The new Labour Code, 2019, and the guiding documents have been in practice for a long time, many businesses have planned and embarked on the adjustment to internal documents related to labour including labour relations that arose before and after the time the new law took effect.
To apply regulations correctly and in favour of enterprises, enterprises need to pay attention to some of the following issues about labour contract:
1. Assessing enterprise decisions on the specific type of labour contract to sign
Labour Code (2019) eliminated seasonal labour contracts (labour contracts with a term lasting for less than 12 months), and currently only two forms of labour contract are present – definite and indefinite term. For definite term labour contracts, the minimum duration is not prescribed, but only capped at a maximum of 36 months. This regulation is completely superior and flexible for enterprises compared to the provisions of the old labour law (the 2012 Labour Code recorded a definite labour contract with a minimum term of 12 months). This change is also considered to be meeting the needs of the enterprises by helping enterprises solve personnel problems in a short time without necessarily signing a labour contract for 12 months or more.
When the labour contract determines the expiration time limit, but the employee continues to work, the enterprises must sign a new labour contract within 30 days from the expiration of the labour contract. If the time limit expires and the two parties do not sign the new labour contract, but the employee continues to work, the labour contract becomes an indefinite-term labour contract. A maximum of 2 definite labour contracts may be signed only, except in some special cases. The appendix must not be used to adjust the duration of the labour contract.
Particularly for regulations on types of indefinite-term labour contracts, there is no difference between the new and old labour laws.
2. Using electronic means for making labour contracts: permitted practices
In addition to the method of establishing a traditional contract in writing, the Labour Code (2019) included provisions for specific situations, in which, thereby accepting the signing of labour contracts electronically in the form of data messages by the law on electronic transactions.
To apply correctly, we should refer to the provisions of the Law on Electronic Transactions (2005), according to which data messages will be shown in the form of electronic data exchange, electronic documents, emails, telegrams, faxes and other similar forms as prescribed by specialized laws from time to time. It is pertinent to note here that for such data message to be binding on the parties and as a basis for later settlement, the establishment of a labour contract by data message must follow a certain process that meets the other conditions set by the Law on E-Transactions (2005).
3. Establishing labour relations: is an ’employment contract’ document mandatory?
Currently, the Labour Code (2019) stipulates that if two conditions are met, including:
- the performance of paid employment, wages, and
- the management, administration, and supervision of a party, it is considered that such labour contract, does not depend on what the parties name in the agreement.
In the past, enterprises often used agreements such as collaborator contracts or service contracts to hide from the obligations like social insurance, health insurance, or the unemployment insurance. These forms of agreement will now be considered as labour contracts if state agencies consider and find that the agreement between the parties meets the above conditions. It must be noted that this also indirectly leads to the recall of the obligations of the parties considering the labour relationship such as social insurance, tax, labour declaration, etc.
These are considered major changes that directly affect the labour contract between the parties. So, it is necessary to review the assigned and paid relationships such as collaborator contracts and labour contracts signed before the new law takes effect to ensure that your business is complying with the regulations. Developing internal processes for the establishment of labour contracts electronically is necessary to avoid discretion between departments in the enterprises. In addition to reviewing labour contracts, it is also necessary to compare the labour policies that businesses are currently applying under the new regulations. This is because the new labour law issued many flexible policies as well as increased rights for enterprises.
