{"id":392,"date":"2016-08-31T09:40:53","date_gmt":"2016-08-31T02:40:53","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/vietnam\/?p=392"},"modified":"2016-08-31T09:40:53","modified_gmt":"2016-08-31T02:40:53","slug":"lawyer-in-vietnam-oliver-massmann-legal-alert-on-employment-issues","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/vietnam\/2016\/08\/31\/lawyer-in-vietnam-oliver-massmann-legal-alert-on-employment-issues\/","title":{"rendered":"Lawyer in Vietnam Oliver Massmann LEGAL ALERT ON EMPLOYMENT ISSUES"},"content":{"rendered":"

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

We highlight below key employment-related issues discussed for your information and specific actions, where necessary.<\/p>\n

    \n
  1. Proposed Amendments of the Labor Code<\/strong><\/li>\n<\/ol>\n

    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.\u00a0 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.<\/p>\n\n\n\n
    Recommendations\/Notes<\/em><\/strong>:\u00a0 We will keep you updated of proposed changes to the Labor Code.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
      \n
    1. Minimum Salaries<\/strong><\/li>\n<\/ol>\n

      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.<\/p>\n\n\n\n
      Recommendations\/Notes<\/em><\/strong>:\u00a0 Please prepare for this inevitable situation, especially with respect to your business plan for the year of 2017.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
        \n
      1. Work Permits (WP) for Foreign Employees<\/strong><\/li>\n<\/ol>\n

        Under the Labor Code, only experts; managers, executive directors and technical employees are permitted to work in Vietnam.<\/p>\n

        One of key considerations is that the concept of managers<\/em> who are permitted to work in Vietnam are now limited to the narrowly defined \u2018managerial positions<\/em>\u2019 under the Enterprise Law of Vietnam (EL<\/em><\/strong>).\u00a0 As such, only few people qualify for managerial positions (e.g. \u2013 members of the Members\u2019 Council, general directors or other individuals\u00a0 have authority to enter into transactions on behalf of the relevant enterprises) pursuant to these enterprises\u2019 charter (or the articles of association in other jurisdictions).<\/p>\n

        According to the MOLISA, a new circular guiding WPs will be issued soon.<\/p>\n\n\n\n
        Recommendations\/Notes<\/em><\/strong>:\u00a0 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 \u2018expert\u2019 who in turn need only to satisfy general conditions (e.g. \u2013 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).<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
          \n
        1. Overtime<\/strong><\/li>\n<\/ol>\n

          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.<\/p>\n

            \n
          1. Social Insurance<\/strong><\/li>\n<\/ol>\n

            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.\u00a0 For example, Vietnam and Germany have basically reached in-principle agreements on possible exceptions to the above rule.<\/p>\n\n\n\n
            Recommendations\/Notes<\/em><\/strong>:\u00a0 From a financial perspective, the payment of social insurance of expatriates may increase more burdens for enterprises.\u00a0 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.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
              \n
            1. Payments of Compensations under Training Contracts<\/strong><\/li>\n<\/ol>\n

              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.<\/p>\n

              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.<\/p>\n

              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. <\/strong><\/p>\n\n\n\n
              Recommendations\/Notes<\/em><\/strong>:\u00a0 It is of utmost importance that the employer must have a well-drafted and detailed training contract at the outset.\u00a0 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.\u00a0 If not, the employee will stick to the fixed amount as agreed in the training contract to limit its reimbursement only.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
                \n
              1. Employment of Local Staff by Offshore Entity<\/strong><\/li>\n<\/ol>\n

                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.\u00a0 The Labor Code is silent on whether a labor contract governed by Vietnamese law can be entered into between parties.\u00a0 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.<\/p>\n\n\n\n
                Recommendations\/Notes<\/em><\/strong>: A number of offshore entities seek to circumvent the above restrictions by entering into:<\/p>\n

                (i).\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 an individual service\/consultancy contract with the local employees;<\/p>\n

                (ii).\u00a0\u00a0\u00a0\u00a0\u00a0 \u00a0a professional service contract with a local partner under which the local employees will work for the offshore entity; or<\/p>\n

                (iii).\u00a0\u00a0\u00a0 a labor outsourcing contract with a labor outsourcing company.<\/p>\n

                Each of the above options presents its pros and cons and care should be taken in adopting specific plan. \u00a0For example, direct involvement of local employee may result in a permanent establishment status under tax laws.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

                  \n
                1. Change of Types of Labor Contract<\/strong><\/li>\n<\/ol>\n

                  Vietnamese law prohibits employers to enter into more than two fixed term labor contracts with each not exceeding 36 months from the signing date.\u00a0 The third labor contracts in such case must be a non-fixed term.<\/p>\n

                  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.<\/p>\n

                  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\u2019 books and settlement of all benefits, etc.<\/p>\n

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

                  THANK YOU VERY MUCH!<\/strong><\/p>\n

                   <\/p>\n

                   <\/p>\n","protected":false},"excerpt":{"rendered":"

                  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. Proposed Amendments of the … <\/p>\n

                  Continue reading “Lawyer in Vietnam Oliver Massmann LEGAL ALERT ON EMPLOYMENT ISSUES”<\/span><\/a><\/p>\n","protected":false},"author":24,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[473,235,22,304,241,351,190,209,202,474,201,26],"ppma_author":[1007],"class_list":["post-392","post","type-post","status-publish","format-standard","hentry","category-vietnam-general","tag-alert","tag-contract","tag-employee","tag-employer","tag-enterprise","tag-labor","tag-lawyer","tag-legal","tag-massmann","tag-molisa","tag-oliver","tag-vietnam"],"authors":[{"term_id":1007,"user_id":24,"is_guest":0,"slug":"omassmann","display_name":"Dr. Oliver Massmann","avatar_url":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-content\/uploads\/sites\/19\/2014\/08\/massmannoliver-125x150.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts\/392","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/comments?post=392"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/posts\/392\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/media?parent=392"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/categories?post=392"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/tags?post=392"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/vietnam\/wp-json\/wp\/v2\/ppma_author?post=392"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}