International Labor & Employment Law Committee Newsletter

Issue: May 2013

Editor: Tim Darby | Africa and Middle East Editor: Karen Seigel | Asia and Oceania Editor: Ute Krudewagen | Canada Editor: Gilles Touchette | European Editor: Paul Callaghan | Latin America Editor: Juan Carlos Varela | Law Student Editor: Irene Lehne, Earle Mack School of Law at Drexel University | USA: Trent Sutton


New Labor Code Changes Requirements for Entering into a Labor Contract

Dang Bich Xuan, Junior Associate, Indochine Counsel, Ho Chi Minh City, Vietnam

Effective from 1 May 2013, the new Labor Code No. 10/2012/QH13 dated 18 June 2012 ("New Labor Code") offers certain key developments of the labor rules in Vietnam, which cover many subjects from labor contracts to labor subleasing regularization to labor dispute resolution. This article outlines significant changes of regulations on entering into a labor contract. The continuation of protections for business secrets and confidential information in the new Labor Code was discussed in a prior newsletter article.1

Rules on Automatic Change of Labor Contract Type

Under the old and the New Labor Code, a labor contract, based on its term, may be classified into three types, including (i) indefinite term labor contract; (ii) definite term labor contract with a term between 12 months and 36 months; (iii) a seasonal or specific job labor contract with a term less than 12 months. Type (i) labor contracts may only be terminated by the employer in certain special cases allowed by the laws.

Previously, the old labor code contained an employee-friendly rule that a signed labor contract of types (ii) and (iii) above shall automatically become an indefinite term one if the employee continues to work and no new labor contract is entered into within 30 days from date of expiry of the contract. Now, the New Labor Code changes this rule for the labor contract of type (iii) which, in such case, may only become a definite term contract of 24 months, instead of an indefinite term contract.

Prohibited conduct by an employer when signing and performing a labor contract

According to the New Labor Code, when signing or performing a labor contract, the employer shall be prohibited from (i) keeping originals of personal papers, degrees or certificates of the employee; or (ii) requiring employees to provide security in the form of cash or assets to guarantee their performance of the labor contract.

More Content Required in Labor Contracts

Further clarification of particular terms and provisions to be presented in a labor contract are also available under the New Labor Code. Particularly, in addition to the general terms as previously required by the old labor code, a labor contract must further contain certain compulsory terms such as the terms regarding method of and time of salary payment, allowances and other payments, regime for increase of salary and promotion, training and skills improvement, and other terms required.

Requirements on Entering into Labor Contracts

As a new provision promulgated by the New Labor Code, entering into a labor contract with an employee who is from 15 years up to 18 years of age must be approved by the legal representative of such employee.

For seasonal work or a specific job with duration of less than 12 months, a group of employees can authorize one of the employees in their group to enter into a written labor contract and in this case, the labor contract shall have the same validity as if it was signed with each employee. The labor contract signed by such authorized person must have a list specifying full name, age, gender, residential address, occupation and signature of each employee.

Appendix to Labor Contracts

The New Labor Code also further clarifies that an appendix to a labor contract shall constitute an integral part of that contract. An appendix which amends an existing labor contract must clearly specify the content of amended terms/ provisions and the effective date of amendments. However, if the appendix purports to elaborate in detail some of the articles of the labor contract but such elaboration results in an interpretation different from that in the labor contract, then the implementation shall be in accordance with the contents of the labor contract.


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