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January 31, 2014

How to Hire and Fire in Vietnam: A Guide to Vietnamese Labor Law

Tilleke & Gibbins

The core legislation that governs labor relations in Vietnam is the Labor Code, first passed by the National Assembly in 1994. The original Labor Code has since been superseded by the new Labor Code of 2012, which took effect on May 1, 2013, and introduced significant new developments relating to labor contracts, work hours, labor outsourcing, internal labor rules, and foreign employees. Employment is further governed by a large set of guiding decrees and circulars. A separate Law on Trade Unions, the latest version of which also came into force in 2013, governs the establishment and activities of trade unions. During the transition to the new laws, as the guiding legislation is updated and replaced, the interpretation and implementation of labor law may be inconsistent and may vary from authority to authority.

Vietnamese labor law is generally considered employee-friendly. The law only allows for two consecutive fixed-term labor contracts (of one to three years); thereafter, the next contract must be an indefinite-term contract. It is difficult to discipline or fire an employee without internal labor rules in writing. The internal labor rules must be registered with the local labor authority and communicated to the employees, and a trade union’s opinion on the internal labor rules must be obtained prior to filing the rules with the labor authority. At-will termination of employees is not possible in Vietnam. Termination of employees must be based on statutory grounds and is subject to strict formalistic requirements and procedures.

This handbook is intended to provide you with a brief introduction on how to hire and fire in Vietnam, and includes special sections on foreign employees and trade unions. It should not be used as a substitute for case-specific advice.