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New Labour Code Brings Vietnam up to International Labour Standards

New Labour Code Brings Vietnam up to International Labour Standards

The Vietnamese Government has approved amendments to their Labour Code, and as of February 1, 2021, it is now in effect. The amended labour code is part of an effort to align Vietnam’s economy with international labour standards, as they become part of the world economy. The new labour code will be necessary to enter agreements such as the European Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

While the labour code itself largely remains the same as previous years, there have been significant changes in regards to mandatory work rules, probationary requirements, notice requirements, and other regulations that offer workers more rights in the workplace.

Notable Changes to Vietnam’s Labour Code for 2021

Labour Contracts

While Vietnam’s labour code previously listed three different types of labour contracts, its 2021 version now only lists two:

  • Definite-term contracts — cannot have an employment term longer than three years, and can only be renewed once
  • Indefinite-term contracts can only be renewed once

Foreign workers with two-year work permits will also only be allowed to renew their work permit once. Seasonal labour contracts, previously the third labour contract, will no longer be permitted.

Working Hours

While the maximum number of hours worked remains at 48 hours per week, the new labour code declares that regular working hours cannot exceed 8 hours per day. There is room for an exception here if the employee and employer agree on an overtime deal — in this case, the overtime cannot be more than 12 hours per day, 40 hours a month, or 200 hours a year.

There is an exemption for industries such as footwear and clothing, if and when seasonal demands require longer than usual hours. In this case, there is an overtime limit of 300 hours per year.

Unions

As part of the new labour code, independent trade unions will now be permitted in Vietnam. Before the new legislation, trade unions were required to be overseen by the state-run Vietnam General Confederation of Labor (VGCL).

This particular part of the legislation is widely thought to become compliant with international free trade agreements which require certain rights for workers.

While trade unions will be independent in their operations, they will still need to get permission from relevant state authorities before their establishment.

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Contract Termination

The previous labour code required a definite-term employee to give at least 30 days notice (45 days for indefinite term employees) to end their contract.

2021’s labour code allows all employees to immediately terminate their contract if they are mistreated, pregnant, or if the employer does not pay them on time.

Discrimination

Vietnam’s 2021 labour code now has safeguards to protect employees from discrimination in the workplace, including:

  • Sexual harassment
  • Discrimination based on
    • Skin colour
    • Race
    • Nationality
    • Ethnic group
    • Gender
    • Marital status
    • Pregnancy
    • Political views
    • Disability
    • HIV status
    • If in a trade group
  • Other rights specifically for younger workers

Retirement Age

To avoid labour shortages in the coming decades, Vietnam will increase the retirement age from 60 to 62 for men, and from 50 to 55 for women. There are some exceptions where workers can retire earlier or later, depending on their work. For example, if an employee works lifting heavy objects, or works in a dangerous environment, they can retire up to five years earlier. Conversely, those who work in highly skilled jobs can retire later if they desire.

To avoid significant disruption to the working population’s lives, this retirement age raising will happen gradually through to 2028 for men, and 2035 for women.

Salaries

The Vietnamese Government will no longer regulate the salary policies at companies where agreements occur between the employer and employee. The Government will still regulate and enforce minimum wages.

A New Holiday for Employees

Employees will now be entitled to an extra day of leave with a new holiday — the Vietnamese National Day, which will occur every September 2.

Decree 145 — Implementation of the New Labour Code in Vietnam

To assist employers in carrying out the new labour code, the Vietnamese Government has issued Decree 145/2020/ND-CP (Decree 145). Some of the highlights of the decree are as follows.

Labour Supervision

All employers must create a labour management book that covers necessary information about all employees. The company must hold its labour management book at its head office or branch or representative office.

The company must report any labour changes to the labour department every six months.

Sexual Harassment

Decree 145 issues more detail on sexual harassment in the workplace. Namely, it mentions the following forms of sexual harassment as unlawful:

  • Physical harassment
  • Verbal or non-verbal harassment such as body language or displays of sexual activity either directly or electronically

The definition of the workplace now includes:

  • Anywhere where the employee works
  • Work-related locations such as social activities, workshops, business trips, vehicles, etc.
  • Business phone calls or video conferencing

Female Employees

  • Mothers with children under the age of 12 will now be allowed to take daily 60-minute breaks to feed their children
  • All female employees will be allowed a daily 30-minute break during their menstruation period. The number of days for this allowance is negotiable between employer and employee but must be at least three working days per month

If the employer does not give these time allowances, they must pay the employee additional hours to be separate from overtime pay.

Overtime

If an employer plans to initiate any overtime work, the employee must agree to the location, term, and the overtime work itself.

Termination of Labour Contract

In the case of unilateral employee termination, employers must give at least 45 days notice for indefinite-term contracts, or at least 30 days notice for definite-term contracts 12 – 36 months, at least 03 working days for definite-term contracts under 12 months

FAQs

Can a business visa be used to work in Vietnam?

In Vietnam, there are several kinds of visas that might be used for business purposes with different requirements and validity periods. As a rule of thumb, DN business visa is the one to apply for when working in Vietnam.

Who can sponsor a Vietnam work permit?

The employer/company hiring the employee.

Can one work in Vietnam without a work permit?

Only if they plan to work for not more than 30 days, with certain requirements apply.

Is it easy to get a job in Vietnam for a foreigner?

If the job requires specific skills and knowledge that the local people lack, it would be quite easy to get a job.

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InCorp Content Team

InCorp's content team includes talented copywriters from our regional group and globally. We contribute informative, thought leadership, and market-trending articles to guide aspiring business entrepreneurs to a higher level across the Asia-Pacific region.

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