Drafting labor contracts in Vietnam

A labor contract is an agreement between an employee and an employer regarding the paid job, working conditions, rights, and duties of each party in the labor relationship. A labor contract is the most authentic legal document in labor relations. Therefore, when agreeing and signing a labor contract, the parties need to consider it carefully to maximize their benefits. In this article, Viet An Law Firm will advise valued clients on how to draft legal labor contracts and some keynotes when participating in drafting and signing labor contracts.

Legal basis

• Civil Code 2015;
• Labor Code 2019;
• Decree 145/2020/ND-CP guiding the Labor Code on working conditions and labor relations;

Type of labor contracts in Vietnam

Labor contracts are quite special compared to other types of civil or economic contracts in that the law specifically regulates the types of labor contracts in practice. According to Article 20 of the Labor Code 2019, labor contracts are concluded according to one of the following types:

• An indefinite-term labor contract is a contract in which the two parties do not specify the term or termination date of the contract;
• A fixed-term labor contract is a contract in which the two parties determine the term and termination date of the contract within no more than 36 months from the effective date of the contract.

Note: For a fixed-term labor contract that expires, if both parties sign a new labor contract that is a definite-term labor contract, it can only be signed one more time. After that, if the employee continues to work, clients must sign an indefinite-term labor contract.

Form of labor contracts in Vietnam

• The labor contract must be concluded in writing and made in 02 copies, each employee and employer keeps 01 copy.
• Labor contracts concluded through electronic means in the form of data messages according to the law on electronic transactions are as valid as written labor contracts.
• Regarding contracts with a term of less than 01 month, both parties are allowed to enter into a verbal labor contract, except for the cases specified in Article 18.2, Article 145.1(a), and, Article 162.1 of the Labor Code 2019.

Subjects participating in entering into labor contracts

Regarding employers

The person entering into the labor contract with the employee is a person in one of the following cases:

• Legal representative of the enterprise or cooperative;
• Heads of agencies, units, and organizations according to the provisions of law;
• Head of household businesses;
• Directly recruited individuals.

Regarding employees

The person entering into the labor contract with the employer is a person in one of the following cases:

• Employees aged 18 years or older;
• Minor employees from 15 years old to under 18 years old and have written consent from their legal representative;
• Legal representative for people under 15 years old and with the consent of the person under 15 years old;
• The employee is legally authorized by the employees in the group to enter into a labor contract.

Some basic terms in labor contracts in Vietnam

A labor contract is a free agreement between the employee and the employer. Contractual parties have the right to freely agree and sign the terms of the contract to suit the conditions and nature of the referred job. However, the content of a labor contract must have the following basic provisions:

Information of the parties in the contract

Honest recording of detailed information of employers and employees:

• Name and address of the employer or legal representative: Name and address of the business, agency, organization, cooperative, or household business that hires or uses employee under a labor contract according to the Enterprise Registration Certificate, cooperative or investment certificate, or decision to establish an agency or organization. In case of an individual hiring an employee, write the full name of the employer according to the issued identity card or valid passport.
• Full name, date of birth, gender, residential address, identity card number, or other legal documents of the employee;

Work and work location

• Work: The work that the employee must perform;
• Employee’s working location: Scope and location of the employee’s agreed upon work; If the employee works in many different locations, write down the main locations where the employee works.

Labor contract term

Time of performance of the labor contract (number of months or days), starting time and ending time of the labor contract (for fixed-term labor contracts); starting time of the labor contract (for labor contracts with indefinite term). From the labor contract term, we can determine the type of labor contract.

Salary level, payment method, salary payment period, salary allowances, and other additional payments

• Salary, salary allowances, and other supplements;
• Pay method;
• Salary payment period.

The parties are free to agree on other additional payments and allowances but must clearly state the amount and conditions of benefit.

Promotion regime, salary increase

The parties agree on the conditions, time, date, and salary level after promotion or salary increase.

Working time, rest time

The parties agree specifically on working hours and rest hours on the principle:

• Working hours per day and week; shift; the start and end times of the day, week, or shift; number of working days per week; overtime and related terms when working overtime;
• Time, start time, and end time of breaks during working hours; Weekly leave, annual leave, public holidays, personal leave, unpaid leave.

Social insurance, unemployment insurance, and health insurance

Because this is a provision that ensures the rights of employees as well as the obligations of the employer, the parties are required to have provisions on this provision in the contract. The parties noted the agreement on the following issues:

• The percentage calculated on the monthly salary for social insurance, unemployment insurance, and health insurance is the responsibility of the employer and the employee under the related law;
• Payment method and payment time for social insurance, unemployment insurance, and health insurance of the employer and the employee.

Other terms are agreed upon by both parties

Depending on the nature of the work, the parties may agree on several other issues such as:

• Labor protection regime;
• Training, fostering and improving professional skills;
• Personal income tax of employees;
• Rights and obligations between the parties.
• When an employee works directly related to know-how or technological secrets of business according to the provisions of law, the employer has the right to agree in writing with the employee on the content and time limit for protecting them, rights, duties, and remedies correspondingly in case of violation.
• For employees working in the fields of agriculture, forestry, fishery, and salt production, depending on the type of work, the two parties can reduce some of the main contents of the labor contract and agree upon a resolution in case contract performance is affected by natural disasters, fires, and weather.

Note: The labor contract takes effect from the date of conclusion unless the parties agree otherwise or the law provides otherwise.

• Employees can enter into labor contracts with multiple employers but must ensure full implementation of the agreed contents.
• The parties sign a labor contract on the principles of voluntariness, equality, goodwill, cooperation, and honesty. Freedom to enter into labor contracts but not against the law, collective labor agreement, and social ethics.

Some questions related to drafting labor contracts in Vietnam

Can labor contracts be concluded electronically?

According to the provisions of the Labor Code 2019, a labor contract concluded via electronic means in the form of a data message by the law on electronic transactions has the same value as a written labor contract.

Can a labor contract be concluded verbally?

Except in some cases, labor contracts can only be concluded verbally for contracts with a term of less than 1 month.

Is the company required to give a copy of the contract to the employee?

According to the provisions of Article 14 of the Labor Code 2019, when a labor contract is concluded in writing and made into 02 copies, the employee keeps 01 copy, and the employer keeps 01 copy, except in the case of labor contracts being concluded via electronic means.

The above article is advice from Viet An Law Firm about drafting labor contracts in Vietnam. Clients who are interested in the field of labor law consulting have related questions or need to use drafting labor contract services, please contact Viet An Law Firm for the best support.