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TRANSCRIPT
FEBRUARY - MARCH 2018
IMPORTANT SUGGESTIONS FOR AMENDING
THE LABOR CODEPage 3 - 5
Page 6 - 7
IS “SERVING THE EMPLOYER’SCOMMERCIAL INTEREST”
A DUTY OF THE EMPLOYEE?
LABOR LAW DOCUMENTS
(ISSUED) - JANUARY 2018Page 8 - 11
LABOR LAWREVIEW
©2018 LE & TRAN. All rights reserved. Attorney Advertising.
Mr. STEPHEN LE HOANG CHUONGManaging [email protected]
Ms. HANNAH HUYNH THI MY HANHSenior Associate
2 © 2018 LE & TRAN
authors
The Ministry of Labor – Invalids and Social Affair (MOLISA) collected
opinions on the application file for the formation of the amended
Labor Code from December 18, 2017 to January 18, 2018 (please see
the Vietnamese content here). Until a detailed draft of the amended
Labor Code is circulated, it is not possible to accurately assess the new
regulations. However, after reviewing the contents of the application file,
we can anticipate the amendment of several key regulations.
IMPORTANT SUGGESTIONS
FOR AMENDING
THE LABOR CODE
3© 2018 LE & TRAN
LEGAL INSIGHTS
The creation and submission of salary scales to local labor-management authorities leads to many difficulties in practice, because:
(1) An enterprise’s creation of salary scales is only a formality to fulfill the report obligation to the state agency. In reality, the salary and
income of an employee are often higher than the amount registered in salary scale.
(2) The salary scale system of an enterprise is changed every year to adapt to a new regional minimum salary policy, as well to the
enterprises’ manufacturing operation, management model, actual revenue and technological level. This places a significant annual
compliance expense and administrative burden on the enterprise.
(3) Currently, it is compulsory to collect the opinions of the Grassroots Trade Union or the Upper Level Grassroots Trade Union when
creating a salary scale. This is difficult to implement since many enterprises do not have a Grassroots Trade Union. Consequently,
the participation of the Trade Unions in creating the salary scale, salary and bonus payment regulations, and salary increments for
employees is only a formality and the employees’ interests may not be realistically assessed or adequately protected.
(4) The payment of salary to employees is at the sole discretion of the enterprise, since it is inherent in the enterprise’s freedom to
conduct business. Therefore, there is no need to register with the state authorities.
On the above grounds, the amended Labor Code is expected to (i) remove the Government’s responsibility in setting standards for making
the salary scale; and (ii) no longer require employers to create and submit salary scales to the local labor-management authorities. Instead,
employers and employees shall base their salary determinations on the actual business conditions prevailing for each enterprise and
actively negotiate together to create the salary scale (which shall be applied and published transparently at the enterprise).
This policy is considered to be an improvement to the 2012 Labor Code and the 2nd draft amendment of the Labor Code1 in helping to
eliminate unnecessary procedures and reduce legal compliance expenses for enterprise.
1. Removing the requirement of submitting salary scales to the local labor-management authority
1 The 2nd draft amendment of Labor Code remained the obligation for submitting the salary scales to local labor-management authorities.
2. Increasing the total number of overtime hours to a maximum of 400 hours per year, compared to the current policy of 200 hours per year
The 2012 Labor Code Proposed amendments
Total number of overtime hours
The total number of ordinary working hours and overtime hours
shall not exceed 12 hours in a day; not exceed 30 hours in
a month and the total of overtime hours in a year shall not
exceed 200 hours.
An employee’s number of overtime hours and standard hours
shall not exceed 12 hours in a day and the total of overtime
hours in a year shall not exceed 400 hours.
Salary for overtime work
y On ordinary days, the equivalent to at least 150% of salary/wages;
y On weekly days off, the equivalent to at least 200% of salary/wages;
y On public holidays, paid leave days, the equivalent to at least 300% of salary/wages, not including salary on public holidays, paid leave days for employees earning daily wages.
y On ordinary days, the equivalent to at least 150% of salary/wages for the first overtime hour, 200% of salary/wages for subsequent hours;
y On weekly days off, the equivalent to at least 200% of salary/wages for the first 02 overtime hours, 300% of salary/wages for subsequent hours;
y On public holidays, paid leave days, the equivalent to at least 300% of salary/wages for the first 02 overtime hours, 400% of salary/wages for subsequent hours.
The contents of the draft amendment propose two adjustment plans for increasing the total overtime hours of employees, which are (i) not
to exceed a maximum of 400 hours per year or (ii) not to exceed a maximum of 500 hours per year. The solution preferred has been “not
to exceed 400 hours per year”, although by comparison these two plans do not differ substantively in terms of negative socio-economic
impacts and don’t differ at all in matters of gender equality, administrative procedure or the legal system.
In addition, this plan also proposes a change to the overtime salary/wages of employees. Accordingly, the overtime salary is expected to
be as follows:
a) On ordinary days: the equivalent to at least 150% of salary/wages for the first hour of overtime and 200% for subsequent hours;
b) On weekly days off: the equivalent to at least 200% of salary/wages for the first 02 hours of overtime and 300% for
subsequent hours;
c) On public holidays, paid leave days: the equivalent to at least 300% of salary/wages for the first 02 hours of overtime and
400% for subsequent hours”.
In addition, the provision for limiting the monthly total number of hours (not exceeding 30 hours per month) is also expected to be removed.
Therefore, basically, this 3rd draft amendment retains the proposals for adjustment mentioned in the 2nd draft amendment. Below is the
comparison table between current regulations of the 2012 Labor Code and the proposed amendments:
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LEGAL INSIGHTS
In order to assure an employee’s freedom in searching
for better jobs and to prevent and eliminate forced labor,
the proposed amendment is expected to recommend
two expansion plans regarding an employee’s right to
unilaterally terminate the labor contract: (i) an employee has
the right to terminate the labor contract without submitting
any reasons as prescribed by law, as long as advance
notice is provided or (ii) an employee has the right to
terminate the labor contract without submitting any reasons
as prescribed by law and without providing advance notice
to the employer. It should be noted that the amendment
proposal for an employee’s right to terminate the labor
contract without submitting any reasons was mentioned in
the 2nd draft amendment, however, employees are obliged
to provide an advance notice in any case.
The two proposed amendment plans will most certainly
benefit the employee but will enormously affect the
employer’s use and management of labor. If these plans
are implemented, the employer is likely to face significant
increase in (i) employee recruitment and replacement
training costs, (ii) litigation costs arising out of disputes
over unilateral termination of labor contracts, (iii) costs for
changing the labor management model, the methods of
managing working conditions (redrafting of the work rules,
collective labor agreement, sample labor contract and
other human resource management documents) and (iv)
other significant and unforeseen economic consequences
when an employee unilaterally terminates the labor contract
without any reason at enterprises where the business
operation requires positions of continuous labor.
3. Expanding the employee’s right to unilaterally terminate the labor contract
The schedule for raising the retirement age in the new proposal
has no change compared to the 2nd draft amendment. This
means that the retirement age of ordinary employees in normal
working conditions remains at 60 years of age for men and 55
years of age for women; and from January 01, 2021, there will be
increments of 06 months for each subsequent year until it reaches
62 years of age for men and 60 years of age for women. This
proposal, in the 2nd draft amendment, has previously encountered
opposing opinions, namely: (i) the raising of the retirement age is
not suitable for employees working in manual labor; and (ii) many
employees do not wish to prolong their working time but wish to
retire at the current age in order to earn a monthly pension, and
so, if they work they can earn income from 02 sources. Therefore,
the raising of the retirement age, i.e. the prolongation of working
time until a pension is earned, will not benefit the employee (i.e.
losing the pension amount), etc.
In reality, in order to guarantee the financial stability of the
Insurance Fund, without raising the retirement age, only two
solutions are possible: (i) raising the contribution amount by
employees and enterprises or (ii) reducing the employee’s
pension entitlement amount. However, it is difficult to raise
the contribution amount as the employees shall bear a greater
financial burden and the enterprise’s competitive strength will
likely be reduced. Reducing the pension entitlement amount will
also negatively affect the quality of life for the pensioners. As
a result, the plan for raising the retirement age to balance the
time and amount of contribution with the time and amount of
entitlement is still currently considered the best solution by the
State (with the fact of an aging population and the risk of future
insolvency of the Insurance Fund).
4. Schedule for raising the retirement age for employees beginning in 2021
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LEGAL INSIGHTS
SERVING THE EMPLOYER’S COMMERCIAL INTEREST
“
”
A DUTY OF THE EMPLOYEE ?
IS
6 © 2018 LE & TRAN
LEGAL INSIGHTS
One expectation when recruiting an employee is to hire
someone to faithfully serve the business of the employer and
to assist in the development of the business. Clearly, this is an
important consideration for the employer when entering into
a labor contract. If so, when an employee refuses to comply
with the employer’s requirements (within the scope of business
development purposes), such as requiring the employee to do
jobs not described in the labor contract or to work overtime,
then would the employee be considered to be in breach of the
contract for causing interruption to the employer’s business (i.e.
the employer’s purpose for entering into the labor contract has
been prevented)?
In other nations around the world, the duty of complying with
an employer’s reasonable requirements and assuring there
is no interruption in the employer’s business are recognized
as “implied duties” of an employee, despite these duties not
being clearly stated in the labor contract. Accordingly, in many
countries the implied duties of an employee are to serve the
employer faithfully and to promote the employer’s commercial
interests. An employee could legally be considered in breach of
the labor contract if they violate these implied duties.
In Vietnam, the duty of being faithful to the employer and serving
the employer’s interests are clearly stated in the provisions of
the enterprise law concerning the duties of the enterprise’s
managers (Director, General Director, Chairman , etc.). However,
with regard to the labor laws, the regulations concerning implied
duty are very limited. For example, pursuant to Article 5.2.(b) of
the 2012 Labor Code, the employee has a duty of “complying
with the employer’s lawful administration”; Article 6.1.(a) of the
2012 Labor Code, allows the employer to “manage employees
according to the demands of production and business”.
Therefore, the question is to what extent does the employer have
the right to require the employee to perform jobs in accordance
with the demands of production and business?
y Under normal circumstances, in order to determine the
extent of an employee’s duty, the content of the labor
contract is the primary reference point. However, the
difficulty is that in many cases, the labor contract does
not contain such detailed job descriptions or, if any,
the descriptions are very general and simple. A typical
example is a labor contract that only describes an
employee’s job as a “lecturer”, or only provides a basic
requirement of performing “lecturing work”. It follows
that if “lecturing” is interpreted in its narrowest sense (i.e.
only as class lecturing), would the employer have the right
to require the employee to perform any jobs other than
“lecturing” (e.g. test preparation, lesson preparation, test
marking, etc.), which are inherent duties but are not clearly
stated in the labor contract?
From a common sense viewpoint concerning the work
of lecturing, it cannot be denied that the incidental but
necessary duties of test preparation, lesson preparation,
and test marking, etc. should be interpreted as being within
a lecturer’s scope of work. Therefore, although not stated
in the labor contract, the position of lecturer still requires
the employee to perform jobs such as test preparation,
lesson preparation, test marking, etc. Consequently, the
employee has the duty of performing jobs other than the
main job of “lecturing”, to fulfill the job objectives under the
labor contract.
y If it is assumed that the employee has the right to refuse
performing any task other than “lecturing” (in its narrowest
sense), would the employee breach his implied duty, i.e.
the duty of serving the employer’s business interests?
To answer this question, it is necessary to specify the
employee’s reason for refusing to perform the job.
Assuming that the employee’s refusal to perform work is a
result of the employer requesting the employee to perform
these tasks outside of working hours and therefore
affecting the employee’s family life, the employee shall
be fully justified and not be considered in breach of his/
her implied duties. However, if the employee refuses to
perform a task with precise knowledge that their refusal
will cause interruption to the employer’s business, or if
the employee refuses to perform tasks that deliberately
cause interruption to the employer’s business (e.g.
failure to prepare lectures or grade papers), then such
employee’s refusal can be considered as a breach of his/
her implied duties. This also means a breach of the labor
contract, because on the basis of his/her implied duties,
an employee has to take appropriate actions to prevent
interruption to the employer’s business.
y Another matter worth considering is, in the event the
employee refuses to perform the required tasks which are
implied in the job description, whether the employer has the
right to deduct a part of employee’s salary corresponding
with the duties that have been breached? Pursuant to
Vietnam labor laws, the employer may justifiably not pay
salary to the employee if such refusal to perform jobs is
considered an action constituting a strike. However, it is
very difficult to conclude that the employee has “gone on
strike” in these cases. Therefore, if there is no standard
for evaluation of job completion at the time of recruitment,
there is no legal basis to support the employer’s refusal to
pay salary due to the conduct of the employee.
With the knowledge that Vietnam laws are still limited in
regulations relating to “implied duty” and are more inclined to
protecting the employee’s interests, the most feasible solution
for the employer is to have a set of labor documentation (labor
contract, collective labor agreement, labor rules, etc.) thoroughly
prepared with as much detail as possible. This documentation
should especially concentrate on rules and wording concerning
job descriptions, labor norms, and standards for evaluating job
completion, so as to specify an employee’s “implied duties”.
SERVING THE EMPLOYER’S COMMERCIAL INTEREST
A DUTY OF THE EMPLOYEE ?
2 Articles 71, 83, 96, 160 etc. of the 2014 Law on Enterprise. 7© 2018 LE & TRAN
LEGAL INSIGHTS
JANUARY 2018
D O C U M E N T SLABOR LAW
( ISSUED)
8 © 2018 LE & TRAN
CIRCULAR NO.28/2017/TT-BLDTBXH OF THE MOLISA PROVIDING FOR A QUALITY ASSURANCE SYSTEM IN VOCATIONAL EDUCATION UNITS
1
Contents:
The circular is applied to colleges, junior colleges, public and private vocational education centers with foreign-invested capital.
The circular does not apply to colleges, junior colleges and training programs of the teacher training division under State management competence of the Ministry of Education and Training.
The circular provides principles, requirements, and procedures for the building, operating, evaluating, and improving the system on quality assurance and self-evaluation of vocational education and the quality of vocational education units.
Date of issuance: December 15, 2017
Effective date: February 01, 2018
Click HERE to see full content of the document (in Vietnamese).
CIRCULAR NO.29/2017/TT-BLDTBXH OF THE MOLISA PROVIDING REGULATIONS FOR THE ASSOCIATION BETWEEN PARTIES ORGANIZING TRAINING PROGRAMS
2
Contents:
The circular provides regulations for the association between parties organizing training programs, including: objects, forms of training associations, organization of training associations, rights and obligations of parties participating in training associations.
The circular is applied to:
• Junior colleges, colleges, vocational education centers, continuing education centers, university establishments which have registered to provide training at college level; and
• Enterprises, agencies, organizations and individuals with a need of a training association.
Date of issuance: December 15, 2017
Effective date: January 29, 2018
Click HERE to see full content of the document (in Vietnamese).
CIRCULAR NO.31/2017/TT-BLDTBXH OF THE MOLISA PROVIDING REGULATIONS FOR THE TRAINING IN COLLEGES, JUNIOR COLLEGES, AND PRELIMINARY LEVELS IN THE FORM OF FULL-TIME AND PART-TIME VOCATIONAL EDUCATION
3
Contents:
The circular is applied to vocational education centers; university establishments which have registered to provide training at the college level; enterprises which have registered to provide training at the preliminary levels, and related agencies, organizations, and individuals.
The circular mainly provides:
• Training programs and curriculum; time, place, and method of training; standards for teachers and training plans; and
• Recruitment for training; organization of training program performance; testing, examining, and assessment for graduation recognition and the granting of college and junior college certificates and preliminary credits in the form of full-time and part-time vocational education.
Date of issuance: December 28, 2017
Effective date: February 12, 2018
Click HERE to see full content of the document (in Vietnamese).
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ISSUED LABOR LAW DOCUMENTS
DECREE NO.161/2017/ND-CP OF THE GOVERNMENT AMENDING ARTICLE 12, DECREE NO.21/2016/ND-CP DATED MARCH 31, 2016 OF THE GOVERNMENT PROVIDING REGULATIONS FOR THE PERFORMANCE OF SPECIALIZED INSPECTION FUNCTIONS REGARDING THE SOCIAL, UNEMPLOYMENT AND MEDICAL INSURANCE CONTRIBUTION OF THE SOCIAL INSURANCE AGENCY
4
Contents:
The decree amends Article 12, Decree No.21/2016/ND-CP on assuring the social insurance agency’s operation expense
in the performance of specialized inspection functions for contributing to social insurance (“SI”), unemployment
insurance (“UI”), and health insurance (“HI”), specifically:
The social insurance agency’s operation expense during the performance of specialized inspection functions for
contributing to SI, UI, HI is arranged in the estimated management expenses of SI, UI, HI as prescribed by the law on
financial management regarding Vietnamese Social Insurance.
Date of issuance: December 29, 2017
Effective date: February 15, 2018
Click HERE to see full content of the document (in Vietnamese).
CIRCULAR NO.33/2017/TT-BLDTBXH PROVIDING GUIDANCE FOR THE STRUCTURE OF ORGANIZATION, NORMS FOR STAFF AND PROCEDURES, AND STANDARDS FOR SOCIAL SUPPORT AT SOCIAL SUPPORT ESTABLISHMENTS
Contents:
The circular provides guidance for the structure of organization, norms for staff and procedures, and standards for
social support at social support establishments.
The circular is applied to public social support establishments and non-public social support establishments, including:
• Social protection establishments caring for the elderly;
• Social protection establishments caring for disadvantaged children;
• Social protection establishments caring for the disabled;
• Social protection establishments caring for and rehabilitating people with mental illness and people with
mental disorders;
• Social protection establishments providing general care for objects that need protection from society or others
that need social support;
• Community service centers providing consultancy, emergency care or other necessities for objects in need of
social protection; and
• Other social support establishments.
Date of issuance: December 29, 2017
Effective date: February 12, 2018
Click HERE to see full content of the document (in Vietnamese).
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ISSUED LABOR LAW DOCUMENTS
CIRCULAR NO.35/2017/TT-BLDTBXH PROVIDING REGULATIONS FOR THE MANAGEMENT, OPERATION AND EXPLOITATION OF DATABASES ON VIETNAMESE EMPLOYEES WORKING OVERSEAS UNDER CONTRACT
Contents:
The circular provides regulations for the management, operation and exploitation of databases on Vietnamese
employees working overseas under contract, including:
• Receiving the dossier of granting, re-granting, or renewal of service licenses to send employees to work
overseas under contract;
• Registering for labor supply contracts;
• Registering for enterprise information on the service operation of sending employees to work overseas;
• Operating the report system on Vietnamese employees working overseas under contract.
Accordingly, the above activities shall be implemented through registration of accounts in the database of Vietnamese
employees working overseas under contract (“DB”), with the domain address of csdl.dolab.gov.vn.
When an enterprise conducts procedures related to the granting, re-granting, or renewal of a service license for
sending employees to work overseas, or registers for labor supply contracts, it shall make application via the DB. After
that, within a reasonable time frame from the date of receiving the application file via the DB, competent agency shall
provide a response on the DB about whether such enterprise’s application file is appropriate. If it is appropriate, the
enterprise shall submit the original of the application file to competent agency for reviewing, comparing and saving/
storing in accordance with the law. If the application file is not appropriate, the competent agency shall clearly state
the reason and ask the enterprise to amend or supplement the documents as requested.
The circular is applied to:
• Department for Overseas Labor, Ministry of Labor – Invalids and Social Affairs;
• Center of Information, Ministry of Labor – Invalids and Social Affairs;
• Center for Overseas Labor, Ministry of Labor – Invalids and Social Affairs;
• Department of Labor – Invalids and Social Affairs of provinces and cities under central Government;
• Division of labor management under the representative agency of the Socialist Republic of Vietnam overseas;
• Enterprises operating under the Laws on Enterprises that require the granting of a service license for sending
employees to work overseas;
• Enterprises that have a service license for sending employees to work overseas under contract;
• Other organizations or individuals related to the operation, management, exploitation and use of database
information.
Date of issuance: December 29, 2017
Effective date: February 12, 2018
Click HERE to see full content of the document (in Vietnamese).
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ISSUED LABOR LAW DOCUMENTS
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