On 20 November 2019, the National Assembly of Vietnam adopted the Labor Code No. 45/2019/QH14 (“Labour Code 2019”) to replace the Labour Code 2012. The Labour Code 2019 will take effect from 1 January 2021.

Below are several significant points of Labour Code 2019 in comparison with Labour Code 2012:

Scope of Labour Code including the workers without labour relations

The Labour Code 2019 expands the scope of application of certain regulations to “workers without labor relations”, which is defined as a person working not on the basis of being hired via a labour contract. Therefore, it may be understood that a person, who is paid wages and is subject to management and supervision by the employer, shall be considered to be an employee under Labour Code 2019, regardless of the names and forms of the agreements.

Electronic employment contracts

The Labour Code 2019 recognises the validity of the electronic employment contracts that are established in the form of data messages in accordance with e-transactions laws.

Types of labour contracts

In comparison with Labour Code 2012, the Labour Code 2019 has removed a seasonal or specific job labour contract with terms of 12 months or less as a type of labour contract. As such, there are two types of labour contracts:

• indefinite term labour contract; and
• definite term labour contract with terms of 36 months or less.

According to the Labour Code 2012 and Labour Code 2019, when a definite term labour contract expires and the employee continues to work, then the employee and employer must sign a new labour contract within 30 days from the expiry date of the labour contract.

While the Labour Code 2012 is silent on the rights, obligations and interests of the two parties in the absence of a new labour contract, Labour Code 2019 has set out clearly that rights, obligations and interests of the two parties shall be performed in accordance with the signed contract.

Right to unilaterally terminate labour contract of the employees

Under the Labour Code 2012, the employee who is subject to the definite term labour contract may unilaterally terminate the labour contract in several specific circumstances, such as employee not being assigned with the correct job or workplace, or working conditions agreed not being ensured, due wage not paid in full or on time to the employee, or employee being abused, etc. Such termination of labour contract must be given advance notice to the employer.

Labour Code 2019 allows an employee to terminate a labour contract without providing reasons, provided that such termination of labour contract must be given advance notice to the employer. However, Labour Code 2019 also provides several specific circumstances in which the employee is allowed to immediately terminate labour contract without giving advance notice, such as an employee being abused and sexually harassed in the workplace, etc.

Term of a work permit

While the Labour Code 2012 stipulates the term of a work permit shall be a maximum of two years and shall be re-issued for another term of a maximum of two years and does not limit the times for the re-issuance, the Labour Code 2019 set out that the expats are allowed to extend the term of work permit once for a maximum of two years after the expiry of work permit.  Upon the expiry of the extended work permit, the application for a new work permit is required in case such expats wish to continue working in Vietnam.

If you have any questions or require any additional information, please contact Trang Hoang of ZICO Law Vietnam (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.