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New decree changes contract procedures

Update: February, 11/2015 - 08:21

Government Decree 05/2015/ND-CP was issued on January 12, 2015, guiding implementation of a number of issues in the Labour Code. Guidance on employment contracts, wages and employer's employment use plan in circumstances of restructuring, changes of technology, changes for economic reasons, or transfer of ownership or right to use assets are highlighted as follows:

Employment contracts

1. Persons eligible to sign:

(1) Employer: (i) enterprise's legal representative; (ii) head of agency, unit, or organisation; (iii) head of family household; or (iv) individual directly employing labour. If the person eligible to sign employment contract does not directly sign it, he/she may delegate authority to another person to sign.

(2) Employee: (i) 18-year-old or more employee; (ii) 15-year-old to under 18-year-old employee subject to his/her legal representative's written consent; (iii) legal representative of employee under 15 years old subject to employee's consent; or (iv) employee in a group delegated with authority to sign the employment contract.

2. Main contents of employment contract

(1) Employer's name and address;

(2) Employee's identity card or other lawful document;

(3) Job description and workplace;

(4) Contract term, e.g a number of months or days;

(5) Rate, method, and time of payment of wages, allowances and other additional payments;

(6) Regime for wage increases and promotion: conditions, time-limits and timing, and wage rates after promotion;

(7) Working hours and holidays: (i) hours of work, overtime work; (ii) rest breaks during working hours, weekly days off, annual leave, public holidays and Tet, personal leave of absence and leave without pay;

(8) Personal protective equipment: specific quantity, type and quality of each type of personal protective equipment and the times for use;

(9) Social insurance, health insurance and unemployment insurance;

(10) Training, fostering and improving an employee's knowledge and skills;

(11) Other relevant particulars as agreed by two parties.

Wages payable to employees

1. Details of wages must be recorded in the employment contract. Wages payable to the employee are based on the rate in the employment contract, labour output and the volume and quality of the work carried out by the employee. Wages stated in the employment contract and payable to the employee is made in Vietnamese dong, except wages and allowances paid to non-resident or foreign resident.

2. Employees are entitled to receive their wages directly in full and on time. Due to natural disaster, fire, or other event of force majeure, the employer has conducted measures but is still unable to pay wages on time; the payment must not be delayed by more than one month. If the payment is late by less than 15 days, no additional amount must be paid. If the payment is late by 15 days or more, additional amount must be paid equal to the late paid amount multiplied by the interest rate published by the State Bank of Viet Nam.

Restructuring, change of technology or change for economic reasons

1. If restructuring, change of technology or change for economic reasons adversely affects employment or could result in job losses with two or more employees to be retrenched, the employer must prepare an employment-use plan. If it causes unemployment, the employer must pay the employees retrenchment allowances.

2. Restructuring and change of technology include (i) change of organisation structure, or labour restructuring; (ii) change of products or product structure; (iii) change of processes, technology, machinery or equipment for production or business.

3. Economic reasons mean (i) economic crisis or recession; or (ii) implementation of the State policy on restructuring the economy or implementation of international undertakings.

Transfer of ownership or right to use assets

1. In case of transfer of ownership or right to use assets of enterprise, the preceding employer must prepare an employment-use plan.

2. If the employment contracts are required to be terminated under the employment-use plan, the employer must pay the employees retrenchment allowances.

3. With regard to employees continually employed, employees to be re-trained for continued employment, the employees transferred to work part-time for next employer under the employment use plan, when their employment contracts are terminated, their next employer must pay severance allowances or retrenchment allowances for the working period with this employer and the period the employees worked for the enterprise prior to its transfer of ownership or right to use assets.

The Decree takes effect on March 1,2015, and replaces Government Decrees No. 196-CP (December 31, 1994), No. 93/2002/ND-CP (November 11, 2002), No. 41-CP (July 6, 1995), No. 33/2003/ND-CP (April 2, 2003), and No. 11/2008/ND-CP (January 30, 2008).

MAI COUNSEL

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