Tag Archives: employer

Lawyer in Vietnam Oliver Massmann LEGAL ALERT ON EMPLOYMENT ISSUES

This Legal Alert is prepared based on recent official and unofficial discussions with the Ministry of Labor, Invalids and Social Affairs of Vietnam (MOLISA) and its in-charge persons in various meetings/seminars on labor laws of Vietnam.

We highlight below key employment-related issues discussed for your information and specific actions, where necessary.

  1. Proposed Amendments of the Labor Code

The MOLISA is working on a draft that amends a number of articles of the Labor Code to reflect TPP and other international treaties and correct shortcomings of the current Labor Code.  New issues including setting up independent trade unions, calculation of minimum salaries, working time. It is anticipated that the new Labor Code will be issued in late 2017.

Recommendations/Notes:  We will keep you updated of proposed changes to the Labor Code.
  1. Minimum Salaries

According to the MOLISA, there will be an increased range from VND180,000 to VND250,000 (equivalent to approximately US$8-12) of minimum salaries in 2017.

Recommendations/Notes:  Please prepare for this inevitable situation, especially with respect to your business plan for the year of 2017.
  1. Work Permits (WP) for Foreign Employees

Under the Labor Code, only experts; managers, executive directors and technical employees are permitted to work in Vietnam.

One of key considerations is that the concept of managers who are permitted to work in Vietnam are now limited to the narrowly defined ‘managerial positions’ under the Enterprise Law of Vietnam (EL).  As such, only few people qualify for managerial positions (e.g. – members of the Members’ Council, general directors or other individuals  have authority to enter into transactions on behalf of the relevant enterprises) pursuant to these enterprises’ charter (or the articles of association in other jurisdictions).

According to the MOLISA, a new circular guiding WPs will be issued soon.

Recommendations/Notes:  In order to recruit a foreign manager who unfortunately disqualifies the managerial position criteria, the employers often expand managerial position definition in its charter or persuade the DOLISA, the issuing body of WPs, to accept them as ‘expert’ who in turn need only to satisfy general conditions (e.g. – acknowledged by the head quarter as expert; having obtained bachelor degree or equivalent; and having had at least 3 years of experience in relevant industry).
  1. Overtime

In response to request for additional overtime hours, the MOLISA confirms that the amended Labor Code will deal with this issue. The specific overtime hours vary by industry and subject to agreements between employees and employers.

  1. Social Insurance

As of 1 January 2018, all employees having labor contract term from 1 month or more including foreigners working in Vietnam must pay compulsory social insurances. However, according to the MOLISA, Vietnam is negotiating with some countries to relax the above rule given more financial burden to be shouldered by foreign invested enterprises.  For example, Vietnam and Germany have basically reached in-principle agreements on possible exceptions to the above rule.

Recommendations/Notes:  From a financial perspective, the payment of social insurance of expatriates may increase more burdens for enterprises.  Please take into account this type of payment when calculating benefits payable to foreign employees and building up your business plan for the year of 2017.
  1. Payments of Compensations under Training Contracts

As a matter of practice, a number of foreign invested enterprises send their local staff abroad for training. In exchange, the relevant employee agrees to enter into a training contract which requires him/her to work for the employer for a fixed period of time following his/her completion of the training courses.

In this regard, the Labor Code makes it pretty clear that any employees who terminate labor contracts illegally (either not having termination grounds or failing to send termination notice on time). Nevertheless, the law is silent on whether an employee who has terminated his/her labor contract in accordance with the laws will still be subject to reimbursement of training fees.

According to the MOLISA, employees are still required to reimburse training costs under training contracts regardless of whether they terminate labor contracts legally or not.

Recommendations/Notes:  It is of utmost importance that the employer must have a well-drafted and detailed training contract at the outset.  Actual [and reasonable] costs that the employer may incur for the benefits of the employee during the training period should also be clearly stated in the training contract.  If not, the employee will stick to the fixed amount as agreed in the training contract to limit its reimbursement only.
  1. Employment of Local Staff by Offshore Entity

As a matter of practice, many offshore entities including parent companies of FIEs in Vietnam seek to employ local staff to work on either a seasonal or long-term basis.  The Labor Code is silent on whether a labor contract governed by Vietnamese law can be entered into between parties.  In such absence, a provision of Circular 30 guiding the Labor Code on labor contracts dated 25 October 2013 makes a list of persons who can act on behalf of the employers. Unfortunately, there is no reference to a person who can act on behalf of the offshore entities. According to a senior expert of the MOLISA, such absence would mean a No for a direct labor contract between offshore employers and local employees.

Recommendations/Notes: A number of offshore entities seek to circumvent the above restrictions by entering into:

(i).        an individual service/consultancy contract with the local employees;

(ii).       a professional service contract with a local partner under which the local employees will work for the offshore entity; or

(iii).    a labor outsourcing contract with a labor outsourcing company.

Each of the above options presents its pros and cons and care should be taken in adopting specific plan.  For example, direct involvement of local employee may result in a permanent establishment status under tax laws.

  1. Change of Types of Labor Contract

Vietnamese law prohibits employers to enter into more than two fixed term labor contracts with each not exceeding 36 months from the signing date.  The third labor contracts in such case must be a non-fixed term.

A number of employers seek to avoid this restriction (i.e. – entering into non-fixed term labor contracts with employees) by first terminating fixed term labor contracts upon their expiry, giving a temporary suspension of works for employees and then signing a new fixed term labor contracts.

In this respect, the MOLISA and the Supreme Court of Vietnam opine that such an arrangement can be challenged because a real termination must result in completion of all related works including return of social insurance books, employees’ books and settlement of all benefits, etc.

Please do not hesitate to contact Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

THANK YOU VERY MUCH!

 

 

Lawyer in Vietnam Oliver Massmann ALERT IMPRISONMENT/JAIL for Labour Law violation – New Penal Code sanctions – Unprecedented !

Lawyer in Vietnam Oliver Massmann ALERT IMPRISONMENT/JAIL for Labour Law violation – New Penal Code sanctions – Unprecedented !

On 27 November 2015, the National Assembly adopted a new Criminal Code No. 100/2015/QH13, which takes effective from 01 July 2016. This new Criminal Code will replace the old Criminal Code in 1999 and its amending / guiding documents.
Notably, the new Criminal Code provides new sanctions for violations in employment sector. Details of these sanctions are set out below:

Illegal dismissal of employees
In particular, if a person for his/ her own sake conducts one of the following behaviours that make dismissed employees or their families fall into difficult situations or go on strike, he/ she will be subject to monetary fine of VND10 million – VND100 million, non-custodial reform of up to 1 year or IMPRISONMENT/JAIL of 3 months to 1 year:
• Illegal dismissal of employees;
• Illegal issuance of decision on dismissing public servants; or
• Forcing, threatening the employees or public servants to quit their jobs.
The violating person will be subject to VND100 million – VND 200 million monetary fine or 1-3 year IMPRISONMENT/JAIL if he / she commits the crimes in either of the following situations:
• Dismissing 2 employees and more;
• Dismissing pregnant employees;
• Dismissing mothers of less than 12-month old baby; or
• Causing the dismissed employees commit suicide.
At the same time, the violating person may also be prohibited from holding certain professional positions within 1- 5 years.

Employment of employees under 16
Anyone who employs a person under 16 to do hard or dangerous work or work that involves contact with harmful substances in any of the following cases will be subject to a fine of VND 30 million – VND 200 million or up to 03-year non-custodial reform or 06 – 36 month imprisonment:
• The offender previously incurred a civil penalty or has a previous conviction for the same offence which has not been expunged;
• The offence results in bodily harm to 01 people who suffers from 31% – 60% physical disability;
• The offence results in bodily harm to 02 people or more who suffer from a total physical disability of 31% – 60%.
A sanction of 03 – 07 year imprisonment applies in the following cases:
• The offence has been committed more than once;
• The offence involves 02 workers or more under 16;
• The offence results in the death of 01 person or bodily harm to 01 person who suffers from over 61% physical disability;
• The offence results in bodily harm to 02 people, each of whom suffers from 31% – 60% physical disability;
• The offence results in bodily harm to 03 people or more who suffer from a total physical disability of over 61%.
A sanction of 05 – 10 year imprisonment applies in the following cases:
a) The offence results in the death of 02 people or more;
b) The offence results in bodily harm to 02 people or more, each of whom suffers from over 61% physical disability;
c) The offence results in bodily harm to 03 people or more who suffer from a total physical disability of over 122%.
The offender might also be subject to a monetary fine of VND 10 million to VND 50 million.

Evading payment of social insurance, health insurance, unemployment insurance for employees
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 200 million to VND 500 million:
• The amount of insurance contribution evaded is VND 50 million to under VND 300 million;
• The offender fails to pay insurance for 10 – 49 employees.
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 500 million to VND 1 billion:
• The offence has been committed more than once;
• The amount of insurance contribution evaded is VND 300 million to under VND 1 billion;
• The offender fails to pay insurance for 50 – 199 employees;
• The offender collects or deducts insurance contribution from the employees at the amount of VND 50 million to under VND 300 million or from 10 -49 employees but fails to pay insurance [to the authority].
A corporate legal entity who commits the following crimes is subject to monetary fine of VND 1 billion to VND 3 billion:
• The amount of insurance contribution evaded is VND 1 billion or more;
• The offender fails to pay insurance for 200 employees or more;
• The offender collects or deducts insurance contribution from the employees at the amount of VND 300 million to under VND 1 billion or from 50 – 199 employees but fails to pay insurance [to the authority].

Coercive labour
Any person that uses violence or threat of violence or other methods to force a person to work against his/her will, depending on each case, be subject to monetary fine of VND30 million – VND200 million, 06-month to 12-year imprisonment, or prohibited from holding certain positions or doing certain jobs within 01 – 05 years.

Action plan
What we recommend to you now:
• You should update your Internal Labour Rules
• You should inform your managing team about these new rules !
We are fully qualified to assist you with this work. Kindly let us know if you require our assistance.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above or should you request our assistance. Mr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Lawyer in Vietnam Oliver Massmann Labor Laws – Human Resources

The new Law on Social Insurance is coming into force at the 1 January 2016 and it will introduce some extensive changes which are considered to be good for Vietnam and align with international practice. These changes include, among others, expansion of the subjects of application of compulsory social insurance; additional provisions to improve the transparency of social insurance regime such as rights of employees to self-manage their social insurance books and obligations of employers to publicize information about the payment of social insurance premiums to employees every 6 months; steps to be taken to separate unemployment insurance from the social insurance regime; etc.

In order to ensure such changes are properly understood by employers and employees, the Ministry of Labour, War Invalids and Social Affairs should have more consultation and communication with the business community by reviewing regulations related to such changes, directly interacting with employers and employees during the consultation and opinion collecting process and building trust for social insurance agency. This would allow employers to be better positioned while explaining issues to their employees.

With respect to foreign workers, following the adoption of the new Labour Code in 2013, the Government of Vietnam recently issued Decree No. 102/2013/ND-CP elaborating the Labour Code’s provisions on foreigners working in the country. While the Decree clarifies the issuance and reissuance of work permits and eligibility for work permit exemption, there are current issues that should be resolved:
• Procedure for re-issuance of work permit should be simplified and it should be possible to apply at least 30 days prior to its expiration so that applicants have time to get their visa/temporary cards renewed;
• Trainees, who are working in Vietnam, and freelancers, who are working for many entities, are not covered by this Decree;
• The requirement of a criminal record certificate should only be applicable for applicants who have been in Vietnam for 6 months or more;
• The period for approval of a “foreign labour demand report” should be maximum 15 days and not 6 weeks as in some provinces;
• Documents for issuance of work permit should depend on type of employment/assignment including foreigners working under labour contracts and intra-company transferees or assignees working under service contracts; foreigners working in Vietnam less than 90 days to conduct audit, training, internship, etc.;
• Procedure for work permit exemption should be simple; and
• More comprehensive guidelines for applicants and training of officers in charge of issuance of work permits should be provided.
Please kindly note that the upcoming ASEAN Economic Community will impact the hiring of regional skilled labour in certain job categories by end the of 2015. The Ministry of Labour, War Invalids and Social Affairs should maintain the communication channels with the business community on this to address both opportunities and challenges.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

Vietnam Human Resources – Best Practice Solutions and Impact of ASEAN

The new Law on Social Insurance is coming into force at the 1 January 2016 and it will introduce some extensive changes which are considered to be good for Vietnam and align with international practice. These changes include, among others, expansion of the subjects of application of compulsory social insurance; additional provisions to improve the transparency of social insurance regime such as rights of employees to self-manage their social insurance books and obligations of employers to publicize information about the payment of social insurance premiums to employees every 6 months; steps to be taken to separate unemployment insurance from the social insurance regime; etc.
In order to ensure such changes are properly understood by employers and employees, the Ministry of Labour, War Invalids and Social Affairs should have more consultation and communication with the business community by reviewing regulations related to such changes, directly interacting with employers and employees during the consultation and opinion collecting process and building trust for social insurance agency. This would allow employers to be better positioned while explaining issues to their employees.
With respect to foreign workers, following the adoption of the new Labour Code in 2013, the Government of Vietnam recently issued Decree No. 102/2013/ND-CP elaborating the Labour Code’s provisions on foreigners working in the country. While the Decree clarifies the issuance and reissuance of work permits and eligibility for work permit exemption, there are current issues that should be resolved:
• Procedure for re-issuance of work permit should be simplified and it should be possible to apply at least 30 days prior to its expiration so that applicants have time to get their visa/temporary cards renewed;
• Trainees, who are working in Vietnam, and freelancers, who are working for many entities, are not covered by this Decree;
• The requirement of a criminal record certificate should only be applicable for applicants who have been in Vietnam for 6 months or more;
• The period for approval of a “foreign labour demand report” should be maximum 15 days and not 6 weeks as in some provinces;
• Documents for issuance of work permit should depend on type of employment/assignment including foreigners working under labour contracts and intra-company transferees or assignees working under service contracts; foreigners working in Vietnam less than 90 days to conduct audit, training, internship, etc.;
• Procedure for work permit exemption should be simple; and
• More comprehensive guidelines for applicants and training of officers in charge of issuance of work permits should be provided.
Please kindly note that the upcoming ASEAN Economic Community will impact the hiring of regional skilled labour in certain job categories by end the of 2015. The Ministry of Labour, War Invalids and Social Affairs should maintain the communication channels with the business community on this to address both opportunities and challenges.

—o0o—

Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.

IF YOU ARE INTERESTED IN DOING BUSINESS IN VIETNAM PLEASE VISIT: www.vietnamlaws.xyz

THANK YOU VERY MUCH