LABOR ARTICLES

Labor Management In Foreign Companies In Vietnam

Labor Management In Foreign Companies In Vietnam
PLF_Labor Management In Foreign Companies In Vietnam

In recent years, Vietnam has been actively integrating with the global economy, expanding foreign relations with other countries and international organizations. In the process of integration, investors from other countries have opened businesses and companies in Vietnam. After establishment of a foreign enterprise, besides complying with investment conditions, foreign investors must ensure strict implementation of Vietnam’s labor requirements. By understanding the regulations related to labor management in Vietnam, investors shall obtain appropriate management methods and avoid damages which may arise from disputes with employees. First of all, the importance of labor regulations and payroll scales in relation to the management of human resources, must be mentioned.

1. Labor rules

Regarding labor regulations, pursuant to Article 119 of the Labor Code 2019 “Employers employing 10 or more employees must register the labor regulations at specialized labor agencies of provincial-level People’s Committees where employers are registered for business”. Thus, foreign-invested enterprises are also subject to this regulation. If there are more than 10 employees, they are required to register the labor code of their company. However, foreign investors who just established small scale legal entities in Vietnam should still draft and publish labor regulations and the effectiveness of such documents decided by employers in the labor regulations. This document is significant in the management of the all employment related issues.

According to the provisions of labor law, a labor regulation is recognized when it has sufficient contents such as working time, rest time, order in the workplace, occupational safety and hygiene, violations of labor disciplinary rules by employees, forms of labor discipline, persons competent to handle labor disciplinary issues, etc. When drafting labor regulations, investors must ensure compliance with the requirements of labor law in Vietnam along with the principles and regulations of their own company.

For registration of labor regulations, within 10 days from the date of promulgation of labor regulations, the employer must submit the dossier for registration of labor regulations to the competent authority where the company’s headquarters is located. In case the company has branches, units, or production and business establishments located in different areas, the dossier must be registered atthe specialized labor agency of the provincial-level People’s Committee where such branches, units and production establishments are located.

If the enterprise charter is aiming to guide the management of each enterprise, the Labor Code is also considered as a guiding document for the relationship between the enterprise and the employee, and the code of conduct for each employee. In fact, the employment contract is only recognized as a basic agreement and the labor code corrects all problems arising in the relationship between the parties.

2. Salary scale, payroll

Article 93 of the Labor Code 2019 stipulates that employers must build salary scales and payrolls. Such salary scales and payrolls are the basis for recruitment, employment, and salary agreed for the work or title listed in the labor contract. In addition, clear & systematic salary provision in the salary scale and payroll helps enterprises effectively manage the salary agreement during the recruitment process. This is more useful when investors have just established their entity and need to recruit a large number of workers in many fields at different ranks.

Compared to the previous labor law provisions, the procedure for the payroll scale has been simplified. Employers do not need to register a payroll scale with a state agency but only need to meet two conditions. Firstly, the opinion of the organization representing employees at the facility where such employee is working must be taken before deciding the salary scale and payroll. Secondly, wages and payrolls must be publicly disclosed at the workplace before implementation.

3. Other forms of labor management

The management of labor by employers and foreign investors in Vietnam is an important and complex issue due to the nature of the relationship. Employees are the core resources of enterprises. For effective management of labor issues, investors can refer to other forms of labor management. One of the most essential documents is the labor contract. The labor contract must be carefully drafted to meet the needs of the company’s personnel and must follow the labor regulations of Vietnam. Enterprises need to be updated with changes in the law and adjust the corresponding labor contracts in a timely manner.

In addition, investors establishing enterprises in areas that need large number of labor resources are recommended to prepare collective labor agreements, and accompanying regulations such as regulations on assessing the level of work completion, financial regulations, etc. This document recognizes the agreement between the employer and the employee collective. The contents of this document must be freely agreed upon with exemptions that do not violate the law. Therefore, the collective labor agreement plays a key role in the negotiation of the labor related issues in the company.

The article is based on applicable law at the time noted as above and may no longer be appropriate at the time the reader approaches this article as the applicable law has changed and the specific case that the reader wishes to apply. Therefore, the article is only for reference.

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