Some Notable Changes To Labor Issues From 2021

On 1 January 2021, the Labor Code No. 45/2019/QH14, adopted by the National Assembly on 20 November 2019 (“Labor Code 2019”), took effect. This new law entirely replaces the previous Labor Code of 2019. In this article, we discuss some fundamental changes in the Labor Code for employers’ consideration to comply with the prevailing labor laws.

1. Changing some points for work permit obtainment

i. Company’s owners must obtain the work permit in some certain cases

Labor Code 2012 allowed the owners of a company to get the work permit exemption due to partly or wholly holding company’s charter capital. However, this permit is compulsory if their holding capital is less than VND3 billion as required by Labor Code 2019.

The granted work permit exemption to an owner has still been valid despite the enforcement of such new regulation, but once it’s expired, the company must obtain new work permit for such subject.

ii. Validity of work permit

The work permit is valid for the maximum of 02 years on a case-by-case basis. Labor Code 2019 additionally provides the instructions for extension with another 02 years in maximum. Therefore, a work permit could last for 04 years if extended. After such term, the company must prepare a new application for obtaining a new work permit.

2. Broadening the subjects to an employment relationship

Pursuant to Labor Code 2019, an employment relationship is determined regardless of the name of the document signed by employer and employee. A document named “service contract” could be considered as a labor contract if covering agreements on the job, working time, wage, salary, management and supervision of the employer.

Therefore, any contractual relationship between a company with a freelancer, individual service provider, contractor could constitute an employment relationship if it covers the above-mentioned elements. In this case, the termination of such contract must follow the regulations of Labor Code 2019, rather than termination of a normal commercial contract.

3. Adjusting the regulations regarding labor contracts

From 01 January 2021, there are lots of changes of labor contract as well as labor contract engagement that the employers should take into consideration. Some notable changes could be listed as follows:

i. Formality of a labor contract

New Labor Code 2019 recognizes that the parties could make and sign electronic labor contracts via electronic devices. Such contracts have the same validity with those in written form.

ii. Types of labor contract

Employer and employee could enter either indefinite-term labor contract or definite-term labor contract with maximum of 36 months.

There is no longer seasonal labor contract/ work-specific labor contract applicable from the date Labor Code 2019 takes effect.

iii. Appendix to an effective labor contract

Employer and employee could sign the appendix to supplement, amend the valid labor contract without extending or changing its duration.

iv. Multiple definite-term labor contracts in some certain cases

Different from the previous regulations, new Labor Code 2019 allows employers to enter more than 02 definite-term labor contracts with the following persons:

1. Directors of State-owned enterprises;
2. Elderly employees (senior employees) who still work after reaching their retirement age;
3. Expats; and
4. Members of executive board of organizations representing for employees when expiring the current labor contracts.

5. Updating the Internal Labor Rules (“ILRs”)

Labor Code 2019 requires employers to issue the Internal Labor Rules. If having 10 employees or more, the ILRs must be in writing. The ILRs contents must comply with the labor laws and relevant regulations. In addition, it should include the following issues:

i. Working hours and rest periods;

ii. Order at the workplace;

iii. Occupational safety and health;

iv. Actions against sexual harassment in the workplace;

v. Protection of the assets and technological and business secrets and intellectual property of the employer;

vi. Cases of employee reassignment are permitted;

vii.Violations against labor regulations and disciplinary methods;

viii.Material responsibility; and

ix. The person having the competence in handling labor disciplines.

If the company employs less than 10 employees, a written ILRs is not compulsory but the employer should specify labor disciplines and material responsibility in the labor contracts.

Due to the changes of numerous regulations of Labor Code 2019, company should check the current ILRs whether complies with the prevailing relevant laws and amending, supplementing its ILRs, if needed.

Thus, to ensure compliance with such new labor code, companies should check the above-mentioned items and make the necessary changes.