News analysis · May 18, 2013
Vietnam Labor Code 2012: What Employers Need to Know
Vietnam labor code 2012 comes into force on May 1, 2013, and it changes how employers must run contracts, probation, leave, working hours and discipline. The National Assembly passed the Code, numbered 10/2012/QH13, on June 18, 2012. It replaces the 1994 Labor Code. Employers who have not yet reviewed their paperwork should start now.
What changes for labor contracts
The biggest practical rule is about timing. A labor contract must be signed between the employer and the employee before the employment begins. Do not let a new hire start on a handshake and sort out the paper later.
The Code also limits what an employer can hold. An employer may not keep an employee's original ID card or original qualification papers. An employer may not ask an employee for cash or assets as a guarantee that the job will be done properly. If your office keeps original diplomas in a drawer, plan to return them.
Staff who handle business or technology secrets may be asked to sign a separate confidentiality agreement. That agreement can say what compensation is owed if the secret is disclosed.
For fixed-term contracts of 12 to 36 months, the employer must now give at least 15 days of notice before the contract expires. Put the expiry dates in a calendar so the notice is never missed.
Source: Tilleke & Gibbins, Vietnam's New Labor Code: Key Changes for Employers, February 27, 2013.
Probation pay goes up
The minimum salary during probation rises from 70 percent to 85 percent of the full salary. If you now pay 70 percent to new staff on probation, your budget for new hires will need to rise from May 1, 2013. Check each offer letter that is still open and update the figure.
Source: Tilleke & Gibbins, February 27, 2013.
Holidays and maternity leave
One day is added to the Lunar New Year break. Paid public holidays rise to ten days a year. Payroll and shift plans for next year should use the new number.
Maternity leave is extended from four months to six months. Employers should plan cover for roles held by women who may take leave, and they should talk early with staff about timing. This is general information, not medical or legal advice.
Source: Tilleke & Gibbins, February 27, 2013.
Working hours and overtime
Employers may set normal hours by the day or by the week. Under a weekly schedule, normal hours are capped at 10 hours a day and 48 hours a week.
Overtime has firm limits. It may not exceed 50 percent of the normal daily hours. It may not exceed 30 hours a month or 200 hours a year, except in special cases set by the Government, where the yearly cap is 300 hours. Under a weekly schedule, normal hours plus overtime may not pass 12 hours in one day.
Track overtime for each person, each month. A simple sheet that adds up the hours will show you early when someone is close to the limit.
Source: Tilleke & Gibbins, February 27, 2013.
Internal rules, discipline and records
The Code adds new grounds for dismissal: gambling, deliberate violence that causes injury, drug use at work, and disclosing business or technology secrets. These grounds must appear in the employer's internal labor rules. The rules must be registered with the local labor authority. Registration was already required for employers with ten or more employees. The registration file must now include an opinion from the grassroots labor collective organization.
The time limit for acting on a breach of discipline grows from three months to six months. For breaches that involve finance, property or the disclosure of secrets, it is twelve months. Moving a worker to a lower-paid job as a punishment is abolished.
Keep a written record of each warning, each meeting and each decision. Clear records help an employer show that it followed the rules.
Source: Tilleke & Gibbins, February 27, 2013.
Foreign staff and outsourced labor
The longest work permit for a foreign employee falls from three years to two. Domestic employers may hire foreign employees only as managers, executives, experts or technicians, and only when Vietnamese workers cannot meet the business need.
Labor outsourcing is allowed only for certain jobs, and the term may not exceed 12 months. The outsourcing company must be licensed and pay a deposit. Its pay to outsourced workers must be at least what the hiring company pays comparable staff.
A quick checklist: review contracts, return original documents, raise probation pay, update the holiday calendar, and register internal rules. Many guiding decrees and circulars are still expected, so check each one when it is issued.
Source: Tilleke & Gibbins, February 27, 2013.
Sources
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