Asia Counsel Insights provide readers a punchy update on legal and business developments in Vietnam. In this edition, we provide a brief summary of the changes to employment law under the new Labour Code which will take effect on 1 January 2021.

1. ASIA COUNSEL INSIGHTS
5 June 2020
LABOUR LAW FOCUS
From 1 January 2021, the current Labour
Code will be replaced in its entirety by a
new Labour Code (the “New Labour
Code”) passed by the National Assembly
on 29 November 2019. Much of the text of
the existing code will be retained, but
existing provisions on employment
relations, probationary employment,
mandatory work rules and notice
requirements, and other matters are
revised on terms generally favourable for
employees. This month’s Asia Counsel
Insights focuses on the New Labour Code.
Probation
The Code provides two new
updates on probation:
• the probation period applied
to managerial positions of
enterprises (as defined by Law
on Enterprise) can now reach
180 days, and
• labour contracts with terms of
less than one month cannot
have probation periods.
The probation can be implemented
through a separate probation
agreement or recorded as a part of
the labour contract. Either party is
entitled to terminate a probationary
agreement without giving advance
notice and compensation. If the
employee’s performance satisfies
the agreed requirements, the
employer must officially employ the
prospective employee upon the
completion of such probation
period and sign a labour contract.
Labour Contract
All employment must be subject to a
labour contract, which may be oral or
in writing. The New Labour Code
deems that a person is an employee if
the following three factors are
satisfied:
• a person has a job,
• is paid, and
• working under the supervision
and management of another
person.
This means that if the above three
factors are established then an
employment relationship exists and
the Labour code will regulate that
employment relationship, regardless
of the name and form of the
agreement (e.g. service agreement,
contractor agreement, etc.).
Furthermore, labour e-contracts
established in the form of data
messages are now recognized under
the New Labour Code. This will have
a particular impact in the technology
sector and shared economy.
Terms of Labour Contracts
There are two types of labour contracts:
indefinite term contracts and definite
term contracts with a maximum term of
36 months. Seasonal labour contracts
will no longer be a type of labour
contract.
Any amendment of the term of a labour
contract using appendices is now
restricted.
The New Labour Code provides several
exceptions that parties may sign
multiple definite term contracts, such
as: definite term contracts with foreign
employees working in Vietnam, elderly
employees, and employees who are
members of the management board of
the employee’s representative
organization and any person being
employed to hold the position of the
Director/General Director of the
enterprises having State capital.
The Code further clarifies that the term
of a labour contract concluded with a
foreign employee shall not exceed the
term of his/her work permit.
About Asia Counsel
Asia Counsel is a dynamic international corporate and commercial law firm dedicated to serving clients in Vietnam. Our partners have over nine years of
experience in working on complex and challenging matters in Vietnam. We are committed to helping clients achieve their business strategies and providing
outstanding legal services.
If you have any questions on any of the items discussed above, please do not hesitate to contact us.
Christian Schaefer
Managing Partner
E christian@asia-counsel.com
Minh Duong
Partner
E minh@asia-counsel.com
Asia Counsel Vietnam Law Company Limited, Unit 15.03 – 15.04, Level 15, Deutsches Haus, 33 Le Duan Boulevard, Ben Nghe Ward, District 1, Ho Chi Minh City

2. ASIA COUNSEL INSIGHTS
New Labour Code
Vietnam Fact Box
The Department of
Labor, Invalids and
Social Affairs of HCMC
(DOLISA) issued an
official letter No.
13413/SLDTBXH-VLATLD
dated 29 May 2020
requesting companies
who employ foreign
employees who are
investors, technical
professionals, highly-
skilled labor, enterprise
managers, or managing
directors to submit a list
of their foreign
employees intending to
enter Vietnam to
DOLISA. DOLISA will
submit the to the People
of Committee of HCMC
for consideration and
approval by 8 June 2020.
Leave and Public Holidays
The New Labour Code adds one
day off to the National
Independence Holiday, on 1 or 3
September, resulting in the
increase of the total public
holidays per year to 11 days.
Furthermore, employees will be
entitled to three-days personal
leave with full pay upon death of
their adoptive father/mother or
death of their spouse’s adoptive
father/mother, one-day personal
leave with full pay upon the
marriage of their adopted child
and three-days personal leave
with full pay upon the death of
their adopted child.
Internal Labour Rules (ILR)
The New Labour Code requires
additional contents in the ILR,
including:
• Prevention of, the sequence
and procedures for dealing
with sexual harassment in the
workplace;
• cases in which an employee
may be temporarily
transferred to undertake work
different from that specified
in the labour contract;
• the authorized person to impose
disciplinary measures
The New Labour Code provides that
the employer is no longer required to
consult with the intermediate upper-
level trade union before issuing the
ILR if it does not have a trade union
at the grassroots level nor another
representative organisation for its
employees.
Independent Trade Unions
For the first time, employees are
allowed to establish and join an
independent representative
organization for employees that is not
under the state-run Confederation of
Labour. The independent union
however will still be required to get
permission from state authorities to
operate. As a result from the removal
of immediate upper level trade union
from the definition of “Organizations
representing the employees at
grassroots level” the employer will no
longer be required to consult with the
immediate upper level trade union
on employment provisions and issues
if there is no organization representing
the employees at grassroots level
established by the employees.
Working Hours
While working hours and overtime
remain unchanged, the monthly
overtime working cap of 30 hours per
month under the current Labour Code
has been increased to 40 hours per
month under the New Labour Code.
The New Labour Code also provides
a list of specific sectors and
circumstances entitled to a 300-hour
overtime scheme per year (e.g.:
generation and supply of electricity,
telecommunications, refinery
operation, textile manufacturing,
work requiring employees with high
technical qualifications or expertise
who are not available on the labour
market, in cases of, natural disasters,
fire, or technical issue of the
production line, etc.) that is not
provided in the current Labour Code.
Retirement ages
The current retirement age provided is
60 for males and 55 for females.
Under the New Labour Code, the
retirement age will be gradually
increased by three months per year
for males and four months per year
for females, to an eventual 62 years
of age for males (effective from 2028)
and 60 years of age for females
(effective from 2035).
Employment of Foreign Employees
There is a notable change under the New Labour Code that foreigners married to Vietnamese
and living in the territory of Vietnam are allowed to work in Vietnam without a work permit.
The term of the labour contract of a foreign employee shall not exceed the term of his/her
work permit. A work permit shall have a maximum term of two years and can only be
extended once with a term up to two years. A new work permit is required after the extension.
From the above, it can be understood that a foreign employee subject to the work permit
requirement can only work for an employer for a maximum term of 4 years on a single work
permit. Nonetheless, under the Code, definite term contracts (with a term up to 36 months)
with foreign employees can be concluded multiple times. The Code is silent on the term of
the labour contract for foreign employees exempt from the work permit requirement and how
many times the confirmation of the work permit exemption can be renewed or re-issued.
We note that no instrument guiding the New Labour Code is available now, and there may
be further official guidance from the relevant authority in this regard in the coming time.