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Asia employment law bulletin 2021


Developments in the light of COVID-19

Working from home

Many employers in Vietnam have established strict social distancing measures in their workplaces during the pandemic. 

One of the lessons learnt by employers during the pandemic was that on top of the logistical challenges of having the necessary infrastructure in place to be ready to allow for flexible working, employers could benefit from pre-existing contractual rights written into employment contracts that provides them with the right and flexibility to update their internal policies as and when changes need to be made to the working arrangements. For example, work protocols had to be changed specifically to permit for flexibility on work allocation, working hours, time and place of work. This will be at the forefront of the minds of employers moving forward.

Other developments

Updated legal framework

Late 2020 and early 2021 witnessed the promulgation and coming into effect of the new Labour Code and some of its implementing regulations.

Next to the new Labour Code (effective as of 1 January 2021), three decrees have entered into force, namely: (1) labour conditions and labour relationships (effective as of 1 February 2021), (2) retirement age (effective as of 1 January 2021), (3) foreign employees working in Vietnam, recruitment and management of Vietnamese labour working for foreign organisations and individuals in Vietnam (effective as of 15 February 2021). The changes brought about by the new laws include:

  1. Terms of labour contracts: “Seasonal labour contracts” (having a term under 12 months) have been abolished leavings only two types of labour contracts, i.e. definite-term contracts (not exceeding 36 months) and open-ended contracts that are recognised by the Vietnamese legislation. Another important change is that parties are no longer permitted to agree to an annex that extends the duration of a signed labour contract;
  2. Grounds for termination: The grounds for employers in Vietnam to unilaterally terminate a labour contract continue to be restricted to limited specific circumstances as prescribed by law. However, new grounds allowing employers to terminate an employment without notice have been introduced, including (a) where an employee is absent from work without legitimate reasons for five consecutive days (instead of having to initiate complex dismissal procedures as required under the old law) and (b) in cases of the dishonest provision of false information by employees which affects recruitment decisions. Finally, the law now also permits employees to unilaterally terminate an employment without cause even for those employed under fixed-term labour contracts (in addition to open-ended contracts as permitted under the old law);
  3. Changes with respect to foreign employees: It is now clear that an employer can have multiple continuous definite-term contracts with the same foreign workers. While the general restriction of not having more than two consecutive definite-term contracts with an employee (i.e. the third contract must be open-ended) is still retained for local employees, the new Labour Code expressly excludes foreign employees from this restriction; and
  4. Independent” union representing employees: the new labour regulations recognised, for the first time, the right of employees to set up their own representative organisations which, by law, is “equal” to the traditional Vietnam General Confederation of Labour. However, certain conditions apply, including having a sufficient number of members and being registered with the competent labour authority. It remains to be seen how this new representative organisation will be established and will function in practice.