Employment 2023 Comparisons

Vietnamese labour law does not provide legal distinctions between blue-collar and white-collar workers.

In general, the law does not make any legal distinction between different categories of workers, except for employees and apprentices. The 2019 Labour Code also now defines “employees” more expansively and states that an “employee” is a person who works for an employer under an agreement, and is paid, managed and supervised by the employer. Therefore, companies must now take particular care when drafting contracts with independent contractors or other types of workers whom they do not intend to employ as regular employees, as these categories of workers may now be considered to be “employees” if the business closely manages or supervises their work.

The 2019 Labour Code also contains specific provisions for certain classes of employees (such as minor employees, elderly employees, disabled employees and female employees) who are granted certain protections and additional statutory employment rights, such as additional rest breaks or shorter regular working hours.

Types of Employment Contracts

The 2019 Labour Code removes the concept of “seasonal employment contracts” having a term of less than 12 months. Accordingly, there exist two types of employment contracts under the 2019 Labour Code: indefinite term contracts and definite term contracts (ie, contracts having a term of 36 months or less).

Definite term contracts may generally only be renewed once. After the expiry of a renewed definite term contract, in most cases the contract will become an indefinite term contract if the employee continues working for the employer, regardless of the agreement of the parties. However, the 2019 Labour Code does specify certain cases in which definite term contracts can be renewed multiple times, including contracts with elderly employees, foreign employees, officers of labour representative organisations and directors of companies having state-owned capital.

Contracts Required

An employer must sign written employment contracts with its employees before the employees start working for the employer.

Contents of Employment Contracts

Parties are generally free to negotiate and enter into their own employment contracts, provided that the terms are not less favourable than those prescribed by law, eg, in relation to minimum annual leave and maternity leave entitlements.

An employment contract must contain the following main provisions:

• work to be performed, job location and term of contract;
• wages (including a rate, method and time of payment, allowances and other additional payments, and a regime for wage increases and promotion);
• working hours, rest breaks and holidays;
• personal protective equipment for the employee;
• social and health insurance for the employee; and
• training and skill improvement for the employee.

Normal Working Hours

Normal working hours of employees in Vietnam must not exceed 8 hours in a day and 48 hours in a week. This means that the employer can require that employees work 8 hours a day for 6 days a week.

The law does not prohibit the company from entering into flexible working arrangements with its employees, but the working hours must not exceed the prescribed limit.

Part-time Contracts

Under the 2019 Labour Code, a part-time employee is an employee who works for less than the usual daily, weekly or monthly working hours as prescribed above, or in the collective bargaining agreement (CBA) or internal labour regulations (ILR) of the company.

The employee may negotiate part-time employment with the employer when entering into an employment contract. The law does not set out a different set of required contents for part-time contracts and therefore, the contents of part-time contracts shall follow the requirements for normal employment contracts as explained in 1.2 Employment Contracts. Part-time employees have equal entitlements, rights, obligations and opportunities as a full-time employee, and are to receive the same treatment.

Overtime Regulations

Vietnam implements strict regulations on overtime. The 2019 Labour Code increased the cap on overtime working hours for employees from 30 hours to 40 hours per month. However, similarly to the 2012 Labour Code, it retains the annual overtime cap of 200 hours in normal situations, though this can be increased up to 300 hours in certain special circumstances. In addition, the 2019 Labour Code has expanded the circumstances in which a 300-hour cap is permitted. These circumstances now include:

• manufacturing and processing for export of electrical devices and processing of salt products; and
• work that demands workers with high-level technical and professional skills the current labour market cannot meet.

Minimum wage requirements

Statutory minimum wages are the minimum wages of employees who do the simplest jobs in normal working conditions that are sufficient to support themselves and their families, and are appropriate for socio-economic development.

Statutory minimum wages per month or per hour vary by region. Currently, according to Decree 38/2022/ND-CP of the government, the minimum monthly salary in Regions I to IV is VND4,680,000, VND4,160,000, VND3,640,000 and VND3,250,000 respectively. Moreover, the minimum hourly salary is also set for Regions I to IV as follows: VND22,500, VND20,000, VND17,500 and VND15,600. Employers are required to pay salaries to their employees which are not lower than the minimum salary level applicable in their region.

Bonuses

A bonus is the amount of money awarded by the employer to the employee based on the annual business performance and the amount of work performed by the employee. The employer possesses the sole discretion to determine this amount. Unless the company has committed to pay its employees these amounts, they are not statutory payments from the company to its employees. Normally, where a bonus payment applies, its terms will be agreed in a bonus clause contained in the relevant employment contract or CBA, or in the employer’s own financial or bonus policy. There are no specific restrictions or guidelines on bonuses. However, an employer can only deduct bonus payments (as a deductible expense) from its corporate income tax liability where the terms of the relevant bonus have been included in a relevant document.

An employer can issue its own internal bonus policy, which will then be announced to employees subject to consultation with the employee representative organisation (if any). It is also subject to a dialogue in a workplace session, which involves a discussion between all the employees’ representatives and the employer’s representatives.

Generally, it is common in Vietnam to offer a 13th-month salary bonus, often called a Tet bonus, to all employees across all sectors. However, it is not legally required if not committed to by the employer.

Vacation and Vacation Pay

By law, employees working under normal working conditions are entitled to a minimum of 12 days of paid annual leave, exclusive of public holidays. In addition, employees who are minors or who are working under heavy, hazardous or toxic working conditions are entitled to a minimum of 14 days of paid annual leave, exclusive of public holidays. Furthermore, employees working under extremely heavy, hazardous or toxic working conditions are entitled to a minimum of 16 days of paid annual leave, exclusive of public holidays. Employees must also be given one additional day of paid annual leave for every five years of consecutive service for an employer, and there is no cap on these additional leave days.

At present, there are a total of 11 statutory public holidays in Vietnam for which employees receive their normal pay entitlement. If any of the public holidays falls on a weekend, employees are entitled to take the next weekday off. In addition to these public holidays, expatriate employees are also entitled to one paid day off for their traditional new year, and another paid day off for the national day of their country.

Confidentiality and Non-disparagement Requirements

Currently, if an employee's job is directly related to business secrets or technological know-how as prescribed by law, the employer has the right to sign a written agreement with the employee on the content and duration of the protection of the business secret or technological know-how, and on the compensation obligation in case of a violation by the employee. However, the law does not currently provide for a non-disparagement requirement in the employer-employee relationship.

These requirements are not statutory and, to be enforceable, must be made a contractual requirement by written agreements signed between the company and its employees.

From a labour law perspective, the existence of a non-competition clause obstructs the working rights of employees and interferes with the rule of “labour freedom”. Specifically, Article 10.1 of the 2019 Labour Code provides the right of the worker “to work for any employer and in any place which is not prohibited by the law”, while Article 19.1 also states that “the employee has the right to engage in employment contracts with several employers, but must ensure the fulfilment of the agreed contract terms”. As such, if a non-competition clause is created, it means that the employees would be obligated to waive their legitimate rights.

The 2019 Labour Code regulates the relationships between the employer and employees that arise from the employment contract. Thus, where a non-competition clause is contained in the employment contract (either in a provision or an appendix of the employment contract), the content of such a non-competition clause often violates the principles provided in Article 15.2 of the 2019 Labour Code which entitles the employees to the “freedom to enter into an employment contract which is not contrary to the law, the collective labour agreement and social morality”.

To strengthen the validity and decrease the possibility of a non-competition clause being rejected by the court in case of disputes, we recommend that the non-competition terms are drafted in accordance with the principles below.

• There should be a separation of the non-competition clause from the employment contract between the employer and the employee. This means there should be a separate agreement created which is independent from the employment contract.
• The period of validity and scope of application of the non-competition clause should be limited to a reasonable time and scope, eg, six months.
• Contents of the non-competition clause need to strike a reasonable balance between the rights and obligations of both parties. It is likely that the court would more easily accept the non-competition clause if it indicates an arms-length civil transaction, meaning an easily definable equitable balance between rights and obligations of both parties (whereby the rights of one party are the obligations of the other party, and vice versa).
• On the part of the employee, there should be a clear consent to forgo their rights for a reasonable time period. On the part of the employer, there should be reasonable compensation offered for the benefit of having the employee abstain from using their rights (this may be an amount of money or a share of profits, depending on the agreement between both parties). It would be advisable to avoid a situation where the court would consider the non-competition clause as a unilateral imposition of the employer’s will on the employee (who is always considered as a disadvantaged party in their relationship with the employer under Vietnamese law).
• Finally, the non-competition agreement should contain a note concerning the penalties for a violation of the terms by the employee. Instead of completely prohibiting the employee from freely working for a third party (and there should not be a complete permanent prohibition), the employer should consider a monetary penalty or a fine for a violation of the non-competition agreement in order to (a) give colour to the non-competition clause as a civil transaction between both parties, thus helping to avoid having the case being considered as a violation of the regulations under the labour law (ie, violating the employee's freedom to work), (b) establish a basis to request that the employee compensate the company when their violation of the non-competition clause leads to a dispute (a fine for violation would be more effective than a request for compensation due to the requirement to prove the actual damages caused to the party requesting compensation), and (c) to reinforce the consequences for the employee if they violate the non-competition clause.

Vietnamese law does not regulate non-solicitation clauses signed with the company’s employees and customers. A non-solicitation clause should also follow the principles set out above for non-competition clauses.

However, please note that a non-solicitation clause will be difficult to enforce in practice, due to the burden of proof and the unfamiliarity of the Vietnamese courts with this type of clause.

Vietnamese laws do not provide for a separate framework governing data privacy in an employment context, but data privacy provisions are provided under various laws – mainly the Civil Code, the Law on Protection of Consumer’s Rights, the Law on Cyber Information Security, the Law on Cybersecurity, and decrees and circulars for implementation of these laws (including but not limited to the new Decree 13/2023/ND-CP on personal data protection).

General data security requires any party to obtain the respective individual’s consent if their personal information is collected, processed, used or stored in any way. Consequently, this requirement will equally apply to employers when handling their employees’ personal data (ie, the employer must obtain the employee’s direct consent). In addition to obtaining the above consent from employees regarding their personal data, there are certain general obligations and standards that employers must adhere to when collecting, processing and using the personal data of the  subject (ie, the employee). These rules are predominantly rooted in the Vietnamese data privacy laws mentioned above.

Generally, expatriate employees working for more than three months require a work permit to work in Vietnam, except in limited exempted cases (eg, board members of shareholding companies having the capital contribution of at least VND3 billion).

The employer is responsible for obtaining the work permit for the foreign employee, which is tied to one specific position with that specific employer only. If any content in the work permit changes (eg, through a change of work position or employer), a new work permit is required. Each work permit has a maximum term of 24 months and can be reissued for subsequent terms at the employer’s request.

Under Vietnam’s commitments to the World Trade Organization, if a foreign invested company routinely transfers expatriate managers in and out of Vietnam, at least 20% of the total number of the managers, executive directors and experts of the company must be Vietnamese citizens. However, each foreign invested company will be allowed to have at least three foreign managers, executive directors and experts in Vietnam. Further, the employer is required to have a training plan and specific apprenticeship agreements to train Vietnamese employees to eventually replace foreign employees.

Employers seeking to hire a foreign employee must submit a written request for approval to hire a foreign worker to the labour authority at least 15 days prior to the start date of employment. Once approval is received, the employer may then apply for a work permit from the labour authority. A number of documents must be submitted by the employer, including the work permit application form; a police or criminal clearance certificate, no less than six months old; copies of relevant qualifications and degrees and/or proof of years of relevant experience; a copy of the employee’s valid passport; two recent passport photos; a certificate of health from an approved hospital in Vietnam or the employee’s home country; the approval from the committee that allows employment of foreign workers; and the business registration certificate.

Under Decree 152/2020/ND-CP, as recently amended by Decree 70/2023/ND-CP, foreigners must have work experience ”suitable with the job position that the foreigners intend to work in Vietnam”. For experts, they must hold a bachelor’s degree or higher, or an equivalent degree, and have “suitable with the job position that the foreigners intend to work in Vietnam”. For technical workers, they must have been trained in a technical field or another major for at least one year and “have worked for at least three years suitable with the job position that the foreigners intend to work in Vietnam”.

Notably, from 1 January 2024, before submitting the written request for approval to hire a foreign worker to the labour authority, the employer will have to additionally announce the recruitment of Vietnamese workers for positions expected to recruit foreign workers on the Governmental portal, which will be launched in the near future.

The 2019 Labour Code and its guiding regulations do not provide for mobile work. However, the employment contract must specifically identify the workplace, defined under the law as “the location where an employee works under agreement or as assigned by the employer”.

It is advisable for companies to include specific details concerning remote work locations in their employment contracts. Additionally, regulations on working hours, employee responsibilities related to maintaining a safe working environment, and compulsory measures regarding issues such as data privacy and social security should also be added to these contracts to mitigate risks for the company.

Vietnamese labour law does not set out a specific regime for sabbatical leave. This kind of leave, as well as the employee’s benefits (eg, salary, period of leave), shall be subject to agreement between the company and its employees.

In Vietnam, a period of sabbatical leave can be created in the form of a suspension of an employment contract under Article 30 of the 2019 Labour Code, where the employee shall not receive the salary and benefits specified in the employment contract, unless otherwise agreed by both parties or prescribed by law.

Due to the rise of the home office and the mobile working platform as a result of the recent Covid-19 pandemic, many companies have begun reducing their workspaces and office areas to reduce rental and energy costs. When employees no longer work in the office every day, the workstations and rooms can be shared by different staff, ie, desk sharing.

As a result, several legal implications for occupational health and safety, data protection, and other factors need to be taken seriously into account. The desk sharing concept requires the creation and communication of regulations governing mobile work, especially when working from home. Dialogue with employees regarding the preparation and implementation of such regulations is recommended.

In Vietnam, the “trade union” was the only organisation solely dedicated to protecting employees’ legitimate rights and interests from the implementation of the first Labour Code in 1994 until the Labour Code of 2012 was enacted (which changed the nomenclature but not the fundamental purpose of the trade union).

The main advantage of a trade union is to harmonise and stabilise the labour relations between the company and its employees. The trade union shall, among other things, participate in the establishment of and supervise the implementation of CBAs, salary scales and tables, labour norms and salary payment regulations, bonus payment regulations, ILRs, and democracy regulations at the company. Additionally, it is to establish dialogue and cooperate with the company to build harmonious and progressive labour relations at the company.

Under the 2012 Law on Trade Unions, roles of the trade union include the following:

• representing and protecting the legitimate and proper rights and interests of the employees, including but not limited to:
1. guiding and advising the employees on their rights and obligations upon concluding or performing employment contracts with the employer;
2. representing the employees in the negotiation, conclusion and supervision of the implementation of CBAs;
3. working with the employer to formulate and supervise the implementation of salary scales and tables, labour norms, salary payment regulations, bonus payment regulations, and ILRs.
• participating in state management and eco-social management;
• submitting law or ordinance projects and proposals for the development of law and policy;
• participating in meetings, sessions and conferences of concerned agencies and organisations at the same level to discuss and decide on matters related to the rights and obligations of the employees;
• participating in the inspection, examination and supervision of the activities of agencies, organisations and companies (this includes participating in and co-operating with competent state agencies' actions to inspect, examine and supervise the implementation of regimes, policies or laws on labour, trade unions, officials and civil servants, public employees, social insurance, health insurance and other regimes, policies and laws related to the rights and obligations of the employees, and also includes a responsibility to investigate labour accidents and occupational diseases);
• mobilising and educating the employees; and
• developing trade union members and the trade union.

By and large, this means that the trade union is involved in all regulations, aspects or matters related to the employees’ rights, interests, obligations and liabilities in labour relations with the employer.

Vietnamese law sets out a stringent and lengthy process for the employees to initiate a lawful strike, which includes consultation with the trade union about: agreement/disagreement with the strike; the start time, location and scope of the strike; and the demands of the employees. Before and during the strike, approval from the court of the legality of the strike may be required upon the request of the trade union or the employer, in which case the court will consider all statutory factors to decide whether the strike is legal or not.

It is advisable that companies establish a Grassroots Trade Union (for an explanation of this terminology, see 6.2 Employee Representative Bodies) to assist in harmonising the labour relationship between the company and its employees and obtaining information about the expectations and opinions of the employees, in order to take appropriate actions. In our experience, when a conflict arises between the employer and its employees, the Grassroots Trade Union will usually play an active role in settling the conflict, understanding the employees’ concerns and advising the employees in accordance with the law.

Unlike in some European countries and most states of the United States of America, trade unions in Vietnam are not entitled to participate in management decisions and presently have no right to be informed about the economic performance of the company. In Vietnamese practice, the trade union would normally intervene in the labour relationship between the company and its employees at the request of any employee who is a member of the union, at the request of the company itself (to consult its opinions as prescribed under the law), or when any action contrary to labour law reaches its attention and the trade union is required by law to step in. However, companies in Vietnam are not required by law to invite the trade union into their business meetings to collect opinions, nor to inform the trade union about business information, such as strategic planning or the profit and loss distribution of the company.

Under the 2012 Labour Code, the term referring to trade unions was changed to “representative organisation of grassroots-level employees”. However, the essence of this organisation did not change and was defined as “the executive committee of a grassroots trade union or the executive committee of the immediate upper-level trade union in a non-unionised company”. As such, it could be said that it was old wine in a new bottle.

The 2019 Labour Code revised the term to “employees’ representative organisations at the grassroots level”, comprising the Grassroots Trade Union and employees’ organisations at all companies. Specifically, Article 3.3 of the 2019 Labour Code stipulates: “The employees’ representative organisations at the grassroots level means an internal organisation voluntarily established by employees of an employer which protects the employees’ legitimate rights and interests in labour relations through collective bargaining or other methods prescribed by labour laws. The employees’ representative organisations at the grassroots level comprise the grassroots trade union and the employees’ organisation at company-level.”

If requested by the majority of employees in the company, the employer and the company’s trade union shall enter into negotiations for a collective bargaining agreement (CBA) setting out the parties’ agreement on the working conditions and the parties’ rights and obligations. The CBA must be registered with the labour authority.

In practice, the main purpose of having a CBA in place is to record the employment benefits that are applied to the majority of employees, so that such benefits can be considered as expenses of the company when calculating corporate income tax.

Vietnamese labour legislation is generally considered to be “pro-employee”. As such, it is imperative that companies prepare and devise a termination plan in compliance with the laws to avoid any potential disputes in court. This plan should be prepared and standardised prior to the termination of the employment relationship.

In brief, Vietnamese labour law sets out four acceptable methods of employment termination, which include (i) automatic termination, (ii) mutual separation, (iii) termination by the company (including unilateral termination by the company, retrenchment, and dismissal), and (iv) unilateral termination by the employee. Different procedures will follow, depending on the grounds for termination of the employment contract.

In cases of retrenchment (which leads to collective redundancies), the law provides for a termination procedure if the employee becomes redundant as a result of “organisational restructure, technological change or economic reasons”. This process involves substantial detailed requirements in order for the termination to be considered lawful, including but not limited to a labour usage plan formulation and notification of the labour authorities. The retrenchment may be challenged by the court for any technical noncompliance with the retrenchment procedures. The retrenchment package may include job-loss pay and other contractual benefits.

Depending on the termination grounds, different notice periods, formalities and termination packages shall apply.

Automatic Termination

An employment contract may be automatically terminated upon the expiration of the contract term or the employee’s completion of the agreed job. No notice period is required. The company may be required to provide severance pay to the employee if the service term is at least 12 months (if not covered by unemployment insurance).

Mutual Separation

The law respects mutual termination of employment between the parties. In such a case, the notice period is negotiated and agreed by the company and its employees, as set out in the termination agreement. At the company’s discretion, the final compensation package for the employee may consist of severance pay, contractual benefits and monetary support.

Termination by the Company

• Unilateral termination by the company – the company has the ability to unilaterally terminate the employment contract if it can produce sufficient evidence to support the legal justification of its termination decision. Furthermore, the company is absolutely required to ensure that the employee receives a prior termination notice of 30 days, 45 days, 90 days or 120 days, corresponding to the specific contract type, job position and the nature of the business. The final compensation package may include severance pay and other contractual benefits.
• Retrenchment – as discussed in 7.1 Grounds for Termination, this process must fulfil substantial detailed requirements in order to be considered lawful, including but not limited to a labour usage plan formulation and notification of the labour authorities. The retrenchment package may include job-loss pay and other contractual benefits.
• Dismissal – the company may dismiss an employee who has committed an offence specified by the law, an ILR or an employment contract. Labour law requires companies to strictly comply with numerous requirements before the dismissal may be considered lawful. If an employee is dismissed in this fashion, no final compensation package is required and the employee may also be obligated to compensate the company and a third party (if any) according to the law.

Unilateral Termination by the Employee

An employee may, without proving a plausible cause, unilaterally terminate the employment contract by serving prior notice to the company. Similar to unilateral termination by the company, the notice period depends on the specific contract type, job position and the nature of the business. However, it should be noted that there are exemptions from the prior notice obligation in cases of sexual harassment or when the employee reaches the statutory retirement age.

Grounds for Dismissal

Under the law, an employee who commits any of the below offences may be subject to dismissal:

• theft, embezzlement, gambling, deliberate violence causing injury, or use of drugs at the workplace;
• disclosure of technology or business secrets, infringement of intellectual property rights of the employer, actions which cause serious loss and damage or which threaten to cause particularly serious loss and damage to the property or interests of the employer, or sexual harassment at the workplace as defined in the ILR;
• being disciplined in the form of demotion or deferral of a salary increase, and then committing the same offence during the period before the initial disciplinary measure has expired; or
• absence without leave for a total period of five days in 30 days, or for a total period of 20 days in 365 days from the first day they fail to go to work without legitimate reasons.

Procedures for Dismissal

The 2019 Labour Code prescribes a stringent process for dismissal of an employee. When the company has a valid cause for dismissal, it is required to strictly follow the dismissal procedures set out by the law. Any technical failure in complying with the stringent dismissal process may subject the company’s dismissal decision to the risk of the being challenged by the courts, which are normally pro-employee in practice. Below is a summary of the steps that the company would need to follow:

• Step 1 – When detecting an employee’s violation of labor discipline at the time of the violation, the company shall make a record of the violation and notify either the employee’s representative organisation at the workplace of which the employee is a member, or the legal representative of an employee who is under 15 years old. In cases where the employer detects a violation of labour discipline after the violation has occurred, the company must collect evidence to prove the breach committed by the employee.

• Step 2 – The company sets up a committee for the disciplinary meeting, which normally includes the legal representative of the company, human resources personnel and the manager of the employee.
• Step 3 – The company sends the notification of the disciplinary meeting to the employee and to the employee’s representative organisation at the workplace of which the employee is a member, at least five working days before the disciplinary meeting. In case one of the required participants cannot attend the meeting at the time and location in the notice, the employee and the employer must negotiate to change the meeting time and location. In case the two parties cannot reach an agreement, the employer will have the prevailing right to decide the time and place of the meeting.
• Step 4 – The company organises the disciplinary meeting. The disciplinary meeting can only be conducted in the presence of required participants, including the disciplinary committee, the representative of the employee’s representative organisation at the workplace of which the employee is a member, the employee, witnesses (if any) and lawyers (if any). In case one of the required participants cannot attend the meeting at the time and location in the notice, the employee and the employer must negotiate to change the meeting time and location. In case the two parties cannot reach an agreement, the employer will have the prevailing right to decide the time and place of the meeting. In such cases, if any of the required participants is absent, the disciplinary meeting can still be proceeded. The meeting must be minuted, with all the parties present signing the minutes. If there is any participant refusing to sign, the reasons for their refusal must be set out in the minutes.

• Step 5 – The company issues the dismissal decision and sends the decision to all participants. The dismissal decision must be issued within the statute of limitations, ie, six months from the date the breach occurred.

Termination agreements are permissible. Given the stringent process and formalities required for an employer to terminate an employment contract with an employee, in practice Vietnamese employers often try to achieve termination by mutual agreement in order to reduce risks of future claims by the employee.

The law allows the employee and the employer to mutually agree to terminate the employment contract; therefore, there are no specific procedures, formalities and requirements that are legally required to be followed.

A termination agreement usually covers the following key contents: the compensation package for the termination, the termination date, and the rights and responsibilities of both the company and the employee (including the confidentiality and non-disparagement undertakings of the employee, and return of property).

Dismissal is a disciplinary action where an employment contract is terminated for a breach of “labour discipline” and is only permitted in a few limited cases, as set out in the labour laws of Vietnam and recorded in the employer’s internal employment rules.

Female employees cannot be dismissed for reasons that concern marriage, pregnancy, maternity leave or nursing a child under 12 months of age. Male employees also enjoy protection from dismissal while they are on paternity leave or raising a child under 12 months of age. An employer is also prohibited from dismissing an employee who is:

• taking leave due to illness or convalescence;
• taking other leave with the employer’s consent;
• being held in temporary custody or detention (without formal charges having been made); or
• awaiting the results of an investigation conducted by a state agency (such as a criminal investigation).

If an employer wishes to dismiss an employee who is a part-time trade union officer, the employer must obtain a written agreement on the dismissal from either:

• the executive committee of the Grassroots Trade Union; or
• the executive committee of the directly superior trade union.

If the employer and the relevant trade union are unable to reach an agreement on the dismissal, the two parties must report this failure to agree to the local labour management authority. Only the employer has the right to make the decision concerning the dismissal, and will be legally liable for that decision, which can be taken after 30 days have expired from the date of the notification of the failure to reach an agreement to the local labour management authority. If the employee and the executive committee of the relevant trade union disagree with the employer’s decision on the dismissal, they have a right to request the resolution of the labour dispute in court in accordance with the procedures stipulated by law.

Grounds for a Wrongful Dismissal Claim

Employees in Vietnam are entitled to initiate a wrongful dismissal claim if their employer terminates them without a valid reason or in a manner not in accordance with the required process under the labour laws. The grounds for a wrongful dismissal claim will depend on the employer’s reason for terminating the employee. Examples include:

• Unilateral termination by the company - the employer fails to provide sufficient evidence to support the legal justification of its termination decision or fails to provide a prior termination notice according to the specific contract type, job position and nature of the business.
• Retrenchment - the employer fails to demonstrate that the retrenchment is genuine, or fails to adhere to the retrenchment process outlined by the law. To lawfully invoke retrenchment, for instance, the employer must develop a labour utilisation plan and notify the labour authorities. If this process is not followed properly, the retrenchment will likely be considered unlawful.
• Dismissal - the employer fails to demonstrate that the employee committed a violation specified by law, the ILR or the employment contract. In addition, the employer fails to comply with the required process for the dismissal to be deemed lawful. For instance, the employer fails to conduct disciplinary hearings in accordance with legal requirements and fails to ensure that all required parties are aware of the disciplinary hearing prior to its occurrence.

Consequences of the Claim

If successful, the employee would be entitled to the following:

• salary and social insurance, health insurance, and unemployment insurance premiums for the days the employee was unable to work, plus an amount at least equal to two months’ salary stated in the employment contract;
• reinstatement to work under the signed employment contract;
• severance pay if the employee chooses not to return to work; and
• at least two months of additional pay, if the employer does not wish to reinstate the employee and the employee agrees.

Grounds for Anti-discrimination Claims

According to Article 3.8 of the 2019 Labour Code, employees can file claims for discrimination-related damages if their right to equal treatment in their employment or career opportunities is violated based upon:

• race, skin colour, national origin or social origin, nationality, gender, age, pregnancy, marital status, religion, beliefs, political views, physical disability or family responsibility;
• HIV infection status; or
• their actions of establishing, joining, or operating a trade union organisation or an employee organisation at a company.

Burden of Proof

When initiating such claims, the employee who has been discriminated against must prove the following factors.

The first is the existence of discrimination, which can be determined by identifying the following main elements:

• the employee experienced less favourable treatment;
• the less favourable treatment was based on differences in the above grounds;
• the less favourable treatment was not based on the nature of the job requirements; and
• the less favourable treatment was not the act of employment sustainment or protection for vulnerable employees.

The second is that such discrimination, exclusion or preference adversely affects the employee’s equal status in employment or career opportunities.

Applicable Relief

In such claims, the employee can seek relief such as compensation for the loss or damages incurred as a result of the discrimination, and also request an apology from the employer for their discriminatory actions.

Guidelines on Virtual Hearings

After the Covid-19 outbreak in Vietnam, on 12 November 2021, the National Assembly of Vietnam issued Resolution 33/2021/QH15 on the organisation of virtual hearings (Resolution 33) for resolving court cases with “simple facts and nature, and clear evidence”, including labour disputes (except for cases involving state secrets).

On 11 December 2021, Joint Circular 05/2021/TTLT-TANDTC-VKSNDTC-BCA-BQP-BTP on guiding the implementation of the virtual hearings (Joint Circular 05) was issued in order to better implement Resolution 33. Joint Circular 05 provided more specific guidelines for conducting virtual hearings, including:

• general requirements of technological equipment;
• details of the authority and responsibilities of competent authorities when planning virtual hearings;
• guidelines concerning participants in the trial – which are similar to those for normal hearings;
• rules of conduct for virtual hearings; and
• procedures for handling disruptions during the trial.

Issues and Challenges in Organizing Virtual Hearings

Overall, Joint Circular 05 provides a more comprehensive guide for organising virtual hearings in accordance with Resolution 33’s principles. However, the current legal framework for virtual hearings is still too broad and has encountered numerous practical challenges. Some prevalent issues include:

• the lack of a clear and unified criterion to determine if a case has sufficiently “simple facts and nature, and clear evidence” to be suitable for virtual hearings (this is up to the discretion of each court managing the case);
• difficulties in adequately and synchronously equipping the court system with the necessary apparatus; and
• concerns regarding information security and confidentiality.

Our Experience

A case from our experience of participating in virtual hearings in September 2022 involved parties who reached a settlement and asked the court to approve their agreement with a valid judgement. We represented the defendant, who joined the trial in Ho Chi Minh Court; the plaintiff, who resided near Thu Duc District, joined the trial in Thu Duc District Court. Even though the process applied to this case was quite simple, it took the court 1.5 hours to technically prepare. Furthermore, during the hearings, the connections were sometimes so sluggish that the parties could not hear each other clearly. Despite these issues, we believe that, in the long run, virtual hearings will ultimately supplant traditional courts, whose technology and infrastructure will be enhanced.

Specialised Employment Forums

Before bringing the case to court, the disputing parties may bring their case to the labour conciliation council and labour arbitration council.

Labour conciliation council

Except for certain labour disputes, such as wrongful termination, compensation, severance pay and social insurance, where the parties may bring their case directly to court, the labour case must be settled through the conciliation procedures conducted by the labour conciliation council prior to being brought to the labour arbitration council or the courts for resolution. The process is as follows:

• Within seven working days after receiving a request for labour dispute settlement, a labour conciliation council must be formed to settle the dispute.
• Within 30 days after being formed, the labour conciliation council must issue a decision on dispute settlement and send it to the disputing parties.
• If the time limit expires but the labour conciliation council has not yet been formed, or the labour conciliation council fails to issue a decision on dispute settlement, the disputing parties may request dispute settlement by a court.
• If either party fails to implement the dispute settlement decision issued by the labour conciliation council, the parties may request dispute settlement by a court.

Even if the parties are not required to bring their case to the labour conciliation council (as in the cases stated above), in our experience, the court is likely to request that the parties undergo mediation via the labour conciliation council before requesting that the court resolve their case. Therefore, in labour disputes, it is strongly advised to seek mediation through the labour conciliation council before bringing the dispute to court.

Labour arbitration council

The disputing parties have the right to request that the labour arbitration council resolve the dispute through non-binding arbitration. When asking the labour arbitration council to resolve a dispute, parties may not simultaneously ask the court to settle the matter. The procedure for labour arbitration is as follows:

• The labour arbitration council must be established within seven working days of receiving the request for dispute settlement.
• Within 30 days of the date of establishment of the labour arbitration council, the labour arbitration council shall render a decision regarding the resolution of the dispute and forward it to the disputing parties.
• If the labour arbitration council has not been established within five days from the date of receipt of the application, if the labour arbitration council has not rendered a decision to resolve the dispute within 30 days of the date of its establishment, the parties have the right to request that the court settle the dispute.
• In the event that one of the parties fails to comply with the labour arbitration council’s decision to resolve the dispute, the parties have the right to request that the court resolve the matter.

As stated, the decision of the labour arbitration council is not final and binding on the parties and the labour arbitration council is not a required procedure under the labour laws. Therefore, according to our litigation experience, to save time and cost, the parties should bypass this employment forum and go directly to court to obtain a resolution.

Collective Labour Disputes

Under the labour laws of Vietnam, a collective labour dispute covers disputes between representative organisations of employees and the employer over differences in the interpretation and implementation of the CBA, ILR and other lawful agreements.

Individual Labour Disputes

Other kinds of labour/employment disputes are considered individual labour disputes. The Code of Civil Procedure of Vietnam currently does not set a legal framework for class action civil claims in general, or for class action labour claims involving individual labour disputes in particular.

Each employee with a similar dispute with the same employer may ask the court to consolidate their case with those of other employees with concurrent cases. However, the court has complete discretion as to whether or not the cases should be merged. Consequently, class action-style lawsuits (or consolidated individual labour disputes) are uncommon in practice.

Commercial Arbitration

The court resolves labour disputes in Vietnam through mediation by a qualified mediator or authority, or through agreements between the employee and employer. Current Vietnamese labour law does not recognise commercial arbitration as a valid method for resolving labour disputes. Consequently, the question of whether a labour dispute can be resolved through commercial arbitration arises.

It should be noted that the labour conciliation council must be distinguished from commercial arbitration. The labour conciliation council is established by the state of Vietnam in accordance with the labour laws, while commercial arbitration involves a civil organisation to which Vietnam has delegated the authority to conduct judicial hearings to resolve commercial disputes between the parties. Under Vietnamese laws, only the labour conciliation council and the courts are authorised to settle labour disputes.

Pre-dispute Commercial Arbitration

Nonetheless, if the draft of Precedent No. 12 in the year 2023, which is based on Decision No. 755/2018/QD-PQTT, is approved, it will establish a precedent allowing arbitration to resolve cases involving certain areas of labour disputes, such as non-disclosure and non-competition agreements. In particular, the draft of Precedent No. 12 for the year 2023 states: “In this case, the court shall determine the dispute regarding the non-disclosure agreement and non-competition agreement between the parties as an agreement independent of the employment contract, within the jurisdiction of arbitration.”

The legal framework for answering the question of whether pre-dispute commercial arbitration agreements are enforceable will depend on whether the draft of Precedent No. 12 in the year 2023 is approved or not.

An employee/employer who prevails will not be awarded attorney fees and other legal costs. The Vietnamese court system does not recognise the awarding of attorney’s fees and legal costs to the victorious party, except in cases involving infringement of intellectual property rights, in which case the laws permit the winning party to claim attorney’s fees and legal costs from the losing party.

To avoid non-compliance, which may result in compensation for employees and, in some cases, affect the employer's reputation, employers must be thoroughly aware of the terms of labour laws on substantive and procedural issues. Failing to comply with the labour law, and even missing a minor step, may pose significant risks to the employer.