Vietnam | Getting Ready for the New Labor Code 2019

Date: 04 Dec 2020

On 20 November 2019, the National Assembly of Vietnam adopted the new Labor Code No. 45/2019/QH14 (“Labor Code 2019”) which will replace the current Labor Code 2012 (No. 10/2012/QH13 of the National Assembly of Vietnam dated 18 June 2012). The Labor Code 2019 will take effect on 1 January 2021 and revises and supplements several provisions across all chapters of the currently in force Labor Code 2012. This includes the recommendation for all Vietnam-established companies to have internal labor regulations (“ILRs”) in place on 1 January 2021.

Under the Labor Code 2012, only employers with ten or more employees are required to have written ILRs and these must be registered with the Department of Labour, War Invalids and Social Affairs (“DOLISA”) to become effective and enforceable against employees. The ILRs must include certain mandatory information such as working hours and rest breaks, rules and codes of conduct for the enterprise, occupational health and safety requirements, protection of assets and confidentiality along with breaches of labour discipline and penalties. Employees must be made aware of the ILRs and they must be posted publicly and prominently within the company’s premises.

In our reasonable understanding and interpretation of the new Labor Code 2019, all employers should have ILRs, regardless of their number of employees. [1] However, when the employer has less than ten employees, such ILRs are not required to be in writing format (the ILRs can simply be posted on the company’s intranet for example) and do not need to be registered with the competent DOLISA. Employers with ten or more employees, by contrast, remain obliged to have written ILRs which must be registered with the competent labor authority (i.e. the DOLISA or a district-level labor authority if the latter has been duly authorized in accordance with the Labor Code 2019) to become effective and enforceable against employees.

The new Labor Code 2019 also amends the consultation procedures for implementing the ILRs: under the Labor Code 2012, such a consultation must be made beforehand with the grassroots trade union (i.e. the trade union at the company level) or, if one does not exist, the labor federation at the district level. From 1 January 2021 onwards, such consultation must be made with the grassroots trade union unit or/and the employee organization established at the company level.[2] The employee organization is a new instance of representation under the new Labor Code 2019 which, from our understanding, may be independent from the existing trade union system managed by the Vietnamese General Confederation of Labor.

Finally, the Labor Code 2019 adds additional mandatory content to be provided in the ILRs such as provisions relating to the prevention of sexual harassment in the workplace, procedures on dealing with sexual harassment behavior or the possibility for the employer to temporarily assign an employee to another work or job position.

Regardless of the number of staff, having well drafted internal labor rules is of particular importance for employers as the possibility of imposing disciplinary sanctions and dismissing employees will directly stem from and be based on the provisions of the company’s ILRs that are in place.

[1] Noting, however, that there is an uncertainty as to the obligation to have written ILRs for companies with fewer than ten employees. To be on the safe side in the absence of further guidance of the Vietnamese Government, we recommend having written ILRs in place, regardless of the number of employees.

[2] Details of the employee organization have yet to be issued by the Vietnamese Government.

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