Important Changes to Labor Code in Vietnam that Every Business Must Know

Posted 21.02. 2020 by Cekindo / Last update on 26.03. 2020

Following the current public health situations (coronavirus pandemic), foreigners who are experts, business managers, high-tech workers and have a certificate showing not tested positive for COVID-19, issued by competent authorities of the host country and approved by Vietnam MOH, will be allowed to enter Vietnam, However, they must be strictly isolated at established accommodation to ensure safety measures and prevent the spread of the virus.

 

The government has implemented the New Labor Code 2019 on November 20, 2019 in Vietnam.

This new labor code will come into effect on January 1, 2021 and the purpose of this new regulation is to keep pace with the international labor standards and to strike a balance of interests between employers and employees.

The newly enacted labor code has several changes, including the introduction of compulsory work rules, probationary employment and notice requirements.

In this guide, Cekindo will highlight some of the major changes in the labor code 2019.

Changes in the Vietnam Labor Code

The new labor code has extended the scope and made several key changes that benefit both employers and employees.

1. Labor Contract

The Vietnam labor code now covers two kinds of labor contracts: indefinite-term contract and definite-term contract.

The definite-term contracts are only valid for a maximum of three years and allowed to be renewed once, including foreigners with a work permit. There will be no more seasonal contracts under this new labor code.

In addition, the new Vietnam labor code recognizes the labor contract through e-contract (or digital contract). An e-labor contract has the same validity as the written labor contract in Vietnam.

2. Public Holidays

The public holidays under the new labor code will be increased to 11 days from 10 days. One more day will be added to the Independence Day holiday.

So, the overall public holidays for employees starting from 2021 are as below:

  • Five days for Lunar New Year
  • One day for the death anniversary of Hung King
  • One day for Victory day
  • One day for International Labor Day
  • Two days for Independence Day
  • One day for International New Year’s Day

3. Overtime Work

As the normal working hours still remain as 48 hours every week, the new Vietnam labor code will increase the overtime hours from 30 hours to 40 hours per month.

However, the employee’s overtime hours must not go over 50% of his/her normal working hours per day; and the total overtime hours shall not exceed 200 hours per year.

4. Termination of Contract

The Vietnam labor code 2019 allows employees to terminate their contract anytime as long as they give notice in advance (specified in the labor contract) to their employers.

In general, the minimum notice requirements are 30 days and 45 days for definite-term contract and indefinite-term contract respectively).

Furthermore, employees can also cease their contracts when they are being mistreated, not paid on time or pregnant.

The Importance of Vietnam Labor Code 2019 Compliance

The government of Vietnam implemented the New Vietnam Labor Code 2019 with an effort to be on par with the international labor standards and participate in various free trade agreements with countries across the globe.

The importance of maintaining compliance with the Vietnam labor code 2019 is straightforward. The new code serves as a protection for both employees and employers and has a serious impact on businesses.

Therefore, if employers do not abide by the requirements of the new code, legal provision will not be accessible for businesses in the events of legal disputes.

How Cekindo can Assist

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Our agile and expert team of consultants works at a cost-efficient speed to give you the best assistance while never sacrificing the quality.

Our legal experts specialize in corporate laws including Vietnam labor code. We can handle the most complex and challenging legal issues and business transactions that you encounter.

If you need legal assistance in Vietnam, simply get in touch with Cekindo now through the form below.