Vietnam Introduces New Labor Code for 2021

ASEAN Briefing, 27 Jan 2021

 

Key provisions of the labor code

Working hours

While the working hour limit remains the same as 48 hours per week, the new code states that normal working hours cannot exceed eight hours a day or 48 hours per week. However, if the employer and employee agree on an overtime deal, the overtime cannot exceed 12 hours a day, 40 hours a month, and 200 hours a year. For industries such as textile and clothing, footwear and electronics in which seasonal orders during certain times of the year require an extensive workload, an overtime cap of 300 hours has been specified.

Labor contracts

The amended labor code now lists only two types of labor contracts as compared to three earlier. Definite-term contracts, which cannot have a term longer than three years, and indefinite-term contracts. The definite contract can only be renewed once. Foreigners who have work permits (valid for two years) will also be able to renew only once. Seasonal contracts will no longer be permitted from 2021.

Termination

In a boost to employees, employees will be able to immediately terminate a contract for mistreatment, pregnancy, and if the employer fails to pay salary on time. As per the current labor policy employees are subject to minimum notice requirements (30 days for a definite term, 45 days for the indefinite term).

Unions

Vietnam will now allow independent trade unions to operate as opposed to currently being supervised by the state-run Vietnam General Confederation of Labor (VGCL). The independent union will still be required to get permission from state authorities to operate. This is partly seen as Vietnam enters into free trade agreements that require the opening of trade union rights. Nevertheless, further guidance will be required on how this will happen practically.

Retirement age

Vietnam will also increase the retirement age for men to 62 from the current 60 and increase the same for women to 55 from the current 50. However, workers may retire later or sooner depending on the situation. For example, employees working in dangerous environments or involved in heavy lifting can retire sooner, while those who work in the private sector or in high skilled jobs can retire later. The maximum extension for this will be five years. However, the increase in retirement age will be done gradually for men and women by 2028 and 2035 respectively. The increase in retirement has been done to avoid a labor shortage from 2040 and to address social insurance deficits.

Discrimination

The new code has safeguards protecting employees from discrimination at the workplace. This includes protection from sexual harassment and discrimination based on skin color, race, nationality, ethnic group, gender, marital status, pregnancy, political views, disability, HIV status or if in a trade group. The amended labor code also enhances protections for younger workers.

In full: https://www.aseanbriefing.com/news/vietnam-introduces-new-labor-code-for-2021/

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