Overview

On 20 November 2019, the Labour Code 2019 was passed by the National Assembly which will take effect from 1 January 2021.  The Labour Code 2019 with 17 chapters and 220 articles has some significant changes comparing to the current Labour Code.

Major changes in the Labour Code 2019

The following is a summary of the changes in the Labour Code 2019.

  1. Expansion of scopes and subjects

The Labour Code 2019 expands its scope of application to the employment on a non-contractual basis, therefore non-contractual labour relationship will be subject to the Labour Code 2019.

This expansion shall protect the rights of the employees who are hired without contracts.  Malpractices of not providing labour contracts in order to avoid regulations under the current Labour Code will be subject to the Labour Code 2019.

  1. Amendments in articles relating to labour contracts

The Labour Code 2019 removes the seasonal labour contract from legitimately recognised forms of labour contracts. Accordingly, the employers can only choose between an indefinite-term and a definite-term contract when entering a labour contract with the employees. Furthermore, the Labour Code 2019 provides that contractual agreements containing provisions of a paid work, salary, management and supervision of one party shall be regarded a labour contract regardless of the titles of the contracts.

These changes will prevent employers from using a seasonal labour contract or agreement by other names as loopholes to circumvent labour regulations such as social or medical insurance for the employees.

On the other hand, the Labour Code 2019 accepts the electronic form of contract as the rising popularity of this form in this technological era.

  1. Modifications in leaves

The Labour Code 2019 allows employees to have one more fully paid day-off on the Independence Day, and so employees will be entitled to 2 fully paid day-offs during Independence Day in addition to the current days off on public holidays and new year holidays.

Moreover, the Labour Code 2019 provides more instances for which employees may take fully paid leaves for personal reasons, which will help to create fairer and healthier working environments for employees.

  1. Extensions in working time and working age

The Labour Code 2019 increases the retirement age by 3 months for the men and 4 months for the women.  Accordingly, the retirement age will be 60 years and 3 months old for the men and 55 years and 4 months for the women from 2021.  The retirement age will increase gradually and reach 62 years old for the men in 2028 and 60 years old for the women in 2035.  On top of this change, the Labour Code 2019 allows repeated definite-term labour contracts with elderly employees.[1]

These changes will help to meet the demand of the labour market as the elderly employees usually have more years of experience which could lead to more high-quality work.  According to the members of the National Assembly, the retirement age in Vietnam is somewhat low compared with other countries across the globe.

The Labour Code 2019 also increases monthly overtime to from 30 to 40 hours which allows employees to raise their incomes.

  1. Unilateral termination of the labour contract

Whilst the employers or employees must notify in advance in case of unilateral termination of labour contract pursuant to the current Labour Code, the Labour Code 2019 allows employers or employees to unilaterally terminate the labour contract without any advance notice in some instances, for example:

  • If an employee is abused, beaten or sexually harassed at work, or provided with false information which affects the conclusion of the labour contract, the employee has a right to terminate the labour contract without a prior notice.
  • If an employee resigns without a reasonable reason for 05 consecutive working days or is absent at the workplace for a time limit as prescribed in the Labour Code 2019, his or her employer has a right to terminate the labour contract without a prior notice.
  1. Detailed regulations for vulnerable employees:

The Labour Code 2019 adds clearer and more detailed articles for the female employees in order to ensure gender equality in the working environment as well as for the juvenile employees of a variety of ages in order to assure their rights in their labour relations.

The Labour Code 2019 also prohibits recruiting employees for the purpose of human trafficking.

  1. Representative organization of employers and employees:

According to the Labour Code 2019, while the employees have the rights to choose to establish or join in representative organizations, the Labour Code 2019, for the first time, has legalized the representative role of Vietnam Chamber of Commerce and Industry, Vietnam Union of Cooperatives and other representative organizations of employers.

The Labour Code 2019 also provides that a periodic dialogue session at work place must be held annually and expands the scope of the collective labour agreements by including various forms of labour agreements such as collective labour agreements of corporate, sector or multiple corporates.

These changes will help to reduce disputes in the workplace and therefore creates a better working environment.

  1. Regulations on wages

The State must not directly interfere with the enterprises’ wages policies pursuant to the Labour Code 2019. The wages policies are to be implemented on the basis of negotiations and agreements between the employers and employees.

This regulation will encourage communication between the employers and employees to create a more comfortable working environment where people work on consensus, not on obligation.

In addition, there are several notable amendments and supplements in regard to the wage payment. Firstly, the Labour Code 2019 allows a legally authorized person of an employee to receive wages on behalf of the employee if the employee cannot directly receive the wages. Secondly, while the current Labour Code stipulates that an employer and an employee have to agree on fees incurred from opening and maintaining the employee’s bank account for the transfer of wage, the Labour Code 2019 imposes responsibility to pay these fees on the employer. Thirdly, to promote the transparency at the workplace, the Labour Code 2019 requires the employer to provide a detailed payroll to the employee when paying wages. The payroll must include wages, overtime pays, night shift pays, content and deductible amount (if any). Lastly, under to the Labour Code 2019, the employer is not allowed to interfere with the employee’s right to spend his/her wages, especially it is forbidden to force the employee to use wages on the purchase of goods/services of the employer.

  1. Regulation on reward:

The Labour Code 2019 expands its scope to cover the financial rewards to the employee. Unlike the current Labour Code under which money is the only recognised form of the rewards, the Labour Code 2019 recognises other forms of the rewards as remuneration for the employee’s work performance and/or the business result.

  1. Regulations relating to dispute resolutions

The Labour Code 2019 has more flexible provisions on the right to choose labour dispute resolution forums after mediation procedures and also removes the provision stipulating responsibilities of State agencies in labour dispute resolutions.

This change shall bring the same impact as the amendment in wages which helps to create a workplace based on consensus.

Conclusion

These above changes in the Labour Code 2019 help to empower the employers and employees in controlling their labour relations, and therefore it will create a more effective and fairer working environment. The issuance of the Labour Code 2019 illustrates the effort of Vietnamese Government to improve the legal system in which rights of people are fully practiced and protected.

[1] Employee who continues to work after reaching the age of retirement.


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This LBN newsletter are NOT legal advice. Readers are advised to retain a qualified lawyer, should they wish to seek legal advice. VCI Legal are certainly among those and happy to be retained, yet VCI Legal is not to be hold responsible should any reader choose to interpret/apply the regulations after reading this LBN without engaging a qualified lawyer.