Vietnam Compliance Questions Guidance

Information on existing and/or new laws in Vietnam relevant to COVID-19  compliance issues. Useful for employers, unions, workers and managers navigating unfamiliar and complex scenarios. More detailed information on compliance issues and legal guidance in Vietnam can be found Here.

[vc_row][vc_column][vc_toggle title=”What are the legal requirements on wages for workers unable to work due to government-ordered factory shutdown?”]Case 1: In case of force majeure (such as earthquakes, fires, floods, epidemics), electricity cuts, or economic recession/crisis, employers shall pay workers a work stoppage salary, which is negotiated between employers and workers, but shall not be less than the legal Minimum Wage. (Labor Code, Art. 98(3)); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)

The factory also must pay benefits agreed to under the CBA, unless the parties reach a different agreement before the work stoppage. (Labor Code, Art. 84); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)

Case 2: Annual leave agreement: Employers can arrange the annual leave schedule for workers, provided they have consulted with the Trade Union and informed workers in advance. (Labor Code, Arts. 111(2),192(5)); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)

Case 3: Labor contract terminated: Employers can unilaterally terminate employment contracts due to force majeure once they have exhausted all other options, and they are forced to scale down production and reduce the workforce. (Labour Code, Art. 38). In that case, they will have to provide advance notice, and pay workers termination payments (wages for days worked, unused annual leave, severance payment, if any). (Please see additional information under question on severance payments). Employers may not terminate employment contracts of workers during their pregnancy, maternity leave or while they are nursing a child of less than 1 year, unless the factory is closing down.  (Labour Code, Art. 155(3)); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)

Case 4: Labor contract suspension

If the employer cannot pay work stoppage wage and the workers agree to share the burden, both parties can negotiate and agree to suspend the labour contract. During this suspension, workers may or may not be paid, depending on the agreement. (Labor Code, Art. 32, Clause 5; Document No. 1064/LDTBXH-QHLDTL dated 25 March 2020); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)

Case 5: Unpaid leave: workers can agree with their employer to take unpaid leave for personal reasons. (Labor Code, Art. 116(3)); (Labor Code, Arts. 32(5); 84; 98(3); 111; 114; 116(3); Decree 148/2018/NĐ-CP, Art. 1(9); Document no. 1064/LDTBXH-QHLDTL dated 25 March 2020)[/vc_toggle][vc_toggle title=”What are the legal requirements on wages during work stoppage/temporary shutdown (employer driven)?”]If the stoppage is caused by the employer, workers are entitled to full payment, calculated based on the contractual wage during the month of the work stoppages and paid at the time rate. (Labor Code, Art. 98(1); Decree 05/2015/ND-CP, Art. 26(1)); (Labor Code, Art. 98(1); Decree 05/2015/ND-CP, Art. 26(1))[/vc_toggle][vc_toggle title=”What are the legal limits on the duration of any suspension of labour contracts for economic reasons?”]There is no legal limit on the duration of suspensions due to force majeure or due to the fault of the employer.  (Labor Code, Art. 98).

Suspension of individual employment contracts depends on the agreement between workers and employers.  After the labor suspension period, within 15 days, the employee shall show up at the workplace and the employer shall reinstate the employee unless otherwise agreed upon by the two parties. (Labor Code, Arts 32(5), 33); (Labor Code, Arts. 98, 32(5), 33)[/vc_toggle][vc_toggle title=”What are the legal requirements for payment of benefits (e.g. social/health insurance) by employers during work stoppage/temporary shutdown?”]In Vietnam, social insurance is mandatory for workers who have an employment contract of more than 1 month, while health insurance and unemployment insurance are mandatory for workers who have an employment contract with a duration of 3 months or more. Social insurance covers long-term benefits (retirement, survivor benefits), as well as short-term benefits (sickness, maternity, employment injury).  (Social Insurance Law 2014)

If workers have a salary paid by the employer for 13 days or more in a month (including work stoppages, paid annual leave, paid holiday, normal workdays), they will join the social, health and unemployment insurance for the month.

If workers do not work, but they still receive wages from the employer for 14 days or more in a month, the wage used to calculate the Social Insurance payments is the wage paid during the work stoppage. (Circular 59/2015/TT-BLĐTBXH, Art. 30, Clause 6)

If workers do not work or receive wages from the employer for 14 days or more in a month (e.g., unpaid leave, or unpaid suspension of an individual labour contract), neither the employer nor the workers pay social insurance premiums for that month.

If workers are on maternity leave (and as a result, they do not have their wages paid by the employer for 13 days or more), they do not have to pay insurance contributions, but they are still eligible to receive insurance benefits.

(Social Insurance Law, Arts. 85(3), 86(4)); (Social Insurance Law, Arts. 1-5, 85(3), 86(4); Decision 595/QĐ-BHXH, Art. 42(4); Circular 59/2015/TT-BLĐTBXH, Art. 30, Clause 6)[/vc_toggle][vc_toggle title=”What are the legal requirements for payment of bonuses during work stoppage/temporary shutdown (e.g. festive bonuses)?”]Bonuses (which are not considered part of wages) must continue to be paid by the employer as required under the CBA, internal regulations, or bonus regulations (if applicable).

Payment of a bonus can only be suspended if and when the CBA/Internal regulations/bonus regulations have been changed to allow for this.[/vc_toggle][vc_toggle title=”What benefits does the government provide to workers (if any) during suspension in labour contracts?”]The Labour Code does not provide for any benefits to be paid by the government during a suspension.

However, on 9 April, the Government issued Resolution No. 42/NQ-CP (2020), which provides support for workers undergoing special hardships, as follows:

Workers who take unpaid leave or have their contract suspended for at least 1 month will receive VND 1,800,000 per month for 1 to 3 months from April to June 2020.

Workers who have been terminated and are not eligible for unemployment allowance (paid by Social Insurance Agency) will receive VND 1,000,000 per month for up to 3 months from April to June 2020. (Resolution No. 42/NQ-CP (2020) (COVID 19 Resolution))[/vc_toggle][vc_toggle title=”What are the legal provisions regarding workers taking paid or unpaid leave during work stoppage/temporary shutdown?”]No specific legal provisions on taking leave during work stoppages exist (work stoppage payments would apply).

Workers taking paid or unpaid leave prior to the work stoppage will continue to be paid according to the existing arrangement (paid or unpaid) on the days of the work stoppage/temporary shutdown for the duration of the leave.

Workers can agree with their employer to take unpaid leave for personal reasons. (Labor Code, Art. 116(39)  And employers can arrange the annual leave schedule for workers, provided they have consulted with the Trade Union and informed workers in advance. (Labor Code, Arts. 111, 192(5)[/vc_toggle][vc_toggle title=”What are the legal requirements for Sick Leave arrangements (paid or unpaid)?”]Sick leave:

Sickness benefit is provided for workers who are covered by the compulsory insurance scheme (75% of the salary during sick leave certified by a medical authority), including for workers found positive for COVID. Health insurance also covers the medical treatment expenses (subject to certain terms and conditions)

Sick leave a without doctor’s certificate is not paid.

(Circular 59/2015/TT-BLDTBXH, Art. 3.)

Sick leave is paid by the Social Insurance Agency. However, workers in quarantine for 14 days receive a work stoppage wage from the employer, instead of the sick leave payment from the insurance fund. The number of days per year for paid sick leave is:

• 30 days per year;
• 40 days for workers engaged in hazardous work, or workers who have been paying social insurance premiums for between 15 and 30 years (50 days if the work is hazardous);
• 60 days if workers have paid social insurance premiums for more than 30 years (70 days for hazardous work);
• up to 180 days for diseases requiring long-term treatment, at reduced rate for the leave after the 180-day period but not exceeding the period of social insurance premium payment.

Other types of related leave:

(i) leave to care for workers’ sick children (paid at 75% of the preceding month salary; applied for each parent covered by social insurance);

(ii) leave for rest after taking sick leave (paid at 30% of common Minimum Wage)

(Social Insurance Law, Arts. 25-29; Circular 59/2015/TT-BLDTBXH, Arts. 3-8)[/vc_toggle][vc_toggle title=”What are the legal requirements for Annual Leave arrangements (paid or unpaid)?”]Employers can arrange the annual leave schedule for workers, provided they have consulted with the Trade Union and informed workers in advance. (Labor Code, Arts. 111(2), 192(5)).

Annual leave days are paid (100%).[/vc_toggle][vc_toggle title=”What are the legally permitted deferments or exemptions for statutory contributions (e.g. health/social insurance etc) for either employer or workers?”]The Social Insurance Law provides that employers who face difficulties and have to suspend their production or business activities, leading to an inability for them and their workers to pay social insurance premiums, can suspend payments into the retirement and survivorship allowance funds for up to 12 months.  When the 12 months expire, employers and workers must continue paying social insurance premiums and make supplementary payments for the suspension period (which are not subject to late-payment interest). (Social Insurance Law, Art. 88)

During the period of suspended payments to the retirement and survivorship funds, employers must still pay into the sickness and maternity fund, occupational accident and occupational disease fund, health insurance fund and unemployment insurance fund.  (Decision 595/QĐ-BHXH, Art. 42(3))

COVID 19 Resolution 42/NQ-CP (2020) provides as follows:

For employers:

If an employer has to lay off at least 50% of workers who had social insurance before the pandemic declaration (including suspended workers or workers taking unpaid leave), or an employer has their assets reduced by 50% or more because of Covid-19, the employer and the workers may defer contributions to the retirement and survivor scheme for up to 12 months (they still have to pay sickness, maternity, employment injury, health and unemployment insurance scheme on time).

For workers:

Unemployed workers may send applications for unemployment benefits by post and receive monthly job notices by email, fax or post, etc. from April 01, 2020 until the end of the pandemic without having to obtain an epidemic confirmation from the People’s Committee of the commune.

Social Insurance Law, Art. 88; Decision 595/QĐ-BHXH, Art. 42(3); Resolution No. 42/NQ-CP (2020) (COVID 19 Resolution)[/vc_toggle][vc_toggle title=”What are the legal requirements on severance (pay and notice)?”]1) Severance pay:

• Workers who have been regularly employed in the factory for 12 months or more are entitled to severance pay of a half month’s wage per year of employment when their contracts expire or the employer unilaterally terminates them or they legally unilaterally terminate their contract. (Labor Code, Art. 48, Clause 1)
• Workers who are dismissed (for disciplinary reasons) or who illegally unilaterally terminate their contracts are entitled to severance only for the working time under the contracts completed before their last contract. (Circular 47/2015/TT-BLDTBXH, Art. 8, Clause 2)

Severance pay = Total number of years subject to severance pay (x) Monthly wage for calculating severance pay (x) ½ .

Of which:

– Monthly wage for calculating severance pay is the average contractual salary of the preceding 6 months. (Circular 47/2015/TT-BLDTBXH, Art. 8, Clause 1)

– Total working time subject to severance pay = Total actual working time – Total periods of employment that are covered by unemployment insurance contribution (Decree 05/2015/ND-CP, Art. 14(2, 3)

In which: Total actual working time includes such periods as actual working time according to the labor contract, time of being sent to trainings, maternity/ sick leaves (covered by social insurance regime), period for occupational accident treatment and/or recovery paid by the employer (regulated by the OSH Law), weekly rest days, paid leave, time of joining union activities, time to conduct citizenship duties paid by the employee, work stoppages that are not caused by workers, and periods when the labor contract was temporarily suspended (Decree 148/2018 – ND-CP, Art. 1, Clause 5)

– Total working time subject to severance pay is rounded up to half year unit (1 month of work is rounded to 0.5 year, and 6 months of work is rounded up to 1 year). (Decree 148/2018 – ND-CP, Art. 1, Clause 5)

Note: Regarding employment contracts that came into force before the effective date of the 2012 Labor Code (May 01, 2013) and contain specific probation period, the work period as the basis for calculation of severance pay or redundancy pay shall include the probation period specified in the employment contract

2) Job-loss allowance:

• Workers terminated due to structural, technological, or economic reasons are entitled to job-loss allowance. (Decree 05/2015/ND-CP, Art. 14, Clause 2)
• The calculation is the same as for severance pay, except that the job-loss allowance is paid at 1 month’s wage for each year of employment, and is subject to a minimum payment of 2 months’ wages (do not multiply by 1/2 as with severance pay). (Circular 30/2013/TT-BLDTBXH, Art. 15, Clause 1; Circular 47/2015/TT-BLDTBXH, Art. 8, Clause 4)

3) Unused accrued Annual Leave:

‘• Workers are entitled to payment for the accrued unused annual leave when they resign or are terminated (even if they are terminated for misconduct). (Labor Code, Art. 114)

• Workers who resign during the calendar year, or who are employed for less than 12 months, are entitled to leave days = the number of days of annual leave the worker earns (considering seniority, type of work, etc.), divided by 12 months, multiplied by the number of months worked, rounded up if the decimal is .5 or more (e.g. (14 days/12 months) x 3 months worked) = 3.5 days, rounded up to 4). The pro-rated Annual Leave earned is rounded before deducting the used Annual Leave days. (Decree 05/2015/ND-CP, Art. 26, Clause 2; Decree 45/2013/ND-CP, Art. 7)
• Unused annual leave payment = the average contractual salary earned during 6 months preceding the termination x the number of unused annual leave days / the number of normal working days prescribed by employers of the preceding month before the employers pay (Decree 05/2015/ND-CP, Art. 26, Clause 2-4)

4) Last month’s wage:

‘• Workers are entitled to wages for all days worked up to and including the last day.

• Other benefits include those stated in the contract, such as return air ticket or bus ticket home, and other benefits according to the contracts, and return of social insurance book. (Labor Code, Art. 47, Clause 3)

5) Notice:

• The amount of notice required depends on the type of employment contract.
• Workers are entitled to:

– 3 working days’ notice, for workers on contracts for seasonal work or for a specific task for less than 12 months; and for skilled and technically certified probationary workers;

– 30 days’ notice, if workers are on definite term contracts (12-36 months in duration);

– 45 days’ notice, if workers are on indefinite term contracts;

– No prior notice if workers are dismissed for disciplinary reasons;

– Minimum 15 days’ notice before the expiration of workers’ fixed-term contracts if the contract is not renewed.

(Labour Code, Art. 48; Decree 28/2015/ND-CP, Art. 11(2)(4); Circular 30/2013/TT-BLDTBXH, Art. 15(1); Decree 05/2015/ND-CP, Art. 14; Circular 47/2015/TT-BLDTBXH, Art. 8; Decree 148/2018 – ND-CP, Art. 1(5)

6) Payment time:

• Within 7 working days of termination or resignation, the employer must pay all outstanding sums owed to the worker, including outstanding wages, payment for unused annual leave, severance pay, and any other termination benefits. (Labor Code, Art. 47(2))
• This time limit may be extended for up to 30 days in special cases (terminations due to natural disasters, fire, hostile acts, epidemics, or changes in technology, organizational structure, or economic reasons). (Decree 05/2015/ND-CP, Art. 14(5))

[/vc_toggle][vc_toggle title=”What are the legal requirements on resumption of work after a work stoppage (including OSH or overtime provisions)?”]Under the Law on Enterprises, factories must send written notification of the time and duration of a suspension of business, including the time business will resume, to the business registration authority at least 15 days before the date of suspension or resumption.  (Law on Enterprises No. 68/2014/QH13, Art. 200(1, 3))

Within 15 days after the expiry of the period of suspension of a labor contract agreed by the worker and employer, the worker shall show up at the workplace and the employer shall reinstate the employee unless otherwise agreed upon by the two parties. (Labour Code, Art. 33)

No special exemptions have been made for OT following a return to work after COVID, and no special requirements apply following a work stoppage, so existing limits on OT apply:  Overtime plus regular hours should not exceed 12 hours per day, and overtime hours should not exceed 50% of the normal working hours in 1 day. In addition OT should not exceed 30 hours per month/ 300 hours per calendar year. (Labour Code, Art. 106; Decree 45/2013/ND-CP, Art. 4)[/vc_toggle][vc_toggle title=”What are the legal provisions on force majeure situations (if any) for wages, hours, benefits and/or severance?”]When force majeure leads to a work stoppage, workers are paid a work stoppage salary, negotiated by both sides, but cannot be paid less than the regional minimum wage. (Labour Code, Art. 98(3))

Employers can unilaterally terminate employment contracts due to force majeure once they have exhausted all other options, and they are forced to scale down production and reduce the workforce. (Labour Code, Art. 38). In that case, they will have to provide advance notice, and pay workers termination payments (wages for days worked, unused annual leave, severance payment, if any).

Severance allowance:

Case 1: The period of service used to calculate the severance allowance for workers includes downtime periods (which were not due to workers’ faults). (Decree 148/2018 – ND-CP, Art. 1(5))

(Please see additional information under question on severance payments.)[/vc_toggle][vc_toggle title=”What are the legal requirements for a company that closes down permanently as a result of Covid-19?”]In case of enterprise dissolution:

Wages and benefits of workers (unpaid salaries, severance payment, social insurance contribution and other benefits as per the labor contracts and CBA) have first priority in dissolution of an enterprise. (Labour Code, Art. 47(4); Law on Enterprises No. 68/2014/QH13, Art. 202(5))

In case of enterprise bankruptcy:

The factory is responsible for paying cost of bankruptcy and the unpaid salaries, severance pay, social insurance and medical insurance, as well as other benefits according to the labor contracts and CBA to workers. (Labour Code, Art. 47(4); Law on Bankruptcy, Art. 54)[/vc_toggle][vc_toggle title=”What are the legal provisions for migrant workers and/or workers residing in dormitories during crisis ?”]No crisis-specific legal requirements for workers residing in dormitories.[/vc_toggle][/vc_column][/vc_row][vc_row][vc_column][vc_btn title=”Return to COVID-19 main page” link=”url:https%3A%2F%2Fbetterwork.org%2F1-better-work-response-to-covid19%2F%231585283630609-b974e95a-64e6|||”][/vc_column][/vc_row]