Decree covering labour relations, contracts and implementation of Vietnam’s new Labour Code for 2021.

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Decree covering labour relations, contracts and implementation of Vietnam’s new Labour Code for 2021

The Vietnamese Government has issued Decree 145 (“145/2020/ND-CP”) providing extensive detail and guidelines for the implementation of the Labour Code 2019, including working conditions and professional relations, and which takes effect from 1 February 2021.

With the introduction of the Labour Code 2019, which took effect on 1 January 2021 (and which replaced the Labour Code 2012), the issuance of this Decree provides required guidance for the implementation of the Law for employers, employees and the Labour authorities. It should be noted that although Decree 145 is extensive, foreign employees, Work Permits and related matters are to be covered by a separate Decree.

The following discussion covers key elements of Decree 145, and the implications of these elements for employers and employees.

Dealing with Invalid Labour Contracts

Article 51 of the Labour Code 2019 details provisions regarding labour contracts, when a labour contract is declared partially invalid and how it should be dealt with, without going into specifics. However, under Decree 145, where dealing with an invalid labour contract, the clear provisions are stated:

  • Dealing with partially invalid labour contracts: Article 9
  • Dealing with a labour contract which is wholly invalid due to the fact that the person concludes without authority or violates the principles of entering into labour contract: Article 10
  • Dealing with an invalid labour contract which is wholly invalid due to the violation of the Labour Code due to the entire content of the labour contract or the concluded work in the labour contract which is prohibited by the Labour Code: Article 11

The decree also clarifies what are the obligations of the employees and employers when a labour contract has been declared invalid (where both parties agree to sign a new labour contract or do not commit to sign a new labour contract) and the rights, obligations and benefits of both parties during the period starting with the moment when the labour contract is partially invalidated until the moment when the labour contract is amended and supplemented.

Termination of a Labour Contract

The Labour Code 2019 mentions the right of an employee to unilaterally terminate the employment contract (Article 35), and the right of an employer to unilaterally terminate the employment contract (Article 36), however there are areas which are not clearly defined (i.e. Article 35, clause 1 and 2, point d: For a number of specific industries, occupations and jobs, the notice period should comply with the Government’s regulations.)

Further details are in Decree 145, Article 7 which specifies which industries, occupations and jobs are considered, and the notice period for each type of labour contract also as below:

  • At least 120 days for an indefinite term or a fixed-term labour contract of 12 months or more;
  • At least equal to a quarter of the term of the labour contract for a labour contract with a term of less than 12 months.

Severance Allowance and Retrenchment (Termination) Allowance

Decree 145, Article 8 defines with more clarity the content relating to the salary basis and the working period used for Severance Allowances and Retrenchment (Termination) Allowances:

  • Where an employee works for the employer under several successive labour contracts as prescribed in Clause 2, Article 20 of the Labour Code, the salary used to calculate Severance Allowances or Retrenchment (Termination) Allowances is the average salary of the 6 preceding months under the labour contract before terminating the last labour contract. Where the last labour contract is declared invalid as the salary is lower than the regional minimum wage announced by the Government or the wage stated in the collective labour agreement, the basis salary for Severance Allowance and Retrenchment calculation is agreed upon by the two parties, but should not lower than the regional minimum wage or the wage stated in the Collective Labour Agreement.
  • The working period used to calculate an employee’s Severance Allowance and Retrenchment (Termination) Allowance is calculated as complete years (full 12 months), or if there are total months less than or equal to 6 months, it should be counted as 1/2 year, and over 6 months, it should be counted as 1 working year. Any period where an employee participated in unemployment insurance is be deducted from the working period for the calculation.

Dialogue in the Workplace

Article 37 of the Decree refers to the responsibility to organise dialogue in the workplace. The employer is to enable the organisation of dialogue and the implementation of regulations at the workplace:

  • Principles of dialogue at the workplace;
  • Number and participants of the dialogue of each party as prescribed in Article 38 of the Decree;
  • The number of times and time to hold the annual dialogue;
  • How to organise periodical dialogues, dialogue at the request of one or both parties, dialogue when there is a case;
  • Responsibilities of the parties when participating in the dialogue in accordance with Clause 2 Article 63 of the Labour Code;
  • The application of the provisions of Article 176 of the Labour Code to the representative members participating in the dialogue on the employees’ side who are not members of the leadership of the grassroots representative organisations ;
  • Other contents (if any).

In addition to the provisions of Clauses 1 and 2 of this Article, employers are responsible to:

a) Assign a representative of the employer to participate in the dialogue at the workplace as prescribed;

b) Arrange place, time and other necessary material conditions to organise dialogues at the workplace;

c) Report on the implementation of dialogue and grassroots democracy at the workplace with the state management agency in charge of labour upon request.

The grassroots representative organisation and the group of representatives for the dialogue of workers have the responsibility to:

a) Assign a representative member to participate in the dialogue as prescribed;

b) To give opinions to employers about the content of grassroots democracy at the workplace;

c) Collect the employees’ comments, synthesise and prepare contents to request the dialogue;

d) Participate in dialogue with the employer as prescribed in Clause 2 Article 63 of the Labour Code, this Decree and the regulations at the workplace.

Article 40 covers the organising of workplace dialogue at the request of one or the parties. The organisation of a dialogue at the request of one or the parties should be conducted when the content of the request for dialogue by the party requesting a dialogue satisfies the following conditions:

  • On the employer’s side, the content of the request for dialogue must be agreed by the legal representative of the employer
  • For the employee, the content of the request for dialogue must be agreed by at least 30% of the representative members of the employee’s party participating in the dialogue as prescribed in Clause 3, Article 38 of this Decree.

Within 5 working days after receiving the request for dialogue as prescribed in Clause 1 of this Article, the party receiving the request for dialogue must reply in writing, agree on the team time and location, conversation function. The employer and the employee’s party representative are responsible for coordinating and conducting dialogue. Dialogue developments must be recorded in minutes and signed by representatives of parties to a dialogue according to the provisions of Clause 4, Article 39 of this Decree. Within 3 working days from the end of the dialogue, the employer is responsible for publicly announcing the main contents of the dialogue at the workplace. The employee representative organisation (if any), the employee’s representative group for dialogue (if any) should disseminate the main contents of the dialogue to the employees.

Article 41 covers the workplace dialogue when there is an incident. The employer must consult and exchange opinions with the representative organisation of the employee at the grassroots level on the regulations regarding the level of work completion assessment as prescribed at Point a, Clause 1 of Article. 36; resignation of employees as prescribed in Article 42; the employment plan in accordance with Article 44; salary scale, payroll and labour norms as prescribed in Article 93; the bonus regulations under Article 104 and the labour regulations under Article 118 of the Labour Code are implemented as follows:

  • The representative members participating in the dialogue are responsible for organising the consultation of the employees they represent and synthesising in writing of each representative organisation at the grassroots. Based on the opinions of the representative organisations of workers at the grassroots level and the group representing the employees, the employer should organise the dialogue to discuss, exchange opinions, consult, and share information about the contents offered by the employer;
  • Number, participants, time and place to hold a dialogue, determined by the two parties according to the regulations at the workplace;
  • Dialogue developments must be recorded in minutes and signed by the parties’ representatives according to the provisions of Clause 4, Article 39 of this Decree;
  • Within 3 working days from the end of the dialogue, the employer is responsible for publicly announcing the main contents of the dialogue at the workplace; The employee’s representative organisation (if any), the employee’s representative group for dialogue (if any) will disseminate the main contents of the dialogue to the employees.

According to Clause 1, Article 128 of the Labour Code, the employer and the employee’s representative organisation can exchange information in writing or through direct communication between the dialogue representative of the employer and the dialogue representative of the representative organisation of the employee.

Article 43 prescribes the content and information which employers are required to disclose and make public to employees:

a) The employer’s business situation;
b) Labour regulations, salary scale, payroll, labour norms, internal rules, regulations and other regulations of the employer related to the rights, obligations and responsibilities of the employee;
c) Collective labour agreements to which the employer participates;
d) Information on the set up and use of the reward fund, the welfare fund and the funds contributed by the employees (if any); Deductions for payment of trade union funds, social insurance, health insurance and unemployment insurance premiums;
e) The implementation of emulation, commendation, discipline, settlement of complaints and denunciations related to the employees’ rights, obligations and interests;
g) Other contents as prescribed by law.

Regarding the contents specified in Clause 1 of this Article, for which the law specifies the form of publicity, the employer is to make public announcements according to the regulation. Where the law does not specify the form, the employer must choose the following forms shown in the regulations at the workplace, as prescribed in Article 48 of this Decree:

a) Public posting at the workplace
b) Notification at meetings, dialogues between the employer and the employee representative organisation at the grassroots level, the group of representatives for the dialogue of the employees
c) Written notification to the employee representative organisation at the grassroots level
d) Announcement on the internal information system
e) Other forms not prohibited by law


Under article 44, employees are allowed to comment on the following contents:

a) Developing, amending and supplementing the internal rules, regulations and other legal documents of the employer relating to the rights, obligations and interests of the employee;
b) Formulate, amend and supplement the salary scale, payroll, and labour norms; propose content for collective bargaining;
c) Propose and implement solutions to save costs, improve labour productivity, improve working conditions, protect the environment, prevent fire and explosion;
d) Other contents related to the rights, obligations and interests of employees as prescribed by law.

Article 45 prescribes the contents and forms which employees are entitled to decide upon:

a) To conclude, amend, supplement and terminate the labour contract in accordance with the law;
b) Joining or not joining the grassroots representative organisations;
c) Participating in or not taking part in a strike as prescribed by law;
d) Voting on the contents of the collective bargaining reached to sign the collective labour agreement in accordance with the law;
e) Other contents as prescribed by law or as agreed by the parties.

Overtime Rights

Article 59 regarding employee’s consent to work overtime: Except for the cases specified in Article 108 of the Labour Code, in other cases, when working overtime, the employer must obtain the consent of the employee to work overtime and on the contents of the work. The employee must consent on following:

a) Overtime;
b) Place of overtime work;
c) Part-time work.

*Where the employee’s consent is signed in a separate document, refer to Form No. 01 / PLIV in Appendix IV issued together with the Decree.

In addition to the cases specified at Points a, b, c, and d, Clause 3, Article 107 of the 2019 Labour Code, the following cases may permit overtime from over 200 hours to 300 hours a year:

1. Situations in which urgent and irrevocable work is required arising from matters directly related to public service activities in state agencies and units, except for prescribed cases in Article 108 of the Labour Code.
2. Providing public services; medical examination and treatment services; educational services, career education.
3. For direct production and business jobs in enterprises, the normal working time is not more than 44 hours per week.

When organising overtime work from over 200 hours to 300 hours in a year, the employer must notify the Department of Labour – Invalids and Social Affairs at the following jurisdictions:

a) Where the employer organises overtime work from over 200 hours to 300 hours in a year;
b) The place of head office, if the head office is located in a province or centrally run city different from the place where the employer organises overtime from over 200 hours to 300 hours in a year.

*The notification must be made within 15 days at the latest from the date of overtime from over 200 hours to 300 hours a year.

Overtime calculation:

Overtime pay
Every employee who receives time-based wage and works overtime in addition to the working time established by the employer is calculated as follows:

Overtime pay = Actual hourly wage on a normal working day x At least 150% or 200% or 300% x Number of overtime hours

With regard to piece workers who receive overtime pay when the employees and the employer reach an agreement on overtime work in additional to normal working hours to increase the quantity of completed products or work in addition to the agreed workload, overtime pay is calculated as follows:

Overtime pay = Piece rate on a normal working day x At least 150% or 200% or 300% x Quantity of additional products.

Pay for night work
With regard to employees receiving time-based wages:

Pay for night work = Actual hourly wage on a normal working day + Actual hourly wage on a normal working day x At least 30% x Number of night work hours

With regard to piece workers:

Pay for night work = Piece rate on a normal working day + Piece rate on a normal working day x At least 30% x Number of products completed at night

Pay for overtime night work
With regard to employees receiving time-based wages:

Pay for overtime night work = Actual hourly wage on a normal working day x At least 150% or 200% or 300% + Actual hourly wage on a normal working day x At least 30% + 20% x Hourly wage during the day on a normal working day or weekly day off or public holiday or paid day off x Number of night work hours

With regard to piece workers:

Pay for overtime night work = Piece rate on a normal working day x At least 150% or 200% or 300% + Piece rate on a normal working day x At least 30%+  20% x Piece rate during the day on a normal working day or weekly day off or public holiday or paid day off x Number of products done while working overtime at night

Labour Discipline

  • Employers having 10 or more employees must have internal labour regulations in writing. Employers having less than 10 employees are not required to issue written labour regulations, but they must agree on the content of the labour discipline and material responsibility in the labour contract.
  • After issuing the labour regulations, the document must be sent to each employee representative organisation at the grassroots level (if any) and notified to all employees, and the main contents must be posted in common places of the workplace.

Policies for Female Employees

  • During the menstruation, female employees will have additional 30 minutes time-off per day for at least 3 days per month.
  • During the time of raising infants, female employees will have 60 minutes additional time-off per day to breastfeed children, collect and store milk, or to take a rest.
  • Employees should be fully paid for such time-off according to the labour contracts. Where they have no need to take leave and employer agrees for employee to work, employee will be paid additional salary according to the work that the employee has done during the leave period
  • Employers are encouraged to enable female employees raising infants to collect and store breastmilk at the working places, and employers having 1,000 or more female employees must build rooms for collecting and storing breastmilk.

Sexual Harassment Prevention

Sexual harassment in the workplace

Sexual harassment in the workplace includes:

  • Physical behaviour including actions, gestures, sexual contact or physical contact on the body or sexual suggestion
  • Verbal sexual harassment includes verbal sexual harassment, whether directly, through the phone or through electronic means with sexual content or sexual implications
  • Non-verbal sexual harassment, including body language; display, describe visual material about sexual or related to sexual activity directly or electronically.

Sexual Harassment Prevention in Labour Regulations

Each organisations labour regulations on Sexual Harassment Prevention should include the following key contents:

  • Strictly forbid acts of sexual harassment at the workplace
  • Specifically define acts of sexual harassment at the workplace suitable to the nature and characteristics of the job and the workplace
  • Responsibilities, time limit, and procedures for internal handling of the act of sexual harassment at the workplace, including complaints and denunciations, settle complaints, denunciations and related regulations.
  • The form of labour disciplinary action against the person who commits the act of sexual harassment or the person who makes false accusers corresponding to the nature and severity of the violation
  • Compensate for damage to the victim and remedial measures.

Responsibilities and obligations to prevent and combat sexual harassment at the workplace

For employers:

    • Implement and supervise the implementation of legal regulations on prevention and control of sexual harassment at the workplace
    • Organise the propagation and dissemination of laws and regulations on prevention and control of sexual harassment at the workplace for employees
    • When complaints or denunciations appear about acts of sexual harassment at the workplace, the employer must promptly prevent, handle and take measures to protect confidentiality, honour, reputation, dignity and safety for victims of sexual harassment, complainants and denunciators, and the complained and denounced.

For employees:

    • Strictly comply with regulations on prevention and combat of sexual harassment at the workplace
    • Participate in building a work environment free from sexual harassment
    • Prevent and denounce acts of sexual harassment at the workplace.

Labour Dispute Resolution

Settling the interests of employees when a strike is postponed or stopped

During the implementation of a decision to postpone or stop a strike at the request of the authorities, the relevant authorities will support the parties to negotiate, mediate to resolve the interests of workers and other related disagreements. When the period of strike postponement or suspension expires, the head of the strike may continue to organise the strike but must notify in writing the employer and the relevant authority at least 5 working days before the date when the strike is due to commence.

Rights and responsibilities of employees when a strike ceases

After the President of the provincial People’s Committee decides on the suspension of the strike, employees must return to work and will receive their salary. If employees do not return to work, they should not be paid, unless otherwise agreed by the two parties. Depending on the severity of the violation, the employee may be disciplined in accordance with the labour regulations and labour law provisions.

 

Decree 145, and the Labour Code 2019, have significant legal and practical implications for all employers and employees. If you require further information, or would assistance with matters concerning labour laws and implementation, please do not hesitate to contact us.

Last updated on January 14, 2021
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