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 PartnerHoangchuong.le@letranlaw.com

Ms. HANNAH HUYNH THI MY HANHSenior Associate

Myhanh.huynh@letranlaw.com

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:

4 © 2018 LE & TRAN

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

5© 2018 LE & TRAN

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

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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).

9© 2018 LE & TRAN

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

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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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10 © 2018 LE & TRAN

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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11© 2018 LE & TRAN

ISSUED LABOR LAW DOCUMENTS

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