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subleasing, a 6-month maternity leave period, a two-year work permit term, revised working and rest times, and a
new role for upper-level labor unions in enterprises without grass-root unions. Information on these changes is
In the year ahead, it is expected that numerous Decrees and Circulars that implement the current Labor Code will
also be revised to comply with the New Labor Code.
Longer Maternity Leave
The New Labor Code provides that female employees are entitled to six months of maternity leave, regardless of
their working condition. The current Labor Code provides for only four months maternity leave, including prenatal
and postnatal period, for most female employees, except for certain limited cases in which female employees can
enjoy five or six months leave.
The New Labor Code also provides that a female employee may return to work prior to the expiry of her maternity
leave only if she has had at least four months' rest after birth. Early return under the current Labor Code is
permissible after two months' rest after birth.
Work Permit Regulations.
The New Labor Code introduces some major changes to the current regulations on work permits. Specifically,
while the current law allows for a maximum term of three years, the New Labor Code only limits that term to a
maximum of two years. In addition, there are fewer exemptions from work permit requirements in the New Labor
Code. Indeed, while the current regulations allow work permit exemptions for any foreign national working in
Vietnam for a term of less than three months, the New Labor Code no longer allows these exemptions.
The New Labor Code introduces the concept of labor subleasing, which is defined as the situation when an
employee employed by an enterprise licensed to provide outsourcing services works for another employer and
subject to the latter's management while the labor relation with the outsourcing service provider is maintained. The
maximum term of a sublease is twelve months.
An enterprise wishing to engage in labor subleasing activities must (i) have a license issued by the State authority to
provide labour subleasing services; and (ii) meet a minimum funding requirement. Also, the contract for
labor-subleasing must be done in a written form, and the labor subleasor much enter into a labor contract with the
employees before subleasing them to the labor subleasee. The labor subleasor also has to pay salary to the
employees, and ensure that the salary of the employees is no less than the salary of an employee of the labor
subleasee who is of the same level or doing similar work. Furthermore, the labor subleasor is also responsible for
imposing disciplinary measures on the employees in the event that the labor subleasee returns the employees for
their violations of the work regulations of the labor subleasee.
The labor subleasee must not discriminate between the employees and its own employees. It further cannot
sublease the employees to another entity. In addition, the labor subleasee can return the employees to the labor
subleasor if the employees do not meet the requirements as agreed between the labor subleasor and labor subleasee.
The labor subleasee is also responsible for providing evidence of violations of the employees in the event that it
wishes to return the employees to the labor subleasor so that the latter can impose disciplinary measures on the
Work Time, Rest Time, and Overtime
The New Labor Code provides additional restrictions on the working time of employees. Similar to the current
regulations, the New Labor Code provides that the normal working time may not exceed eight hours a day or 48
hours a week. However, it further specifies that working time cannot exceed ten hours a day in case the employer
schedules the company's work time on a weekly instead of a daily basis.
Regarding rest time, one major change in the New Labor Code is that for Lunar New Year, employees can have five
days leave instead of only four days as provided under the current regulations.
Regarding overtime work, while the current regulations require consent of employees in all cases of working
overtime, the New Labor Code provides for some exceptions to this rule. Specifically, under the New Labor Code,
the employer must obtain consent from employees to work overtime, except (i) if the country is in a period of war
or the President announces a national emergency situation; and (ii) to prevent or remedy/limit the loss of lives and
assets, or coming dangers in emergency situations, such as serious accidents, fires, floods, storms, earthquakes,
epidemics or other disasters.
Furthermore, while the current regulations provide that overtime hours must not exceed 50% of official working
hours in a day or 200 hours per year (in some special limited cases, not exceeding 300 hours), the New Labor Code
has added that overtime hours must not exceed 30 hours a month.
Another new point in the New Labor Code is the payment for employees for overtime hours. Specifically, if an
employee works overtime at night, in addition to payments provided under current regulations, that is, (i) the normal
overtime rate (150-300% of the current salary rate, depending on whether overtime hours are on weekdays,
weekends, or public holidays or fully paid leave days) and (ii) the additional payment for work performed at night
(at least 30% of the salary earned for day-work), the employer needs to pay the employees additional compensation
of 20% of the salary earned for day-work.
Additional Causes for Dismissal as a Disciplinary Measure
The current regulations provide a list of limited cases that are subject to dismissal as a disciplinary measure,
including (i) theft, embezzlement, disclosure of business or technology secrets, or other conduct which may cause
serious damage to the assets or to the interest of the enterprise; (ii) re-commit an offence during the period when
he/she is disciplined by extension of the period for wage increase or transfer to another position; or re-commit an
offence after he/she is disciplined in the form of removal from office; and (iii) where an employee takes an
aggregate of five days off in one month or an aggregate of 20 days off in one year without legitimate reasons.
Under the New Labor Code, the above list is extended to some further breaches: assault causing injuries, using
drugs during working time, infringing IP rights of employers, or other breaches possibly causing serious material
damages to employers' interests or assets.
New Role for Upper-Level Labor Unions in Enterprises without Grass-root Unions
Under both current regulations and the New Labor Code, consultation/participation of the trade union is required in
several cases (e.g., consultation on bonus regulations, salary scheme, etc.).
Current regulations impose a clear separation between the standing committee of a trade union at the grassroots
level and the standing committee of an immediate upper level trade union of the grassroots level trade union.
Accordingly, if a company does not have a trade union, the employer may skip the consultation/participation
procedures above, or may have to ask the opinion of the whole labor collective. Under the New Labor Code, on the
other hand, when a company has no trade union, consultation with the immediate upper level trade union will be
|NEW LABOR CODE OF VIETNAM ENTERS INTO EFFECT MAY 1, 2013