EMPLOYMENT AND LABOR ARTICLES

KEY CHANGES OF THE NEW LABOUR CODE COMMENTED

news on labour code

Subject

 

Key changes

 

PLF’s comments

1.  Employees’ right to refuse to work

The new Labour Code which will take effect from 1 January 2021 (“NewLabour Code”) has clearly recognized the right of employees to refuse to work when they realize that performing the work will directly threaten their lives and health.

The law only provides general regulation, which means that enterprises need specific internal regulation to define:

 – What is considered as a threat or harmful to life or health;

– Procedures to refuse to work.

The enterprises’ internal regulation will be the foundation to consider whether the employees are at fault or not when refusing to perform their work.

2.  Name, or title of a labour contract

According to the provisions of the New Labour Code, although some documents are not called labour contracts, if they contain sufficient contents (such as wages, job descriptions, management, administration, etc.) they can be considered as labour contracts.

Enterprises need to review the signed agreements, contracts where one party is an individual to ensure that the documents do not contain any contents of labour contracts. If a signed document is considered as a labour contract, obligations under the law of labour, social insurance, trade union, etc. will arise for the enterprise.

3. Form of the labour contract

 

An expansion in stipulation on forms of a labour contract, whereby the labour contract is not only allowed in the hard copy form but also in the form of an electric data as a soft copy and shall have same value as a hard copy labour contract.

An enterprise needs to stipulate the forms and procedures of establishing a labour contract through the internet or electronic means, including the presented forms, confirmation style and even an approach to establish the labour contract and consider it as a valid contract.

4.  Practice prohibited for employers

The New Labour Code prohibits the use of labour contracts by enterprises wishing to force employees to work to repay their debts to their employer.

A common practice in Vietnam is for employees to borrow money from their employer on the promise of a reimbursement through the implementation of the labour contract and a commitment of working for the company for a fixed period of time. This practice often happens in the context of apprenticeship or occupational training. Enterprises should pay attention to this new regulation to adjust their existing mutual agreements and contracts accordingly.

5.  Type of labour contract

Withdrawn the regulation on casual labour contracts, according to the New Labour Code, labour contracts shall be either indefinite-term or fixed-term.

Fixed-term labour contracts shall be set from at least 01 month but shall not exceed 36 months instead of the 12 months stipulated in the Labour Code 2012.

This provision is favourable for enterprises having high demand for fixed term labour contracts. Nevertheless, this also means that enterprises must adjust their current labour contracts forms.

6. Probation

The New Labour Code allows the inclusion of probationary terms directly in the labour contract.

The inclusion of the probationary terms shall ease the conclusion of the official labour contract without signing a separate document.

However, PLF recommends to separate the regulations applicable to the probationary period and to define the transition from the probationary period to the official working period.

7.  Probationary period

The New Labour Code supplements another term of probationary period, which can now be up to 180 days for mployees holding a managerial position.

 

This new term is one the main difference between the Labour Code 2012 and the New Labour Code. Managerial positions are essential working positions in companies, thus require a longer cultural integration and probation period than the 60 trial days provided for in the previous law.

Employers should build specific probationary contents for manager labour contracts to include this new probationary period, as well as determine the manager’s position and duties.  

8. Situations of termination of a labour contract

The New Labour Code clearly recognizes that labour contracts will be terminated if the work permit is expired or if the employee failed to achieve the probation’s requirements detailed in the labour contract during the probation term.

Enterprises should pay attention to this matter in order to monitor foreign employees within a working duration in their enterprises as well as the results of their jobs during the probation period.

9. Information in the Labour Contract

Employees and employers are now entitled to unilaterally terminate labour contracts in case of failure on providing truthful information during the conclusion of the labour contract.

This matter had not been specified in the 2012 Labour Code, leading to situations that during the working period, although one of the parties provided untruthful information (for example on the employee’s competencies or professional qualifications), the other party had no ground to terminate the labour contract.

10.  The right of an employer to unilaterally terminates the labour contract

The New Labour Code 2019 has supplemented the term in case the employees quit the job without having an acceptable excuse from 05 consecutive working days.

Enterprises should adjust and amend their labour regulations according to this new regulation. Additionally, we recommend providing a step by step procedure to unilaterally end the contract in accordance with the law. 

11.  Right of employees to unilaterally terminate their labour contract

Employees are now entitled to unilaterally terminate their labour contract without prior notice to the employer, for example: Not being assigned work as agreed, not being paid in full and on time for their salary, being sexually harassed at the workplace, etc.

This new change in labour code will affect the stability of the enterprise. Hence, labour regulation in an enterprise needs to show more detail in term of unilaterally terminate the labour contract, such as procedure, the situation allows to unilaterally terminate the labour contract, evidence needs to provide for consideration if the unilateral termination of the labour contract is based on law or not, etc.

12.  Labour regulations and disciplinary actions

From 1 January 2021, companies must supplement their regulations with the following contents:

–      Preventing and combating sexual harassment at the workplace, procedures and handling orders.

–      Situations that allow to temporarily transfer employees to work in different tasks other than those stated in the labour contract.

–      Individuals with competence to handle labour discipline procedures.

Enterprises need to quickly implement these new terms into their labour regulations to have legal grounds to apply when violations arise.

Employers are limited from disciplining employees if the violation is not specified in the New Labour Code or in the labour contract.

13.  Amend, supplement the collective bargaining agreement

Under the new regulations, the amendment of the Collective Labour Agreement shall be made based on the agreement of the parties at any time.

Enterprises should pay attention to this new term to actively amend the Collective Labour Agreement at any time when the applicable agreement is not suitable.

14.  Continue to implement the Collective Labour Agreement when it expires

Increase the time to continue applying the Collective Labour Agreement when it expires from 60 days according to the Labour Code 2012 to 90 days under the New Labour Code.

The Company should take note of this duration in case the Collective Labour Agreement needs to be used to settle industrial relations.

15. Salary payment

Supplementation of a new provision on the Company’s responsibilities in providing monthly salary statements, or payslip employees. Accordingly, the payslip must fully contain the subject of the salary, overtime, night wage, and deductions.

Employers’ accounting departments should pay attention to this matter in order to comply with the new regulation.

16.  Salary payment for provisional non-working

Further details are now required to stipulate the salary suspension in case of electricity issue, natural disasters, epidemics, or other cases:

If the suspension does not exceed 14 working days, the salary shall not fall below the statutory minimum wages.

If the suspension is longer than 14 working days, the salary shall be negotiated by both parties and the salary for the first 14 days must not fall below the statutory minimum wages.

With this new term, employers should further detail in the enterprise’s regulations situations of work suspension and negotiation methods regarding the termination or suspension of the job, etc.

The more detailed the regulations, the more opportunities for employers to suspend work when there is a need.

17. Salary advance

The New Labour Code has supplemented a new provision in circumstance, an employee joint into the army, shall not receive a salary advance.

Enterprises should note these amended regulations in the internal labour regulation and financial regulations of the enterprise.

18. Public holiday

Increase the number of National Day holiday to 02 days including the National Day and the National Day Eve or the next following date.

19.  Labour Regulations

The following terms must now be included in the Labour Regulations:

– Preventing and combating sexual harassment at the workplace, order and process for handling this behaviour;

– The cases are temporarily transferred employees to work in another job that is different from the labour contract.

Enterprises need to build a specific method of preventing, combating, and dealing with acts of sexual harassment at the workplace right into the Labour Regulation, which is mandatory. Besides, giving details in circumstance of temporarily transferred employees to work in another job which is different from the one instructed in the labour contract, the time to be transferred and others related to salary, working position.

Thus, enterprises need to adjust and re-register their Labour Regulations once the New Labour Code is effective.

20. Pregnancy protection

The New Labour Code allows enterprises to allow female employees who are nurturing children under 12 months of age to work overtime, night shifts, or on long term business trip when the employees agree to do so.

This stipulation must be adjusted in the section of working hours and rest period in the Labour regulations.

21.  Protection for female employees when terminated contract

The New Labour Code increases the benefits and rights of female employees when they are pregnant or nursing children under 12 months of age and when their labour contract expires. Accordingly, they will be given priority to sign another new labour contract.

For enterprises that hire many female employees, this new term might affect their plan to employ female staffs.

22.  Retirement age

The employees’ retirement age is increased as follows:

The retirement age of employees in normal working conditions is adjusted according to the route until they are 62 years old for male employees by 2028, and at 60 years old for female employees by 2035.

From 2021, the retirement age of the employee under normal working conditions are at enough 60 years and 03 months for male employees and enough 55 years and 04 months for female employees; Afterward, each year increases by 3 months for male workers and 4 months for female workers.

Enterprises need to pay attention to this regulation when drafting labour contracts and other payments related to social insurance regulations.

For consultation, please contact us;

PLF LAW FIRM

12 floor, 81-85 Ham Nghi, Nguyen Thai Binh Ward, District 1, Ho Chi Minh City.

+84 28 38 21 21 61

+84 28 38 21 21 65

client@plf.vn

www.plf.vn

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