Labour implications in Vietnam with COVID-19.

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Labour implications in Vietnam with COVID-19

The impacts of Covid-19 continue to be felt globally, with businesses in Vietnam being effected by downturns across many sectors. As part of the planning on how to manage business continuity and control costs, understanding the rights and responsibilities with respect to employment and staff is essential.

Below, we look at some of the key issues facing businesses in Vietnam with respect to labour management in light of Covid-19.

Can employers unilaterally terminate labour contracts due to the pandemic?

Article 38 of the Labour Code 2012 allows an employer to make redundancies where it seeks to overcome “the consequences of natural disasters, fire or other force majeure events”. This is commonly regarded as including pandemics, such as Covid-19.

However, careful attention is required in order to utilise this clause as it requires the employer to “take all measures” to overcome the consequences, and must follow a prescriptive notice period and payout process, depending on how long the employee has been working and their contract type (ie, fixed or indefinite term).

Can hours or salaries be reduced for employees without their consent?

Article 98 of the Labour Code 2012 allows for a reduction in salaries where force majeure events, including “dangerous epidemics”, arise and which permits paying employees an “idle salary” whilst there is no work for them and they remain suspended from working. However any reduction in salary needs to be agreed by employer and employee by mutual consent, and cannot be less than the minimum monthly wage for the region as prescribed in law. If a mutual agreement cannot be reached, then this Article is difficult to utilise in practice.

Employees in mandatory quarantine – can they claim sickness insurance?

Where employees are subject to mandatory quarantine, but are not inflicted by or suspected to be inflicted be a disease requiring treatment, then they are generally regarded as not meeting the requirements to access the Social Insurance for sickness benefits. Therefore, the options available to individuals in mandatory quarantine would be to:

  • Take annual leave,
  • Take unpaid leave, or
  • Mutual agreement for salary reduction in accordance with the suspension of employment (as referred to above)

Employees in quarantine suspected of a disease – can they claim sickness insurance?

Where employees are subject to mandatory medical isolation, due to infection or suspected/potential infection, then they will be able to avail themselves to the sickness provisions of the Social Insurance Fund. It should be noted that we are awaiting final confirmation from the Social Insurance Authority of their requirements in order to be able to claim in these scenarios, and what the specific documents required to verify the scenario.

In an unpredictable period such as this, employers and employees can both face challenges with certainty and the ability to plan ahead with sufficient confidence. Where difficulties are encountered, we encourage all parties to act rationally, with the employer being open with their challenges and longer term objectives, thus making it easier for employees to understand and for appropriate decisions to be made.

Last updated on November 12, 2020

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