Vietnam’s NEW Labor Code – 15 notable changes coming your way effective January 2021

The New Labor Code 2019 will soon come into effect on 1 January 2021 and entirely replace the current labor regime (‘Labor Code 2012’). The below fundamental amendments should be taken into account with a view to best protecting an employers’ legitimate rights and entitlements under Vietnamese labor law.

1.         The definition of ‘employment relationship’ has been broadened

Pursuant to the Labor Code 2019, a legally valid employment relationship is deemed to exist even where two parties agree to a document by a different name rather than ‘a labor contract’, as long as the document includes a description of the job, salary, management, and supervision conditions. In other words, a contractual document with a different name is still considered to be a labor contract assuming the above general terms are included.

The new Labor Code 2019 creates the possibility that where a contract with an “independent contractor”, “service provider”, “freelancer”, or other informal agreement between two or more parties contains employment-like terms may specifically be recognized as a formal Vietnam-law labor contract.

From a practical perspective, this serves to prevent employers from misusing service contracts as an alternative mechanism for hiring individuals (as opposed to traditional labor contracts). The use of service contracts typically enables employers to more easily undertake termination without statutory restrictions, as well as avoid mandatory social insurance contributions, as would otherwise ordinarily be required under a formal employment contract.

It is thus necessary for an employer who genuinely wishes to engage an individual contractor for a specific service to prepare a specific service contract in order to avoid the potential risk that the relationship be characterized as one of employment and not of service.

  1. E-contracts are formally recognized

    Labor contracts made by electronic means in data message form are now formally accepted and recognized under the Labor Code 2019. Specifically, labor contracts concluded via electronic devices in data message form have the same validity as those concluded in written form.

Additionally, a verbal labor contract can be concluded if the contractual term is for less than one (1) month.

  1. Seasonal labor contracts have been removed

    From 1 January 2021, labor contracts can take either one of the following forms: (i) indefinite-term labor contracts, and (ii) definite-term labor contracts of maximum 36 months.

    That is to say, compared to the current regulations of the Labor Code 2012, seasonal or work-specific labor contracts will no longer exist.


  1. Labor contract extension is no longer allowable

 Under the Labor Code 2012, an annex to a labor contract serves to elaborate on specific provisions or to amend or supplement the primary labor contract. Specifically, the duration of a labor contract shall be amended only once by annex and type of the signed contract shall not be changed as the result.

Under current law, in practice, the employer is entitled to conduct one extension for each definite-term labor contract via an annex as an integral part of such labor contract. On this basis, by way of two definite-term labor contracts plus two extensions, an employer is potentially eligible to extend three times before the labor contract term is deemed indefinite by law.

Conversely, the employer can no longer do that under the Labor Code 2019. The reason is that, an annex to a labor contract fundamentally serves to elaborate, amend or supplement specific provisions of the labor contract, but must not change the duration of the labor contract.

  1. Multiple definite-term labor contracts are now allowed in certain cases

In principle, in case the two parties enter into a new labor contract with a definite-term, only one additional definite-term labor contract may be executed. After that, if the employee continues working, an indefinite-term contract shall be constituted.

Nevertheless, the Labor Code 2019 has addressed exceptions for this aforesaid principle whereby parties may sign multiple definite-term labor contracts under special circumstances, comprising: (i) elderly employees (i.e. employee working after reaching his/her retirement age); (ii) expat employees; (iii) members of executive boards of organizations representing the labor collective (including trade unions); and (iv) directors of state-owned enterprises.

  1. New regime for probationary periods

 Probationary periods can last up to 180 days for managerial positions (as defined under the Law on Enterprises or Law on Management and use of State Investment in Enterprises, which greatly favor an employer from a recruitment perspective, effectively enabling an extended trial period, though only for a narrow list of personnel that meet the managerial positions definition.

It is also worth noting that probation is not allowed if the employee works under a labor contract with a duration of less than one (1) month.

  1. Unilateral termination by employer 

Since 1 Jan 2021, an employer shall have additional legal grounds to unilaterally terminate a labor contract, once:

 (i)         An employee has reached his/her retirement age, noting that under the Labor Code 2012 an employer CANNOT unilaterally terminate an employee who has not yet contributed to the social insurance regime in full for the purposes of pension entitlement, even though he/she has reached his/her retirement age;

(ii)        An employee is absent from work without a legitimate reason for five (5) consecutive working days or more; or

(iii)       The employee has provided false information that affects the recruitment of the employee.

Additionally, the Labor Code 2019 has granted extra protection for an employer to unilaterally terminate a labor contract without prior notice once:

(i)         An employee fails to return to work after 15 days from the expiry of the suspension period of a labor contract; or

(ii)        An employee is absent from work without a legitimate reason for five (5) consecutive working days or more.

  1. Unilateral termination by employee

 From an employee perspective, under the Labor Code 2019, an employee has the right to unilaterally terminate a labor contract without any reason as long as they provide proper notice in advance (i.e. at least 45 days in case of indefinite-term labor contract; at least 30 days in case of definite-term labor contract of 12 to 36 months or at least 3 working days in case of definite-term labor contract of less than 12 months).

In addition to the above, an employee also has the right to unilaterally terminate the labor contract without prior notice should he/she:

  • be not assigned to the contractual position or workplace;
  • be not provided with the agreed working conditions;
  • be not paid, in full or on time, the salary due as agreed in the labor contract;
  • be mistreated or humiliated by the employer;
  • be sexually harassed in the workplace;
  • be pregnant and the continued employment would adversely affect the fetus;
  • reach retirement age; or
  • be provided with false information by the employer that affects the performance of the labor contract.
  1. New regulations on salary payment

 Employers are now no longer required to register a salary table, salary scale, or salary norms with the labor authorities.

In case of salary paid via bank transfer, employers shall pay the cost of account opening and money transfer. An employer may also pay the salary to the employee’s authorized person.

When taking annual leave, an employee may request the employer to pay advance payments equal to the salary for the entitled days of leave of such month. Should the employer agree, it can deduct the advance payments at the time of salary payment for the employee in question.

  1. Changes applicable to expat employees

 The maximum term of a work permit for a foreign employee is two (2) years and may only be extended once for an additional maximum term of two (2) years. That is to say, new application in full for a new work permit should be prepared every four (4) years for those working in Vietnam for a long way. Under the current law, the maximum duration of a work permit is also two (2) years and can be renewed on an unlimited basis.

Employers and foreign employees may enter into multiple definite-term labor contracts. This regulation is to guarantee that the term of the expat employee’s labor contract shall be consistent with that of his/her obtained work permit and should close a long-standing conflict in the law concerning the mandatory use of indefinite-term contracts after two consecutive definite-term contracts.

In addition, expats married to Vietnamese citizens and living in Vietnam shall be exempt from work permit obligations (noting that work permit exemption certificate is still required though).  This is a major new additional ground for work permit exemption.  It remains to be seen whether there will be any limits to the types or positions that such spouses may hold without work permits.

  1. Labor discipline

 The internal labor regulations may be registered at the district-level labor authority.  We are of the  presumption and view that the provincial labor authority may authorize a district-level labor authority to process an application for the registration of internal labor regulations.

Importantly, employers may impose disciplinary measures for violations stipulated not only in the internal labor regulations but also in the labor contract or labor laws. This is the case for an employer with less than 10 employees where internal labor regulation preparation and registration is not mandatory.

As a separate note, similar to current law, the procedure to impose labor discipline would strictly require the involvement of a representative organization of employees at grass-root level. However, it is also worth noting that, under new Labor Code 2019, representative organization of employees could be other internal employee organizations within the employer, in addition to the current regime of internal trade union which is purely under the sole management of Vietnam Labor Federation.

  1. Retirement ages have been increased

 The age of retirement for employees working in normal conditions will follow a roadmap until the age of 62 years for men and 60 years for women. Specifically, the retirement age will be gradually increased to 62 years by 2028 for men, and 60 years by 2035 for women.

From 2021, the retirement ages of employees in normal working conditions shall be 60 years and 3 months for men, and 55 years and 4 months for women, and shall increase by 3 months for men and 4 months for women for each consecutive year.

  1. The number of public holidays has been increased by one day

National Day public holiday will now consist of two (2) days, namely (i) the second day of September; and (ii) the previous or next day (presumably at employer’s discretion to identify the specific one).

  1. Overtime policy

 The monthly overtime cap has been increased from 30 hours to 40 hours.

Additionally, the Labor Code 2019 has supplemented the circumstances where organizing overtime work of up to 300 hours in a year is permissible, comprising the manufacturing and processing of textiles, garments, footwear as well as electric and electronic products; and the processing of agricultural, forestry, aquaculture, and salt products.

  1. Concept of ‘sexual harassment’ has been introduced for the first time

‘Sexual harassment’ at the work place is expressly defined in the Labor Code 2019.

Procedures and policies on the prevention and handling of sexual harassment at the workplace must be included in the internal labor regulations, whereby ‘sexual harassment’ is now defined as a legal ground for dismissal.


For more information, please contact Giles at or Le Nhan at or any of the lawyers in our office listing. Giles is Chairman of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

COVID-19 and eligibility to enter Vietnam

Border Control

As of the date of this post, the Government of Vietnam still maintains suspension of entry for expats, including people with a Vietnamese visa exemption certificate.  A potential date to allow foreigners to enter Vietnam again has not been formally announced by the Government yet, though further information is expected imminently.

The current entry restriction, which came into effect on 22 March 2020, has limited exemptions for diplomatic, official duty, as well as special circumstances, including experts, business managers, high-skilled technicians (pursuant to Government’s Decree 11/2016/ND-CP, it can be interpreted that experts, business managers, high-skilled technicians are those who have been issued with work permits to legally work in Vietnam), and other essential categories as determined by the Government of Vietnam.  That is to say, statutorily speaking, there exists a possibility where such subjects are entitled to enter Vietnam, subject to approval of provincial People’s Committee and Department of Immigration, after the  consultation with the Ministry of Public Security, Ministry of National Defense, Ministry of Foreign Affairs, Ministry of Health, and other relevant agencies.

Despite this, to the best of our knowledge, though feasible in theory, practice appears to be different and it seems no formal approval has been granted yet, partly due to absence of any guidance from the Government to each province in detail.

Should an enterprise wish to send an expat (with a valid work permit) to Vietnam to manage operations in Vietnam at the moment, they should seek approval for entry on a case-by-case basis from the provincial People’s Committee and Department of Immigration as first priority.

Quarantine Requirements in Vietnam

Since 8 March 2020, all people who have arrived from outside the country must (i) complete a medical declaration form, which can be done by completing a paper form on arrival or a digital form online before the trip via this link and (ii) undertake COVID-19 testing. On this basis, regardless of whether the COVID-19 testing result is positive or not, everyone entering Vietnam, including Vietnamese nationals, have been subjected to mandatory, centralized quarantine for 14 days. It is worth noting that this quarantine period, under some circumstances, might be prolonged to more than 14 days, at the broad discretion of the authorities.

Hệ thống thông tin quản lý Khai báo Y tế

Hệ thống thông tin quản lý khai báo y tế

So-called “centralized” quarantine sites in Vietnam may be basic facilities. Therefore, Ministry of Health released Decision No. 1246/QD-BYT on 20 March 2020 (“Decision 1246”) to grant more flexibilities for the mandatory quarantine. Specifically, a person subject to quarantine is entitled to request to be quarantined at a permitted hotel to enjoy better facilities and would need to bear all accommodation expenses during the quarantine period.

By law, this requires the individual to simply (i) fill in a Request Form under Annex 2 of Decision 1246; and (ii) submit same to immigration authority. However, we note that the procedure for this step is neither transparent nor well-organized and unlikely to be workable in practice on an ad-hoc basis.  It is thus necessary to ensure that arrangements are confirmed directly with the relevant provincial authorities of the port of entry.

For more information, please contact Giles at or Le Nhan at or any of the lawyers in our office listing. Giles is Chairman of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

COVID-19 Guidance for Employers in Vietnam: CANs and CAN’Ts

Employers the world over are facing unprecedented issues brought about by the COVID-19 pandemic. Vietnam employers are no different. They need to be able to both respond rapidly and decisively to actual facts and formal and information government direction as it arises and simultaneously comply with legal obligations set out in law and statute. What trumps what?

An earlier blog post addressed specific remuneration issues under Vietnam law (see: here). That is a topic that will be further addressed as this crisis continues to unfold globally. This post covers some additional ad-hoc issues that we have seen come up for employers in Vietnam.

As ever, these topics are subject to change, potentially very suddenly, but we’ve attempted to set out the current position in law and practice. Please get in touch for more information.

Topic 1: Right to disclose an employee’s COVID-19 status to other colleagues

Strictly speaking, this information is deemed by law to be ‘confidential medical information’ of the employee, meaning that an employer is NOT permitted to disclose the fact of an employee’s sickness to others in the absence of the relevant employee’s express consent. An employer could disclose generally that an employee has tested positive for COVID-19 without identifying the specific individual affected.

On the other hand, taking into account the wider public health imperative and the positive obligation of all infected individuals to isolate and identify individual contacts for checks (Art. 3.2.1 of Guidance on medical quarantine in term of Covid-19, under Ministry of Health’s Decision No. 904/QĐ-BYT dated 16 March 2020) plus the positive obligation on employers to disclose the positive case (noting that failure to disclose the positive case of disease is strictly prohibited under Article 8.3 of The Law on Prevention and Control of Infectious Diseases) it can reasonably be concluded that, even without express consent, employers must provide other employees and the authorities with identifying information of affected employees that they have knowledge of in order to meet wider obligations.

In other words, this is one area where it seems likely that wider public health concerns and obligations trump individual personal privacy regulations. Having said that, employers are advised to proceed in a way so as to limit, to the extent possible, the scope of privacy breaches. The practical ability to do this will vary from case to case but may includes: (i) making at least a reasonable effort to obtain prior express consent from affected employees; and (ii) disclosing the information to as small a circle of people as reasonably possible in order to address public health obligations; and (iii) ensuring that language used is as neutral as possible and does not stigmatize the individual or overly-dramatize the situation.

On the first point, employers would be well-advised to pro-actively prepare specific consent forms that can be rolled out at short notice in a bid to obtain express consent on an as-needed basis.

Topic 2: Right to require employees to work from home

Theoretically speaking, any change to an employee’s workplace as recorded in their labor contract must comply with the terms of the relevant contract or be subject to express prior consent of the employee concerned.   Despite this, in the current situation, we are of the view that employers are able to require employees to work from home regardless of the foregoing, should the employer determine that such change of location is necessary to protect health and/or to comply with orders or requests of competent authorities.

In doing so, the employer would be entitled to expect the employee to continue to discharge regular duties and working hours. Reality does however dictate that this may be difficult in practice for the employer to control and/or the employee to achieve. The employee would have a reasonably expectation of being provided necessary means to discharge duties (such as computer).

We are also of the view that employers could mandate this on the basis of implementing plans under the Law on Prevention and Control of Infectious Diseases. Again, it would be important that the plan be properly prepared and informed to employees.

It remains arguable what rights employees may have to insist on working from home where the employer reasonably considers it unnecessary for public health purposes and in the absence of any positive requirement from authorities to order work-from-home arrangements where possible.

Topic 3: Right to screen employees’ and visitors’ temperatures

The Law on Prevention and Control of Infectious Diseases 2007 generally recognizes enterprises’ rights to prepare and implement plans to prevent and control infectious diseases on a case-to-case basis.

In our view, this would provide a basis for employers to insist on temperature screening for employees and visitors entering the workplace. In fact, this is widely accepted practice by most, if not all, State authorities and State-owned enterprises in Vietnam and many private businesses as well.

It would however always be preferable to have an actual written policy that outlines the reason by reference to the Law on Prevention and Control of Infectious Diseases and procedures to implement including how to act in the case of temperatures considered to be high.

Topic 4: Right to report in case of employee’s abnormal symptoms

In principle, an employee is obliged to comply with their employer’s internal policies on labor safety and hygiene at the workplace. Specifically, one of these obligations is to report any potential risk where dangerous and hazardous factor might appear at workplace (Art. 18, Law on labor safety and hygiene 2015). Concurrently, employers are entitled to be aware of all health-related risks at the workplace and have a responsibility to keep employees and relevant authorities updated on same (Art.23.4, Law on Prevention and Control of Infectious Diseases 2007).

Therefore, it is allowable for employers to report to competent authorities and/or to update its internal management personnel in case an employee has abnormal symptoms, including without limitation to the employee’s temperature which is abnormal.

Topic 5: Right to collect employees’ personal travel information and obligation to declare same to authorities

Vietnamese law is silent on this topic. As a matter of practice, those who have recently visited/ passed through territories considered as pandemic regions (e.g., the US, European countries, China, Iran, etc.) and those suspected of suffering from Corona virus are required by the government to undergo a compulsory 14-day centralized quarantine. In addition, individuals who have been in close contact with someone who has tested positive for COVID-19 (known as ‘F0’ individuals) are also subject to such mandatory centralized isolation/ self-isolation, depending whether they are determined as F1, F2, F3, F4 or F5 individuals respectively.

Following this, it is reasonable to conclude that employers are entitled to seek and be made aware of such information with a view to best protecting all their employees and reporting same to the competent authorities where necessary.

For more information, please contact Giles at or Le Nhan at or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.


COVID-19 Guidance for Vietnam-law Employers: Remuneration Focus

COVID-19 undoubtedly has impacted your business or workforce in some way. The past period has been full of challenges for all employers as we all face the actual influence of this difficult-to-control global pandemic. Clearly, this is a unique and rapidly-developing situation.

In Vietnam, the Prime Minister formally issued Decision 173/QĐ-TTg declaring that the corona virus is an epidemic (issued 1 Feb 2020 and effective on same date).   With a focus on remuneration payment to employees during the epidemic season, this article is provided based on current laws and, where relevant and available, Government ad-hoc policy and guidance.

As ever, Employers are of course free to implement policies that are more favorable than the statutory minimum. Also, this is an area subject to change, potentially very suddenly.  We will endeavor to update this as possible.

  1. Salary payment for sick employee, regardless of regular sickness or positive result of Covid-19

Once an employee has illness symptoms or is feeling un-well and then stays home, please kindly see the various options as follows, which should be considered on a case-to-case basis.

Sick Leave under Vietnam’s Social Insurance regime (SI)

If an employee is sick and obtains a valid medical certificate evidencing same, the Employer can file this medical certificate with the SI and the SI will pay sick leave entitlements to the employee.  Such entitlement is equal to the lower of 75% of the employee’s regular salary or 75% of the SI cap.

With respect to quantity, the SI will pay up to: (i) 30 days/ year for those who have contributed to the SI fund for less than 15 years; (ii) 40 days/ year for those who have contributed to the SI fund for more than 15 and less than 30 years; and (iii) 60 days/ year for those who have contributed to the SI fund for more than 30 years.

In short, assuming Employer has contributed in full as required to the SI scheme (employee and Employer contributions) then such Employer is not required by law to pay salaries for employees on sick leave.

Sick Leave voluntarily offered by Employer, in addition to SI

The above is subject to any other policies and practices that Employer may, in fact, have in place that offer greater additional benefits to employees.  Some Employers voluntarily offer extra fully-paid sick leave to employees and, if such an arrangement is in place at your company, employees would be entitled to ‘use up’ any additional ‘paid’ sick leave entitlement before filing statutory SI claims.

Unproven sickness

Strictly speaking, the SI regime will only provide salary cover for employees with certified sickness.  Thus, an employee who is isolated to be assessed as to whether they are sick or not would not be covered by the SI regime as it stands now.  In such circumstances, it would be recommended that the Employer seek to reach agreement with the employee to pause work on a reduced salary (see item #2 below).

Relationship with paid annual leave entitlement

Under all circumstances, an affected employee would be entitled to apply to take their accrued paid annual leave entitlement first.

  1. Salary payment for those who have to be home because their child’s school is closed

Very upfront, we note that this reason for being home is not considered as sick leave or leave to take care of a sick child under the age of 7, both of which are permitted reasons for absence from work covered under Vietnam’s SI regime (as explain under item #1 above). In addition, as addressed above under item #1, unproven sickness would also fall under this category.

Strictly speaking, unless the employee is able to work from home due to his/her job description and the Employer was to agree with that, absence from work for this reason is considered either absence without permission or leave pursuant and subject to the Employer’s specific leave regime.

As such, the options for salary payment would be the below, in order of priority:

Option 1: the employee applies for paid annual leave until they use up their accrued annual leave entitlement.

Option 2: the employee formally pauses work as a direct result of epidemic and following negotiation and agreement with their employer on reduction of contractual salary during such period (Art. 98.3, Labor Code 2012) (see further at item #3 below).

Option 3: the employee and their employer discuss and reach agreement on unpaid leave (Art. 116.3, Labor Code 2012).  Agreement on this in principle, and length of any unpaid leave, is essentially at the discretion of the parties to agree.

  1. Temporary suspension of operations

For avoidance of doubt, temporary suspension of operations referred to here is a decision to temporarily pause the operations and not a decision to permanently close the business location(s).

From a corporate law perspective (Art. 200, Law on Enterprises), an enterprise is entitled to make a formal application to temporarily pause/ suspend its operations (up to a maximum 2 years).  This applies at all times, regardless of occurrence of any epidemic or not.  However, formal temporary suspension of operations is not a legal basis for Employers to unilaterally terminate employee labor contracts.  In other words, existing employment must be either maintained as normal, including with respect to payment of salaries, or employment relationships terminated lawfully on some other basis.

From a labor law perspective, epidemic is a legal basis for Employers to: (i) unilaterally terminate labor contracts pursuant to Article 38.1(c), Labor Code 2012; or (ii) maintain employment relationships but negotiate reduced salaries with affected employees (such amount not to be lower than the applicable regional minimum wage) for a specific period, pursuant to Article 98, Labor Code 2012.

At this time, Vietnam law appears to be silent on how employment matters are handled in the case where Employers are ordered by competent authorities to temporarily shut down operations as a result of epidemic.  The People’s Committee of Ho Chi Minh City (PC) recently issued orders to shut down all cinemas, bars and other entertainment venues at least until the end of March 2020 without providing any specific guidance on employment-related matters.

At present then, there is no real difference in practice between a temporary closure made at the decision of the Employer as a result of epidemic and one ordered by a competent authority.  In both cases, the initial starting point is that it would need to continue to pay contractually agreed amounts. However, as noted below, the Employer should consider discussing with employees about receiving a reduced salary, not to be lower than the applicable regional minimum wage (with no work duties to be performed).  If the alternative is the (lawful) right to unilaterally terminate employment, this may be an attractive option for affected employees. In other words, employees may be motivated to agree on the reduction (accept Employer’s proposal) because, if they do not, the Employer would have legal grounds to unilaterally terminate employment as a result of epidemic (subject to the generally-applicable 30 and 45-day advance notice requirement for definite and indefinite-term labor contracts respectively).

For your information, according to Government Decree 90/2019/ND-CP, almost all of the districts of Hanoi and Ho Chi Minh Cities fall within Region 1 and the applicable regional minimum wage for 2020 is: (a) VND 4,420,000 per month for un-trained employees; and (b) VND 4,729,400 per month (i.e. an additional 7%) for trained employees.  This is approximately US$192 and $205 respectively. The minimum wage of other regions throughout the country would be a bit lower than that of Region 1.

Bottom line, despite the current laws, there might be a strong possibility that further ad-hoc regulation or policy may be issued by the Government that will affect the current status quo at law.  We will endeavor to keep you informed of any developments.

  1. Government’s guidance/ comments / indication recently about the current situation

As noted, the situation is complex and fluid.  It is quite likely that the Government will issue further policy/ regulatory guidance that will impact the current position outlined above.  At this moment, the main item of note is that the Prime Minister released the Directive No.11/CT-TTg on 04 March 2020 giving instructions to relevant agencies as outlined below.  While this is very general, it provides an indication of how things may develop so we provide it here FYI along with some initial comments.


1. Ministry of Labor (MOLISA) (i) To report on the labor and employment status in the enterprise;


(ii) To diversify methods of propaganda and solutions to motivate employees’ morale;


(iii) To support employees whose employments are terminated due to the influence of Covid-19;


(iv) To monitor the expat employees who come from the epidemic regions or pass by the epidemic regions; and


(v) to stop issuing new work permits for expat employee in a certain duration, then the Vietnam-based enterprise should be proactive to seek for alternative local employees to play roles of expat experts.


Item # (iii) recognizes the fact that epidemic is a legal basis for unilateral termination by Employers.
2. Vietnam Social Security To work with relevant authorities to provide guidance on temporary cessation of social insurance contributions for objects affected by Covid-19 until the end of June or December 2020, without calculating interest for late payment. Employers may be entitled to delay payment of social insurance contributions without being charged interest.


3. Vietnam Labor Federation To consider and guide the suitable time for collect trade union fees, so as to support enterprises affected by Covid-19. Employers may be entitled to delay payment of trade union fees.



For more information, please contact Giles at or Le Nhan at or >any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Update on draft new Labor Code for Vietnam

The Ministry of Labor, War Invalids and Social Affairs (MOLISA) released another draft of the new Labor Code (the Draft Code) on 19 August 2019 with a view to improving the current Vietnamese legal framework by further aligning it with the overall development of the Vietnamese labor market, from both employer and employee’s perspectives.

The below highlights some of the key amendments being proposed in the Draft Code, together with some comments on the same based on long-standing practice in this sector in Vietnam.



Form of labor contract For the first time the execution of labor contract via electronic methods are formally recognized, e.g. emails.


On this basis, please kindly be advised that the agreed negotiations between Employer and Employee including without limitation to the job offer recorded via emails systems might be deemed as a binding contractual agreement, unless otherwise expressly repealed by the formal labor contract.


Prohibited acts Employer is prohibited to force the employee to perform a labor contract so that the employee can pay back an amount of debt that he/she borrows from the employer.


In other words, a loan that an employer grants to an employee shall constitute a separate civil-law relationship which is independent from the labor-law employment.
Type of labor contract To remove the seasonal labor contract. Namely, according to the Draft Code, there would be two types of labor contract: (i) definite term of up to 36 months; and (ii) indefinite term.


We however note that there exist some different schemes for labor contract of less than 12 months and labor contract of 12-36 months, such as prior notice in case of unilaterally termination.
Contents of labor contract To allow parties to agree on the non-disclosure agreement including rights, obligations and compensation in case of breaches.


This proposal adds extra protections for employers. Nevertheless, there remains no regulation on non-competition or non-solicitation agreements in the Draft Code as currently drafted.


Probationary period To add a special category of ‘enterprise manager’ who may be subject to a probationary period of up to 180 days (instead of the 60 day max under current law).


We note that the definition of ‘enterprise manager’ will be in line with Law on Enterprises.
Unilateral termination by employer To add three circumstances in which an employer can unilaterally terminate a labor contract:


(i)        if employee reaches his/her statutory retirement age;

(ii)       if employee is absent from work for 5 consecutive working days without a proper reason;

(iii)      if employee provides false info (e.g. qualifications) for the purpose of recruitment.


At first glance, this would grant employer with extra lawful grounds for the purpose of unilateral termination. It is however recommended that the employer should await further guidance in detail for the purpose of implementation.
Time frame for payment of termination package According to the Draft Code, employer would have 14 working days from the date of termination for the purpose of termination package payment.


The doubles the current requirement of 7 working days.
Salary payment Employers are obliged to provide employees a monthly pay slip to breakdown the differences between net and gross salary amounts at the time of salary payment.



By this approach, the drafting team is trying to build up the transparent regime of remuneration payment which can help to enable an employee to be aware of the social insurance, health insurance and unemployment insurance contributions, personal income tax and other withholding amounts from his/her gross salary, if any.


Form of salary payment To pay salary in cash is formally recognized without any restrictions.


This requires further guidance from the Government as it would prima facie conflict with certain mandatory accounting-related requirements.


Overtime payment There are two options:


(i)        Option 1: to remain same, i.e. 150%, 200%, and 300% for regular day, weekly days off and public holidays respectively; or


(ii)       Option 2: to increase the overtime payment, i.e. up to 180%, up to 240%, and up to 360% for regular day, weekly days off and public holidays respectively.


At the time of this Draft Code, the drafting team is carefully considering these two options. The latter is undoubtedly more preferable from the employee’s perspective.


Putting that aside, the Draft Code is proposing to increase annual overtime cap into 400 hours (from current 300 hours).

Annual leave calculation The principle of pro-rata calculation is formally recognized by the law for those who do not work for 12 months in full. This widely-accepted practice in Vietnam looks set to be formally reflected in the new law.
Labor Discipline If the violation is clearly stated in the labor code or the labor contract, employer can still apply labor discipline [in the absence of the (registered) internal labor regulations (the ILR)].



This would be a major change.  We currently presume however that it may be intended only to apply to employers with less than 10 employees that are not required by law to have and register ILR.


Labor contract term for expat employee The Draft Code is saying that expat can enter into a number of consecutive definite-term labor contracts, term of which must be in line with that of the work permit (the WP).



That is to say, the indefinite-term labor contract is not applicable to expat employees.


WP exemption category To add extra condition for WP exemption subject. Specifically, owner or capital contribution member of a limited company would be exempted from WP requirement only if his/her/their ownership value in the company (employer) reaches VND 1 billion (equivalent to US$42,750).


This is likely aimed at a loophole where expat employees are granted ‘super minority’ shareholder status in order to enjoy WP exemption.


This amendment is to minimize the aforesaid legal gap. In other words, WP exemption is a statutory entitlement applicable to ‘true’ shareholders/ owners only.


WP extension WP can be extended once, for another additional term of maximum 2 years.


Under current law, WP re-issuance is required upon expiration with cumbersome paperwork.


Subject to further guidance on the extension procedure, it is hoped this will reduce admin burden on employers.


For more information about labor laws in Vietnam please contact Giles at or Nhan Le at

Compulsory Social Insurance for expats working in Vietnam – who’s in and who’s out?

Ever since the Law on Social Insurance[1] was issued in late 2014, employees and employers have been on notice that “expat employees working in Vietnam” will be required to participate in the State’s compulsory social insurance (SI) regime “from 2018”.  2018 came however with no further clarity around the details.

In October 2018, the Government issued Decree no. 143/2018/ND-CP[2] guiding the Law on SI and providing that “Employees who are expats working in Vietnam shall be required to participate in the SI program if they obtain work permits, practicing certificates, practicing licenses issued in Vietnam, indefinite-term employment contracts or employment contracts valid for at least one year with employers in Vietnam.” (Article 2.1). Also in the same decree, several exceptions from SI participation are listed, including intra-company transferees and expats reaching retirement age.

According to the statistics of the Ministry of Labor, War Invalids and Social Affairs (“MOLISA”), 64% of applicable expats working in Vietnam joined the SI scheme under Decree 143[3]. Having said that, there remains confusion amongst both employers and expats employees as to the subjects of application of the law.

Finally, on 18 March 2019, MOLISA issued Official Letter no. 1064/LDTBXH-BHXH[4] clarifying the issue of exactly which expats will be required and not required to participate into the Vietnam-law SI scheme.

Specifically, expat employees working in Vietnam must satisfy all of the following criteria in order to be applicable for the SI scheme:



Nationality Non-Vietnamese nationals working in Vietnam An overseas Vietnamese national entering Vietnam to work via his/her passport of a foreign country would be deemed as a non-Vietnamese national working in Vietnam.


Licenses Work permits, practicing certificates, practicing licenses issued by the competent authority in Vietnam


As a side note, a work permit issued for
an expat entering Vietnam to supply services to a Vietnam-based entity would not fall under this category. 
Employment Indefinite-term or at least one-year definite-term labor contract with a Vietnam-based employer. We are of the view that a definite-term labor contract (from 12 to 24 months) would suffice in this regard.


It is worth noting that term of expat’s labor contract must be in line with term of his/her valid work permit, which is maximum 24 months from a theoretical perspective.


Age Men: Under 60 years old

Women: Under 55 years old

Please kindly be advised that these retirement ages are being proposed to increase to 62 for male and 60 for female according to the draft of new labor code.


Others NOT falling under the scope of statutory intra-company transferees, i.e. any expat managers, chief executive officers, experts and technicians, who have been employed by the offshore enterprise for at least 12 months and are temporarily re-assigned/ seconded to its Vietnam-based commercial presence (e.g. subsidiary, representative office, or branch). Frankly speaking, an expat deemed an intra-company transferee with his/her work permit exemption certificate would be NOT eligible to attend the SI scheme.

For ease of reference, timeline and ratio for SI contributions applicable to both employer and expat employees under Decree 143 please see the table below.

In short, employers who hire expat employees would have to bear an extra liability to ‘part’ pay SI from 1 December 2018 and to ‘fully’ pay SI from 1 January 2022 while the relevant expat employees will NOT commence contributing to the scheme until 1 January 2022.

Sickness and Maternity Labor Accident and Occupation Disease Pension


Death Allowance


1 December 2018

Employer 3% 0.5% 0% 3.5%
Expat Employee 0% 0% 0% 0%

1 January 2022

Employer 3% 0.5% 14% 17.5%
Expat Employee 0% 0% 8% 8%

Importantly, please also note that there is a statutory maximum cap for all SI contribution, as with caps applicable to Vietnamese employees, if the expat employee’s actual gross salary is higher than the maximum cap, the cap becomes the basis of the % calculation. Specifically, in light of SI, the basis for % calculation would be (i) the actual gross salary OR (ii) 20 times of ‘Base Salary[5], whichever is lower. Accordingly, such cap shall apply equally to both the employer % contribution and the employee % contribution.


[1] Law on Social Insurance no. 58/2014/QH13 dated 20 November 2014 (“Law on Social Insurance”)

[2] Decree no. 143/2018/ND-CP dated 15 October 2018, elaborating on Law on Social Insurance and Law on Occupational Safety and Hygiene regarding compulsory social insurance for employees who are foreign nationals working in Vietnam (“Decree 143”)


[4] Official Letter no. 1064/LDTBXH-BHXH issued by the MOLISA dated 18 March 2019

[5] ‘Base Salary’ is a measure set by the Vietnamese government from time to time. The current Base Salary applicable since 1 Jan 2019 is VND 1,390,000 / month, corresponding to a monthly cap of VND 27,800,000. However, it is worth noting that the Base Salary will change effective 1 July 2019 to VND 1,490,000, corresponding to a monthly cap of VND 29,800,000.


For more information about labor laws in Vietnam please contact Giles at or Nhan Le  at

Location, location, location – 5 areas to watch in Vietnam

With the second fastest growing economy in the world after China, Vietnam offers investors an almost overwhelming range of ways to get in on its continuing success story.


From energy to real estate, transport to tourism, a multitude of areas are experiencing growth and attracting domestic and foreign investment. The push to ease regulations is set to continue, and the government is working to ensure an evermore fertile business climate. But with so many options, where is a good place to start?


Here are five spots currently generating some real excitement:


  1. Soc Trang


The Mekong Delta province of Soc Trang recently held an investment promotion conference and, with the backing of the Prime Minister, managed to rally investment pledges totalling nearly US$5.4 billion. The 47 projects are mainly focused on clean power generation, high-tech agriculture and tourism services.


With work already underway to reform and streamline administrative procedures, a new injection of cash could inspire even more growth over the coming years.


During the conference, the PM set out an aggressive development strategy for the province, underlining his vision that the coming decade would see Soc Trang expand its economy to achieve middle-income status.


Specifically, the province was urged to set its sights on high-tech agriculture adapted to climate change, clean seafood production and processing targeting high-value markets and eco-tourism linked with ‘smart’ agricultural models. To achieve this kind of sustainable development, provincial authorities will need to invest in human resources and education. Co-operative models between farmers, investors, banks and distributors will help the development of value chains and quality standards for agricultural products.


  1. Ninh Thuan


For those with eyes on the renewable energy sector, the province of Ninh Thuan is looking like a hot prospect. Construction on the country’s biggest solar power plant, with a capacity of 168 MWp and total investment of roughly US$194 million, commenced in the southern province early in June.


The plant is a project by Singapore’s Sunseap Group – a large provider of clean energy solutions – and is slated to cover an area of 186 hectares. Once operational in June 2019, the plant is expected to supply over 200 million kWh of electricity to the national grid annually.


Sunseap is not the only player taking advantage of the province’s valuable location and abundance of sunlight, with four other plants kicking of construction this year in Ninh Thuan. With backing from provincial leaders, the province aims to become a renewable energy hub, with the generation of 2,000 MW of solar power by 2020.


So far, the province has 15 wind power and 27 solar power projects, with designed capacity of nearly 800 MW and 1,808 MW, respectively.


  1. Ho Chi Minh City


With properties priced at a fraction of those in neighbouring Singapore and Thailand, Vietnam is drawing a number of real estate investors and becoming a popular destination for foreign buyers.


Interest in Ho Chi Minh City, in particular, has been growing among foreign buyers with a number of projects already for sale and some approaching completion in the next one to two years. Given the political stability of the government, some investors see Vietnam as having the possibility to grow like China.


Home prices in Vietnam have been rising over recent years, making a modest increase last year on the back of 6.8 per cent economic growth and rapid increase in direct foreign investments.


  1. Coastal hot spots


The hotel and hospitality sector is experiencing a resurgence in Vietnam, with many properties reporting strong occupancy rates and a large number of new operators entering the market, especially in coastal areas such as Da Nang and Nha Trang.


These sites were already known as popular destinations for both domestic and foreign tourists, with the number of international guests visiting the country reaching over 13 million last year. In the first four months of 2018, more than 5.5 million international guests visited Vietnam, an increase of 29.5 percent over the same period last year. As interest continues to mount, so too do opportunities for investors in the hospitality sector.


Thanks to the strong development of tourism infrastructure and improvements in accommodation, cities like Da Nang and Nha Trang now offer a wide selection of hotels, luxury resorts and beach villas to suit a range of budgets and preferences.


Condotels are a growing trend in this sector, and several developers have adopted this model as a method of refinancing. Experts forecast that up to 18,000 condotel units will be added to the market in the next two years in key tourism destinations, accounting for 60% of the total new supply.


With major groups such as Vingroup, Sungroup, FLC, Muong Thanh and Empire, as well as well-known international brands snapping up segments of Vietnam’s hospitality market, this area will be one to watch in the coming years.


  1. Quang Binh


The central province of Quang Binh has drawn up a list of 48 projects to be completed in the 2018-2020 period, with total expected value of over US$2.2 billion.


The projects are expected to cover more than 8,000ha of land, with a focus on tourism, trade and services, industry, and agriculture, as well as education and health care.


Of the projects, 14 are in tourism, including coastal and ecological tourism and resort complexes. These are considered high-value projects that will spur local job creation, boost the budget and foster tourism development in the province.


For more information about investing in Vietnam, please contact Giles at or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Mid Year Labor Law Update

The Labor Code in Vietnam is undergoing a rare revision with changes expected to be confirmed later this year and effective in 2018.  Click the link below for a snapshot of some anticipated changes as well as an update on trade union and social insurance matters.

Asia Employment Law Congress – Duane Morris – 9June2017

For questions about Vietnam labor law, please contact Giles at or any of the attorneys in our office listings.