You are using an outdated browser and your browsing experience will not be optimal. Please update to the latest version of Microsoft Edge, Google Chrome or Mozilla Firefox. Install Microsoft Edge

December 12, 2019

Vietnam Issues Revised Labor Code

Subscribe to Updates

On November 20, 2019, the National Assembly of Vietnam issued a revised version of the Labor Code, the primary legislation governing employment and employer-employee relationships in Vietnam. The new Labor Code will take effect on January 1, 2021, replacing the current Labor Code of 2012.

The new Labor Code introduces a number of large and small changes, with the general intention being to address shortcomings and clarify unclear provisions of the current law, and bring Vietnam’s labor law more in line with international standards.

Some of the more notable changes include the following:

  • Unilateral termination by employees: Employees will be allowed to unilaterally terminate their contracts without providing any reason, provided they meet the requirements for advance notification.
  • Additional holiday: The National Day holiday on Sept. 2 will become a two-day holiday – the 11th public holiday on the Vietnamese calendar.
  • More overtime allowed: Employees will be allowed to work up to 40 hours of overtime in a month (instead of the previous limit of 30).
  • Types of labor contracts: Seasonal/specific-job labor contracts are no longer mentioned in the new Labor Code, which has only (i) indefinite-term labor contracts, and (ii) definite-term (of up to 36 months) labor contracts, which include the previous seasonal/specific-job contracts.
  • Multiple fixed-term contracts: While the current Labor Code only allows the signing of two consecutive definite-term contracts—the third contract must be an indefinite-term contract—the new Labor Code provides an exception for elderly employees, who can continue to work on definite-term contracts. Also, the terms of expatriate employees’ labor contracts must be in line with the terms of their work permits (maximum two years); in other words, indefinite-term labor contracts are not applicable to expats.
  • Validity of electronic labor contracts: Labor contracts concluded through electronic means (such as by email) will have the same validity as printed paper contracts.
  • No direct interference in salary structure: Companies are free to establish their own wage scales and salary structures, provided they at least meet the regional minimum wages set by the government.
  • Increase in retirement age: The retirement age, currently 55 for women and 60 for men, will increase to 60 for women and 62 for men. This change will be phased in gradually, with the retirement age increasing by 3 months each year for men and 4 months each year for women until the new limits are reached.

With more than a year before implementation, companies have plenty of time to consider their current work rules and practices, make the necessary changes before implementation, and consult counsel if needed to ensure compliance. For more information on the new Labor Code and how it may impact your business in Vietnam, please contact us at [email protected].

Related Professionals

Practices

Employment

Location

RELATED INSIGHTS​ 

December 4, 2024
Thailand Legal Basics, a valuable primer for foreign investors, explores all aspects of living and doing business in Thailand. Written by specialists at Tilleke & Gibbins in Bangkok, it is the only comprehensive English-language guide to the Thai legal system with a focus on the concerns of foreign business and investment.
Read More
October 1, 2024
Three of Tilleke & Gibbins’ labor and employment specialists in Vietnam have contributed the Vietnam chapter to the newly issued Labor and Employment Disputes 2024, a comprehensive guide from Lexology Panoramic to labor and employment dispute resolution in various jurisdictions around the world. The Vietnam chapter covers the following topics: Pre-action considerations: Key requirements, third-party funding, contingency fee arrangements Issuing a claim: Forum, territorial jurisdiction, standing, commencing claims, fees, service Defendants and legal personality: Types of claims, time limits, counterclaims Case management: Procedure, rules, amendments to claims, adding parties to proceedings, consolidating proceedings Class and collective actions: Special considerations Evidence: Witnesses, tactical considerations Interim relief: Availability, requirements Trial: Hearings conduct and typical time frames, confidentiality and public access, media reporting Elements of successful claims and burden of proof Alternative dispute resolution: Available types, requirements and expectations Enforcement: Collective employment and labor rights, enforcement of collective rights, standing Remedies and enforcement: Available remedies, assessing compensation, enforcement mechanisms Appeals: Appeal procedure and time frames, other means of challenge Update and trends: Recent cases and developments, technology developments, other issues The Vietnam chapter was authored by Truc Thi Thanh, Linh Ngoc Nguyen, and Kien Trung Trinh. Tilleke & Gibbins also contributed the Cambodia and Thailand chapters to Labor and Employment Disputes 2024.
Read More
October 1, 2024
Four of Tilleke & Gibbins’ labor and employment specialists in Bangkok have contributed the Thailand chapter to the newly issued Labor and Employment Disputes 2024, a comprehensive guide from Lexology Panoramic to labor and employment dispute resolution in various jurisdictions around the world. The Thailand chapter covers the following topics: Pre-action considerations: Key requirements, third-party funding, contingency fee arrangements Issuing a claim: Forum, territorial jurisdiction, standing, commencing claims, fees, service Defendants and legal personality: Types of claims, time limits, counterclaims Case management: Procedure, rules, amendments to claims, adding parties to proceedings, consolidating proceedings Class and collective actions: Special considerations Evidence: Witnesses, tactical considerations Interim relief: Availability, requirements Trial: Hearings conduct and typical time frames, confidentiality and public access, media reporting Elements of successful claims and burden of proof Alternative dispute resolution: Available types, requirements and expectations Enforcement: Collective employment and labor rights, enforcement of collective rights, standing Remedies and enforcement: Available remedies, assessing compensation, enforcement mechanisms Appeals: Appeal procedure and time frames, other means of challenge Update and trends: Recent cases and developments, technology developments, other issues The Thailand chapter was authored by Eric M. Meyer, Chusert Supasitthumrong, Pathanin Sornchangwat, and Chayathorn Kruatao, all in the Thailand dispute resolution and litigation team. Tilleke & Gibbins also contributed the Cambodia and Vietnam chapters to Labor and Employment Disputes 2024. The full Thailand chapter is available below as a PDF.
Read More
August 14, 2024
Myanmar has once again made significant amendments to its minimum-wage framework by introducing additional allowances for both public- and private-sector workers. On August 9, 2024, the National Committee for Setting the Minimum Wage issued Notification No. 1/2024, which entitles private-sector workers to a new additional daily allowance of MMK 1,000 (approximately USD 0.48). This increase is on top of the MMK 1,000 additional daily allowance introduced last year. As a result, workers at private-sector employers with more than 10 employees are now entitled to the base minimum wage of MMK 4,800 plus additional allowances of MMK 2,000, for a total of MMK 6,800 (approximately USD 3.20) per day for an eight-hour workday, effective August 1, 2024. A similar additional allowance had been announced for workers in government departments and organizations on July 26, 2024. Background The MMK 4,800 (approximately USD 2.29) minimum wage for an eight-hour workday (equivalent to MMK 600 per hour) was established in May 2018 for all workers, irrespective of location or job type. In September 2023, the Ministry of Planning and Finance announced an additional daily benefit of MMK 1,000 for workers in government departments and organizations, and on October 9, 2023, the National Committee for Setting the Minimum Wage extended this benefit to workers at private-sector employers with more than 10 employees, bringing the effective minimum daily wage to MMK 5,800 (approximately USD 2.77). These changes took effect on October 1, 2023. Applicability of Additional Allowances for Private-Sector Workers The latest announcement also entitles employees to the base minimum wage and additional allowances for days used from their entitlement to leave and holidays, in accordance with the 1951 Leave and Holidays Act. However, the daily allowances—totaling MMK 2,000—are not to be included when calculating overtime payments. Instead, overtime payments must be calculated based on
Read More