Employment Contract in Vietnam: Two Types Under New Rules

An employment contract in Vietnam now comes in just two types: definite term and indefinite term. The new Labor Code started on January 1, 2021. It drops the old third type. Here is what that means for workers and employers.

The two types of contract

A definite-term contract has an end date. Its length cannot be more than 36 months. An indefinite-term contract has no end date. The two sides agree on the type when they sign.

The old 2012 Labor Code had a third type. It covered seasonal work and jobs under 12 months. That type is gone. A short job now needs a definite-term contract that states its dates.

Contracts signed before January 1, 2021 stay valid. They run until they end under their own terms.

Sources: Labor Code, Law No. 45/2019/QH14, National Assembly of Vietnam, passed November 20, 2019 (Article 20 on contract types; the Code's closing transitional provisions).

Put it in writing

The contract must be written and made in two copies. The employer keeps one. The worker keeps the other. The only normal exception is a job that lasts less than one month. Those can be agreed by word of mouth.

A good contract names both parties and states the job and the workplace. It also gives the term, the pay, the pay date and the working hours. It should cover rest time, social insurance and health insurance, and training if there is any.

Read the pay clause with care. Check the base salary, any allowances and the way raises are decided. Ask for anything unclear to be written down before you sign.

The Code also bars two practices. An employer may not keep the worker's original ID or degree papers. An employer may not ask for a cash deposit to secure the job.

Sources: Labor Code, Law No. 45/2019/QH14, National Assembly of Vietnam, passed November 20, 2019 (Articles 14, 17 and 21 on form, banned practices and contract content).

Probation comes first, once

A worker can be put on probation only once for each job. The length depends on the job. A manager of an enterprise can be on probation for up to 180 days. A job that needs a college degree or higher allows up to 60 days. A job that needs an intermediate vocational or technical level allows up to 30 days. Other jobs allow up to 6 working days.

Pay during probation cannot fall below 85 percent of the usual salary for that job. If the probation goes well, the employer must tell the worker the result. Then the full contract starts.

Sources: Labor Code, Law No. 45/2019/QH14, National Assembly of Vietnam, passed November 20, 2019 (Articles 24 to 27 on probation and its result).

What happens when a fixed term ends

Picture a worker who stays on after a definite-term contract runs out. Both parties then have 30 days to sign a new contract. During those 30 days, the rights and duties of the old contract still apply.

If no new contract is signed in that time, the old one turns into an indefinite-term contract. That rule protects workers who stay on without paperwork.

The Code also limits renewals. Two sides may sign one more definite-term contract. After that, the next contract must be indefinite, with a few exceptions set by law. Employers who like short terms should plan for this early.

Sources: Labor Code, Law No. 45/2019/QH14, National Assembly of Vietnam, passed November 20, 2019 (Article 20, renewal and expiry).

Quitting and the notice you owe

A worker may end a contract by giving notice. The notice depends on the type. For an indefinite-term contract, it is 45 days. For a definite-term contract of 12 to 36 months, it is 30 days. For a definite-term contract under 12 months, it is 3 working days.

Some sectors and jobs have longer notice set by the Government. Check the rules for yours. Giving notice on time keeps the worker clear of claims for breach.

Employers also have duties when they end a contract. They must follow the grounds the Code allows and give the required notice. Keep copies of every notice sent or received.

Sources: Labor Code, Law No. 45/2019/QH14, National Assembly of Vietnam, passed November 20, 2019 (Articles 35 and 36 on notice by the worker and the employer).

What to check before January ends

Employers should list every contract in force. Mark each as definite or indefinite, with its end date. Replace any form that still uses the old third type for new hires.

Workers should look at their copy. Check the type, the term, the pay and the notice. If a fixed term has ended and you are still working, count the 30 days.

The Government published Decree No. 145/2020/ND-CP in December 2020. It gives detailed guidance for the Code on working conditions and labor relations. Read it together with the Code before you change your forms. This is general information only. For a real dispute over a contract, ask a licensed Vietnamese labor lawyer or the local labor office.

Sources: Decree No. 145/2020/ND-CP of the Government of Vietnam, issued December 14, 2020, guiding the Labor Code.

Sources: Law No. 45/2019/QH14 (Labor Code), National Assembly of Vietnam, 2019. Decree No. 145/2020/ND-CP, Government of Vietnam, December 2020.