, oil refinery, water and

drainage; and

12.2.3. Other cases of handling

urgent works that must not be

delayed.

is not able to provide sufficiently and

promptly;

12.4.2. In cases of handling urgent

work that must not be delayed due to

the seasonality and timing of raw

materials, products, or handling work

arising due to unforeseeable objective

factors as consequences of weather,

natural disasters, enemy sabotage, fire,

lack of electricity, lack of raw

materials, technical problems of

production lines; and

12.4.3. Other circumstances regulated

by the Government.

13. Payment of wage

via bank account


2012,31 in case of payment of wage

via bank account, the employer and

employee must reach an agreement


in case of payment of wage via bank

account, the employer must pay the

relevant fees for opening and

13.3. As an obligation to pay the

relevant fees for opening bank accounts

and transferring wages via the

employee’s bank account, the employers


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on the relevant fees for opening

and maintaining such a bank

account.

transferring wages via such a bank

account.

may incur a considerable expense,

especially those having a huge

workforce.

14. Bonus 14.1. Under the Labor Code

2012,33 bonus means a sum of

money which the employer grants

an employee based on annual

production and business results

and the level at which the

employee has completed his or her

work.


bonus means a sum of money or assets

or in other forms which the employer

grants an employee based on the

annual production and business

results and the level at which the

employee has completed his or her

work.

14.3. The new regulation under the

Labor Code 2019 will give employers a

chance to reduce their financial burden.

For example, an employer will be able to

pay bonuses to its employees in the

form of self-produced assets (e.g.,

goods, services).

15. Resolution of

labor dispute


2012,35 agencies and individuals

authorized to resolve individual


agencies and individuals authorized to

resolve individual labor disputes

15.5. The labor arbitration committee

is an alternative option for the court to

resolve the labor disputes.39 However,

the effectiveness of dispute resolution

33 Article 103.1 of the Labor Code 2012. 34 Article 104.1 of the Labor Code 2019. 35 Article 200 of the Labor Code 2012. 37 Article 187 of the Labor Code 2019. 39 Article 189.1 and 193.4 of the Labor Code 2019.

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labor disputes include:

15.1.1. Labor conciliators; and

15.1.2. People’s Courts.


2012,36 agencies and individuals

authorized to resolve collective

labor disputes about rights include:

15.2.1. Labor conciliators;

15.2.2. Chairman of district-level

People’s Committees; and


include:


15.3.2. Labor arbitration committees;

and



agencies and individuals authorized to

resolve collective labor disputes about

rights include:


15.4.2. Labor arbitration committees;

and


via the labor arbitration committee may

be questionable. This is because in case

either party fails to perform a dispute

resolution decision adopted by the

arbitration committee, a party may still

need to initiate a lawsuit against the

other party at relevant court.40

15.6. Chairman of district-level

People’s Committees is no longer

having the authority to resolve the

collective labor dispute.

36 Article 203.1 of the Labor Code 2012. 38 Article 191 of the Labor Code 2019. 40 Article 189.5 and 193.6 of the Labor Code 2019.

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16. Registration of

internal labor

rules (ILR)

16.1. An employer having ten

employees or more must register its

ILR with the provincial labor

authority.41

16.2. An employer having ten

employees or more may register its

ILR with district-level labor

authority.42


the provincial labor authority can

authorize to the district-level labor

authority to be in charge of registration

of ILR.

16.4. The new regulation will provide

flexibility for both the employer and the

competent agencies in the registration of

ILR.

17. Organization

representing the

labor collective at

the grassroots

level


2012,44 an organization representing

the labor collective at the grassroots

level means the executive

committee of the grassroots trade

union or the executive committee of


an organization representing the labor

collective at the grassroots level

includes:

17.2.1. an organization voluntarily

established by employees of an

17.3. The new regulations on

establishment of independent

organization representing employees at

grassroots level introduced by the Labor

Code 2019 are conformable to the

Conventions of International Labor

41 Article 119.1 and 120.1 of the Labor Code 2012. 42 Article 119.1 and 119.5 of the Labor Code 2019.


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the trade union at the directly

superior level to the grassroots

level in a place where a grassroots

trade union has not yet been

established.

employer to protect the legitimate

rights and interests of the employee in

a labor relationship via collective

bargaining or other methods in

accordance with the labor law; and

17.2.2. Grassroots trade union.

Organization;

17.4. The new legal framework for

the operation of independent

representative labor organizations not

being affiliated to the Vietnam General

Confederation of Labor will promisingly

enhance efficiency in representation and

protection of employees’ legitimate

rights and interests.

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NEW VIETNAMESE LABOR CODE 2019

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