Due to the need to internalize labor standards of the International Labor Organization (ILO); to meet the requirements for international economic integration, and overcoming many shortcomings and limitations of the implementation of the Labor Code in 2012 (“BLLD 2012“), Draft amendments to the Labor Code of 2019 (“Draft Code​”) are currently being submitted to the National Assembly for consideration and public comment.

This article summarizes some of the outstanding changes formed in the Draft Code in comparison with the BLLD 2012 among the three important content groups and in 11 major topics focused on by comments and amendments of the Labor Rights Committee that will affect both Vietnamese employees (“employees”) and foreign workers in Vietnam.

  1. Labor contract (“HDLD“)

Some noteworthy new points in the Draft Code relating to contracting, implementation and amendment, supplementing and termination of HDLD are as follows:

a) Supplementing form of labor contract via data message

The Draft Code proposes to recognize an additional form of HDLD signed through electronic means in the form of data messages. However, in order for the signing of this HDLD to be effective, in addition to complying with the Labor Code, the parties of the HDLD must also comply with the conditions specified in Articles 35, 36 and 37 of the Electronic Transactions Law 2005. This is an advanced idea in labor productivity because it helps the parties to sign HDLD proactively, easily and economically. Instead of signing directly and in writing, employees and employers can easily sign contracts through the electronic means such as fax, and email. In cases of labor relations with foreign elements, signing through electronic becomes more convenient because it overcomes the situation of express courier or face-to-face meetings to sign contracts when one of the parties has some difficulties due to long distance or the lack of communications.

b) Right of employees to unilaterally terminate the HDLD without any reason

The Draft Code proposes to add a right to allow employees to unilaterally terminate the HDLD for no reason, and only with a notice period. This proposal was designed to ensure the right to choose better jobs for employees and to prevent forced labour: whenever employees feel dissatisfied with their current job or seek a better job in other enterprises, they will exercise the right to unilaterally terminate the HDLD without any reason with just need to give notice. At the same time, prescribing a certain time limit for enterprises to be informed and to take the initiative to seek alternative labor.

c) Right to unilaterally terminate the employees HDLD of the employer

BLLD 2012 regulates that employers can terminate HDLD with employees who are at or over the retirement age when there are 2 conditions be qualified: age and time of social insurance payment.[1] In reality, when applying this regulation, enterprises cannot terminate HDLD with employees who are at or over the retirement age due to not having enough time to participate in social insurance. This makes it difficult for enterprises to arrange working times (because older workers can shorten working hours) or may lead to legal violations (because the BLLD 2012 prohibits the use of elderly workers in the occupations which are heavy, toxic, dangerous). Therefore, the Draft Code proposes the right to unilaterally terminate HDLD for employers when employees reach the retirement age without satisfying the conditions of the current social insurance payment time.

  1. Salary

Implementation of Labor Code Article 91 Clause 1 shows recently that the determination of minimum living needs is difficult to quantify because of varied living needs, including physical needs and mental needs. While many experts assess that the current regional minimum wage can only meet part of the minimum living standards of employees and their families.[2] The Draft Code proposes to adjust the minimum wage in the direction of ensuring “minimum living standards of employees and their families” and suggests adding additional elements to determine regional minimum wage as a basis for National Salary Council to research. This proposal is based on Resolution No. 27-NQ/TW dated May 21, 2016 of the Central Party Executive Committee XII. Accordingly, salary reform aims to turn salaries into the main income source to ensure employees and families’ daily lives by salaries and motivating to improve labor productivity and working efficiency of employees, thereby promoting and improving the quality of growth and sustainable development. This is also a step in specifying the provisions of the ILO Convention No. 95 of 1949 concerning the protection of wages on the definition of wages to ensure the wages of employees are the money that they receive from the implementation of the agreed work.[3]

  1. Working time

Labor Code 2012 stipulates the maximum number of overtime hours for employees shall be no more than 30 hours/month and no more than 200 hours/year, for special cases not exceeding 300 hours/year.[4] However, in the process of applying this regulation, suggestions have been made increase the overtime to: (1) meet the needs of most businesses; (2) meet the needs of a large number of employees who wish to do more to increase their income; (3) increase the competitiveness of the labor market of Vietnam compared to regional countries. In relation to regional countries, the maximum number of overtime hours of Vietnamese workers is lower than those in China, Thailand, and some other countries in ASEAN.[5]

Therefore, the Draft Code proposes to increase the maximum number of overtime hours in a working day. Employees work normally and work overtime no more than 12 hours/day and are not allowed to mobilize workers to work overtime continuously for more than 5 working days per overtime.

  1. Foreign workers

The Draft Code adds more recruitment conditions to ensure the rights to work of foreign employees in Vietnam, as well as strengthen the management of their residences in Vietnam, namely:

  • Conditions of work experience and adequate health as prescribed by the Ministry of Health.
  • Conditions for use of foreign workers in bidding packages: Before recruiting and using foreign workers to work in Vietnam, the contractor must specify the job positions, technical qualifications, working experience, working time needed to use foreign workers to implement the bidding package and seek written approval from the competent authorities.
  • Conditions for foreign employees to be exempted from work permits: For owners or capital contributors of limited liability companies and the Chairman of the Board of Directors or members of the Board of Directors of the joint stock company whose contributed capital/value of share are at least VND 1 billion or more will be exempted from the work permit. This regulation has narrowed the subjects exempted from work permits compared to the current Code 2012.
  1. Age of retirement

Compared with the provisions of Code 2012 on retirement age, for male employees at the age of 60, female employees of 55 years old[6], the Draft Code submitted two options to gradually increase the retirement age of both genders, particularly, for male employees it might be 62 years old and for female employees it might be 60 years old. The two proposed plans are different in the roadmap to increase retirement age:

Option 1: The retirement age of employees in normal working conditions is 60 years and 03 months for male employees, 55 years and 4 months for female employees; then, annually increased by 3 months for men and 4 months for women;

Option 2: The retirement age of employees in normal working conditions is 60 years and 4 months for male employees, 55 years and 6 months for female employees; then, annually increased by 4 months for men and 6 months for women.

Regulations concerning the right to retire at lower ages for some occupations that are heavy, toxic, dangerous, or special jobs; and the right to retire at higher ages for employees with high professional qualifications or in some special cases, are stipulated based on the spirit of the Code 2012.

  1. Other labor standards

a) For child labor

From the fact that in some areas cases of child labor have existed, the Draft Code has developed some regulations as follows:

– Only the cases where employees who are under 18 years old employed in occupations which are suitable to their health, accompanied with the assurance of the employer for their physical, intellectual and personality development, as well as the employer’s responsibility for caring for those employees are considered legal. Employing underage minor is illegal.

– Exceptional cases where employers are allowed to recruit and use employees under 13 years old include artwork (dancing, singing, circus, cinema, theater …) or gifted athletes for sports. Employees aged between 13 years and under 15 years old are only recruited and allowed to work light jobs as classified by the Minister of Labor – Invalids and Social Affairs.

– In addition to the basic conditions stipulated in Code 2012 relating to this section, the employer is required to ensure periodic health checks at least once every 6 months for child labor.

– Particularly, employers are prohibited from using minors at the electronic game service business location.

b) For female workers

Following the provisions of the Code 2012, the Draft now adds the right of the female employees to choose the appropriate time off during the day when she is in the period of menstruation. However, the Draft Code has not specified the obligation to notify the employer in this case about the form and time limit of such notification.

c) For elderly workers

Instead of making an agreement with elderly employees who are healthy enough to extend the term of the labor contract or entering into a new labor contract as stipulated in Code 2012[7], the Draft proposes that it is possible for both sides to agree and to repeatedly enter into a labor contract with definite term.

  1. Dialogue at workplace, collective bargaining and collective labor agreement

a) Dialogue at workplace

“Dialogue” at the workplace has been defined in the Draft Code, including the activities of: “… sharing information, consulting, exchanging ideas between employers and employees on issues related to rights and interests of both sides to enhance understanding and discussion of solutions to address workplace issues of mutual concern.”

The Draft Code has clarified (i) the cases of dialogue, (ii) the content of the dialogue at the workplace, (iii) the method of establishment, organization and operation of the Cooperation Committee in the dialogue proceeding.

In particular, dialogue at the workplace is held periodically (at least every 6 months), upon request of the employer or/and employee, or according to the case (i.e. related to job loss benefits and the case where the employer cannot provide the job when there is a change in structure, technology or economic reasons, resulting in the employees being unemployed; while building the labor utilization plan; while making the salary scale, payroll, labor norms; when making agreement, negotiating on remuneration regimes for employees; when consulting on labor regulations; when the employer temporarily suspends the work of the employee.

b) Collective bargaining

The Draft Code re-defines and adds new organizational forms (such as the organization representing the employees at the grassroots level, the Cooperation Committee of the two parties the employee and the employer, the representative organization of the employer) participating in the collective bargaining process. The regulations on employees’ representative organizations at grassroots level are new and unprecedented issues in Vietnam[8]. Unlike Code 2012, the organization representing the employee at the grassroots level is currently proposed to be established on the basis of voluntary of employees, not necessarily be the Executive Committee of the grassroots trade union or the immediate superior trade union executive committee[9].

  • The principle of collective bargaining is supplemented with the principle of voluntariness, cooperation of goodwill, in addition to principles of equality, publicity and transparency.
  • The content of collective bargaining is expanded more than the Code 2012, including labor and bonus norms; conditions and means of operation of employee’s representative organizations; mechanisms and methods of preventing and settling labor disputes, etc.
  • The number of times to conduct collective bargaining to sign different collective labor agreements for different contents is not limited. However, for one content, there is only one collective bargaining and one collective labor agreement shall be signed.

c) Collective labor agreement

Regarding the collective labor agreement (“CLA”), the Draft Code requires the content of the draft CLA after being negotiated by both parties, it must receive the approval of all employees in the enterprise. No matter what type of labor agreement (of collective enterprise, of collective industry, or of collective multi-enterprise), it must be approved by more than 50% of the signing respondents.

  1. Settling labor disputes

In comparison with the definition of labor dispute of the Code 2012[10], the Draft Code classifies more clearly the cases of labor disputes and categorizes them into 3 main groups:

  • Personal labor disputes between employees and employers;
  • Collective labor disputes on rights (where there is difference in interpretation and implementation of the provisions of the CLA, the internal labor regulations, other legal regulations and agreements; There is a difference in implementing provisions of the Code 2012; Where the employer acts to discriminate against the employee, or to intervene, manipulate against the representative organization of the employee, violate the obligation of goodwill in negotiation).
  • Collective labor disputes on benefits: arising in the collective bargaining process to establish working conditions and employment utilizing conditions; establishing rights and obligations of parties in labor relations.

Notable points on competence and order of resolving labor disputes in the Draft Code include:

a) About jurisdiction to settle disputes

  • Supplementing the Labor Arbitration Council to be among three entities which have the authority to settle individual labor disputes.
  • Replacing the Chairman of the District People’s Committee with the Labor Arbitration Council in resolving collective labor disputes on rights.

b) Conciliation procedure

The conciliation procedure conducted by a labor conciliator becomes mandatory before requesting an arbitral tribunal or a District/Provincial People’s Court to settle the dispute, except for some disputes such as disciplinary action in the form of dismissal; the labor contract being unilaterally terminated; compensation for damages and allowances when terminating labor contracts; about social insurance, health insurance; etc.

[1] Article 36.4 Labor Code 2012.

[2] https://baomoi.com/muc-song-toi-thieu-va-nhung-con-so-dinh-luong/c/27042547.epi

http://cafef.vn/luong-co-dap-ung-nhu-cau-song-toi-thieu-cua-nguoi-lao-dong-20190416091227671.chn

http://cafef.vn/chuan-bi-ban-phuong-an-tang-luong-toi-thieu-vung-ban-khoan-tieu-chi-muc-song-toi-thieu-20190428075308841.chn

http://cafef.vn/dinh-nghia-lai-luong-toi-thieu-20161223073856948.chn

[3] Article 1 of ILO Convention No. 95 year 1949 regulates that:

“In this Convention, the term wages means remuneration or earnings, however designated or calculated, capable of being expressed in terms of money and fixed by mutual agreement or by national laws or regulations, which are payable in virtue of a written or unwritten contract of employment by an employer to an employed person for work done or to be done or for services rendered or to be rendered.”

[4] Article 106 Labor Code 2012.

[5] Report to the Government on the Law on amending and supplementing a number of articles of the Labor Code

http://thoibaotaichinhvietnam.vn/pages/xa-hoi/2019-04-30/bo-ld-tb-xh-de-xuat-tang-gio-lam-them-toi-da-len-400-gio-nam-70805.aspx

http://ndh.vn/lao-dong-viet-nam-lam-them-gio-it-nhat-khu-vuc-2014120204125260p145c151.news

[6] Article 187 Labor Code 2012.

[7] Article 167 Labor Code 2012.

[8] Updated on 29 May 2019 at the meeting to present the Draft http://vneconomy.vn/sua-bo-luat-lao-dong-de-xuat-van-de-chua-co-tien-le-o-viet-nam-20190529123244977.htm

[9] Article 3 Clause 4 Labor Code 2012.

[10] Article 3 Clause 7, 8, 9 Labor Code 2012.


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