What is a labor contract? Who has the right to sign a labor contract? How many types of labor contracts are there? What are the principles for concluding a labor contract? Or, what are the penalties for violating a labor contract?… These are concepts that business owners and employers need to know to avoid labor violations and labor disputes.
This article provides a complete and detailed guide to employment contracts and instructions on how to sign them.
Understanding Employment Contracts
1. What is an employment contract?
A labor contract is an agreement between an employee and an employer regarding paid work, wages, working conditions, and the rights and obligations of each party in the employment relationship.
What is a worker?
A worker is someone who works for an employer under an agreement, receives a salary, and is subject to the management, direction, and supervision of the employer.
What is an employer?
An employer is a business, agency, organization, cooperative, household, or individual that hires or employs workers for them according to an agreement; if the employer is an individual, they must have full legal capacity.
Note:
If the two parties agree using a different name but the content reflects paid work, wages, and management, direction, and supervision by one party, it shall be considered an employment contract.
2. Principles of concluding employment contracts
Voluntary participation, equality, good faith, cooperation, and honesty.
This means that when entering into an employment contract, the parties are completely free and voluntary in their will, not influenced by a third party (except in the case of employees under 15 years old, who must be represented by their parents or legal guardian), and have an equal standing with the employer when signing the employment contract. Furthermore, both parties must demonstrate good faith in their cooperation and honesty in providing information related to the employment contract before signing.
Freedom to enter into labor contracts is permitted, but must not violate the law, collective bargaining agreements, and social ethics.
This is a general principle that not only ensures the rights and interests of the parties involved in the labor contract but also ensures that it does not affect the interests of other entities related to the common good of society.
Labor contracts must adhere to the principle of freedom of negotiation; however, this freedom of negotiation must be within a framework. That framework consists of ethical standards, compliance with the law, and collective bargaining agreements.
3. Authority to conclude labor contracts
According to the regulations on the authority to conclude labor contracts:
3.1. Employees directly enter into labor contracts, except as stipulated in Clause 2 of this Article.
3.2. For seasonal work, or work with a fixed duration of less than 12 months.
Therefore, a group of workers aged 18 and above can authorize one worker in the group to enter into an employment contract; in this case, the employment contract must be in writing and have the same effect as if it were signed with each individual worker.
Employment contracts signed by authorized representatives must be accompanied by a list clearly stating the full name, date of birth, gender, place of residence, and signature of each employee.
3.3. The person concluding the labor contract on the employer's side is a person who falls into one of the following categories:
a) The legal representative of the enterprise or a person authorized by law;
b) The head of an agency or organization with legal personality as prescribed by law, or a person authorized by law;
c) The representative of a household, cooperative, or other organization without legal personality, or a person authorized according to the provisions of law;
d) Individuals who directly employ workers.
3.4. The person concluding the labor contract on the employee's side is a person who falls into one of the following categories:
a) Workers aged 18 years and older;
b) Workers aged 15 to under 18 years old with the written consent of their legal representative;
c) Persons under the age of 15 and their legal representatives;
d) The worker is legally authorized by other workers in the group to enter into an employment contract.
3.5. A person authorized to conclude a labor contract may not further delegate this authority to another person.
4. Types of employment contracts
Types of employment contracts are determined based on the duration of the employment contract. To answer the question of how many types of employment contracts there are:
From January 1st, 2021, seasonal contracts lasting less than one month or for a specific job will no longer be accepted. Labor contracts must be concluded according to one of the following two types:
a) An indefinite-term employment contract is a contract in which the two parties do not specify a term or a date for the contract's termination;
b) A fixed-term employment contract is a contract in which both parties determine the duration and termination date of the contract, for a period not exceeding 36 months from the effective date of the contract.
When a fixed-term employment contract expires and the employee continues to work, the following procedures should be followed:
- Within 30 days of the expiration of the employment contract, both parties must sign a new employment contract; during the period before the new contract is signed, the rights, obligations, and benefits of both parties shall be governed by the previously concluded contract.
- If, after 30 days from the expiration date of the employment contract, the two parties do not sign a new employment contract, the previously concluded fixed-term employment contract becomes an indefinite-term employment contract.
- If both parties sign a new fixed-term employment contract, it can only be renewed once. After that, if the employee continues to work, an indefinite-term employment contract must be signed.
Bilingual employment contract, or English employment contract
This type of contract is drawn up in two languages (usually bilingual English and Vietnamese) with the same content and format as a normal employment contract. Vietnamese is the primary language and serves as the basis for reference in case of misunderstandings between Vietnamese and the other language in the bilingual employment contract.
Guide to signing employment contracts
1. Time of signing the employment contract
Before hiring a worker, the employer must enter into an employment contract with the worker.
2. Procedures for signing employment contracts
Employment contracts must be concluded in writing and made in two copies, one copy for the employee and one copy for the employer.
It is possible to sign an electronic employment contract: Employment contracts concluded electronically in the form of data messages, as stipulated by the law on electronic transactions, have the same validity as written employment contracts.
3. Obligations to provide information when concluding an employment contract.
- Employers must provide employees with truthful information about the job, workplace location, working conditions, working hours, rest periods, occupational safety and health, wages, payment methods, social insurance, health insurance, unemployment insurance, regulations on protecting trade secrets, protecting technological secrets, and other matters directly related to the conclusion of the labor contract that the employee requests.
- Employees must provide employers with truthful information regarding their full name, date of birth, gender, place of residence, educational qualifications, professional skills, health status, and other matters directly related to the conclusion of the employment contract as requested by the employer.
4. Actions that employers are prohibited from doing when concluding and executing labor contracts.
- Keep the original copies of employees' identification documents, diplomas, and certificates.
- Requiring employees to provide monetary or other asset guarantees for the performance of the employment contract.
- Forcing workers to fulfill their employment contracts in order to repay debts to their employers.
5. When does the employment contract become effective?
The employment contract takes effect from the date of signing by both parties, unless otherwise agreed upon by both parties or stipulated by law.
6. The employment contract is invalid.
6.1. An employment contract is entirely invalid in the following cases:
- The entire content of the employment contract violates the law;
- A person who enters into an employment contract without proper authority or in violation of the principles of labor contract formation stipulated in Clause 1, Article 15 of this Code;
- The work stipulated in the employment contract is work prohibited by law.
6.2. A labor contract is partially invalid when the content of that part violates the law but does not affect the remaining parts of the contract.
The People's Court has the right to declare a labor contract invalid.
7. Entering into multiple employment contracts
- Workers may enter into multiple employment contracts with different employers, but they must ensure that they fully fulfill all the terms of the contracts.
- If an employee simultaneously enters into multiple employment contracts with multiple employers, their participation in social insurance, health insurance, and unemployment insurance shall be carried out in accordance with the provisions of the law on social insurance, health insurance, unemployment insurance, and occupational safety and health.
8. Contents of the employment contract
An employment contract must include the following key elements:
a) Name and address of the employer and the full name and title of the person signing the employment contract on the employer's side;
b) Full name, date of birth, gender, place of residence, Citizen ID card number, National ID card number or passport number of the person signing the labor contract on the employee's side;
c) Job title and workplace;
d) The duration of the employment contract;
e) Salary based on job or position, method of payment, payment schedule, salary allowances and other additional benefits;
f) Promotion and salary increase system;
g) Working hours, rest periods;
h) Providing personal protective equipment for workers;
i) Social insurance, health insurance, and unemployment insurance;
j) Training, professional development, and upgrading of vocational skills.
When employees' work is directly related to trade secrets or technological secrets as stipulated by law, the employer has the right to enter into a written agreement with the employee regarding the content and duration of protection of trade secrets and technological secrets, the rights and compensation in case of violation.
For workers in agriculture, forestry, fisheries, and salt production, depending on the type of work, both parties may reduce some key provisions of the labor contract and agree to supplement it with provisions on how to resolve issues in case the performance of the contract is affected by natural disasters, fires, or adverse weather conditions.
9. Probation period and probationary employment contract
1. Employers and employees may agree on the terms of the probationary period, which can be included in the employment contract, or they may agree on the probationary period by entering into a separate probationary contract.
2. The main contents of a probationary contract include the probationary period and similar provisions to those of a labor contract as stipulated in points a, b, c, d, g, and h of Clause 1, Article 21 of the Labor Code.
3. A probationary period does not apply to employees who enter into employment contracts with a term of less than one month.
The following are the relevant contents of a probationary employment contract:
Probationary period
The probationary period is agreed upon by both parties based on the nature and complexity of the job, but only one probationary period is allowed for a single job, and the following conditions must be met:
1. Not exceeding 180 days for the work of business managers as stipulated in the Enterprise Law and the Law on Management and Use of State Capital Invested in Production and Business at Enterprises;
2. Not exceeding 60 days for jobs requiring professional or technical qualifications at the college level or higher;
3. Not exceeding 30 days for jobs requiring intermediate-level professional or technical qualifications, skilled workers, or professional staff;
4. No more than 06 working days for other tasks.
Probationary salary
The employee's salary during the probationary period is determined by mutual agreement between both parties, but it must be at least 85% of the salary for that job.
End of probationary period
1. At the end of the probationary period, the employer must inform the employee of the results of the probationary period.
If the probationary period is successful, the employer shall continue to perform the employment contract already concluded in the case of a probationary period stipulated in the employment contract, or shall conclude an employment contract in the case of a probationary period.
If the probationary period is unsuccessful, the signed employment contract or probationary contract will be terminated.
2. During the probationary period, each party has the right to terminate the probationary contract or the concluded employment contract without prior notice and without compensation.
10. Appendix to the employment contract
- An addendum to a labor contract is part of the labor contract and has the same legal effect as the labor contract itself.
- An addendum to a labor contract specifies, amends, or supplements certain articles and clauses of the labor contract, but it may not modify the term of the labor contract.
In cases where an addendum to the labor contract specifies details of certain articles or clauses of the labor contract that lead to a different interpretation than the labor contract itself, the content of the labor contract shall prevail.
In cases where an addendum to a labor contract amends or supplements certain articles or clauses of the labor contract, the content of the amended or supplemented articles or clauses and the effective date must be clearly stated.
11. Amendments and additions to employment contracts
- During the execution of the labor contract, if either party requests amendments or additions to the contract's content, they must notify the other party at least 03 working days in advance of the proposed amendments or additions.
- If both parties agree, the amendment or supplementation of the labor contract shall be carried out by signing an addendum to the labor contract or entering into a new labor contract.
- If the two parties cannot agree on amending or supplementing the content of the labor contract, the labor contract as concluded shall continue to be implemented.
Guidelines for implementing employment contracts
1. Perform work as per the employment contract.
The work specified in the employment contract must be performed by the employee who signed the contract. The workplace is as stipulated in the employment contract, unless otherwise agreed upon by both parties.
2. Transferring employees to perform work different from that specified in their employment contract.
1. In the event of unforeseen difficulties due to natural disasters, fires, dangerous epidemics, or the implementation of measures to prevent and remedy occupational accidents, occupational diseases, electrical or water incidents, or due to production and business needs, the employer has the right to temporarily transfer the employee to a different job than specified in the labor contract, but not for more than 60 cumulative working days in one year; if the transfer of the employee to a different job than specified in the labor contract exceeds 60 cumulative working days in one year, it can only be done with the employee's written consent.
Employers shall specify in their internal labor regulations the circumstances under which, due to production or business needs, they may temporarily transfer employees to perform work different from that stipulated in their labor contracts.
2. When temporarily transferring an employee to a different job than stipulated in the labor contract as specified in Clause 1 of this Article, the employer must notify the employee at least 03 working days in advance, clearly state the temporary work period, and assign work suitable to the employee's health and gender.
3. Employees who switch to a different job than specified in their employment contract will be paid according to the new job. If the salary for the new job is lower than the salary for the old job, the employee will retain the old salary for a period of 30 working days. The salary for the new job must be at least 85% of the old salary but not lower than the minimum wage.
4. If an employee refuses to temporarily perform work different from that specified in their employment contract for more than 60 cumulative working days in one year and has to stop working, the employer must pay them wages for the period of work stoppage as stipulated in Article 99 of this Labor Code.
3. Suspension of the employment contract.
1. Cases of temporary suspension of employment contracts include:
a) Workers performing military service or participating in the militia;
b) Workers who are detained or held in custody in accordance with the provisions of the law on criminal procedure;
c) Workers must comply with decisions to apply measures such as placement in reform schools, compulsory drug rehabilitation centers, or compulsory educational institutions;
d) Female employees who are pregnant as stipulated in Article 138 of this Code;
e) Employees appointed as business managers of a limited liability company wholly owned by the State;
f) Employees are authorized to exercise the rights and responsibilities of the state owner's representative with respect to the state capital in the enterprise;
g) Employees are authorized to exercise the rights and responsibilities of the enterprise with respect to the enterprise's capital invested in other enterprises;
h) Other cases as agreed upon by both parties.
2. During the period of temporary suspension of the labor contract, the employee is not entitled to salary and the rights and benefits stipulated in the labor contract, except in cases where both parties agree otherwise or the law provides otherwise.
Re-employ workers whose temporary suspension of employment contracts has expired.
Within 15 days from the expiration of the temporary suspension of the labor contract, the employee must report to the workplace, and the employer must reinstate the employee to their job under the concluded labor contract if the labor contract is still valid, unless otherwise agreed upon by both parties or stipulated by law.
4. Part-time work
1. Part-time workers are those whose working hours are shorter than the normal daily, weekly, or monthly working hours stipulated in labor laws, collective bargaining agreements, or company regulations.
2. Employees agree with employers to work part-time when entering into employment contracts.
3. Part-time workers are entitled to wages; equal rights and obligations with full-time workers; equal opportunities, no discrimination, and guaranteed occupational safety and health.
Instructions for Termination of Employment Contract
1. Cases of termination of employment contracts
1. Expiration of the employment contract, except as provided in Clause 4, Article 177 of this Code (4. The employment contract for employees who are members of the leadership board of the employee representative organization at the workplace and whose current term of office is expiring must be extended until the end of their term.)
2. The work as stipulated in the employment contract has been completed.
3. Both parties agree to terminate the employment contract.
4. Employees who have been sentenced to imprisonment but are not granted a suspended sentence or are not eligible for release under Clause 5, Article 328 of the Criminal Procedure Code, or who have been sentenced to death, or who are prohibited from performing the work specified in their labor contract according to a legally effective judgment or decision of the Court.
5. Foreign workers employed in Vietnam who are deported pursuant to a legally effective court judgment or decision, or a decision of a competent state agency.
6. The employee dies; is declared by the Court to be incapacitated, missing, or deceased.
7. The employer is an individual who dies; is declared by the Court to be incapacitated, missing, or deceased. The employer is not an individual who ceases operations or is notified by the specialized business registration agency under the Provincial People's Committee that there is no legal representative or authorized person to exercise the rights and obligations of the legal representative.
8. The employee was dismissed as a disciplinary measure.
9. The employee unilaterally terminates the employment contract in accordance with Article 35 of this Code.
10. The employer unilaterally terminates the labor contract in accordance with Article 36 of this Code.
11. The employer terminates the employment of the employee in accordance with the provisions of Articles 42 and 43 of this Code.
12. Work permits for foreign workers employed in Vietnam expire in accordance with Article 156 of this Code.
13. In cases where the terms of the probationary period are stipulated in the labor contract, but the probationary period is unsuccessful or one party cancels the probationary agreement.
2. The right of the employee to unilaterally terminate the employment contract.
1. Employees have the right to unilaterally terminate their employment contract, but they must give prior notice to their employer as follows:
a) At least 45 days if working under an indefinite-term employment contract;
b) At least 30 days if working under a fixed-term employment contract with a term of 12 to 36 months;
c) At least 03 working days if working under a fixed-term employment contract with a term of less than 12 months;
d) For certain specific industries, occupations, and jobs, the notice period shall be implemented according to the regulations of the Government.
2. Employees have the right to unilaterally terminate their employment contract without prior notice in the following cases:
a) Not being assigned to the correct job, workplace, or not being provided with working conditions as agreed upon, except as stipulated in Article 29 of this Code;
b) Not being paid full salary or not being paid on time, except as stipulated in Clause 4, Article 97 of this Code;
c) Being mistreated, beaten, or subjected to insulting words or actions by the employer, or actions that affect health, dignity, or honor; being subjected to forced labor;
d) Being sexually harassed in the workplace;
e) Female employees who are pregnant must take leave as prescribed in Clause 1, Article 138 of this Code;
f) Having reached the retirement age as prescribed in Article 169 of this Code, unless the parties agree otherwise;
g) The employer provides false information as stipulated in Clause 1, Article 16 of this Code, affecting the performance of the labor contract.
3. The employer's right to unilaterally terminate the employment contract.
1. The employer has the right to unilaterally terminate the employment contract in the following cases:
a) Employees who consistently fail to fulfill their contractual obligations are assessed based on performance evaluation criteria outlined in the employer's regulations. These performance evaluation regulations are issued by the employer but must be discussed with the employee representative organization at the workplace, if such an organization exists;
b) Employees who have been ill or injured and have received continuous treatment for 12 months for those working under indefinite-term employment contracts, or for 06 months for those working under fixed-term employment contracts with a term of 12 to 36 months, or for more than half the term of the employment contract for those working under fixed-term employment contracts with a term of less than 12 months, and whose ability to work has not yet recovered.
When the employee's health recovers, the employer will consider whether to continue entering into an employment contract with the employee.
c) Due to natural disasters, fires, dangerous epidemics, enemy attacks, or relocation or reduction of production and business activities at the request of competent state agencies, the employer has taken all remedial measures but is still forced to reduce jobs;
d) The employee is absent from the workplace after the deadline stipulated in Article 31 of this Code;
e) Employees who have reached the retirement age as prescribed in Article 169 of this Code, unless otherwise agreed;
f) Employees who voluntarily abandon their jobs without justifiable reason for 05 consecutive working days or more;
g) An employee provides false information as stipulated in Clause 2, Article 16 of this Code when concluding a labor contract, thereby affecting the recruitment of the employee.
2. When unilaterally terminating a labor contract in the cases specified in points a, b, c, d, and g of Clause 1 of this Article, the employer must give prior notice to the employee as follows:
a) At least 45 days for indefinite-term employment contracts;
b) At least 30 days for fixed-term employment contracts with a term of 12 to 36 months;
c) At least 03 working days for fixed-term employment contracts with a term of less than 12 months and for cases specified in point b, clause 1 of this Article;
d) For certain specific industries, occupations, and jobs, the notice period shall be implemented according to the regulations of the Government.
3. When unilaterally terminating a labor contract as stipulated in points d and e of Clause 1 of this Article, the employer is not required to give prior notice to the employee.
Cases where the employer is not allowed to unilaterally terminate the employment contract.
1. Workers who are sick or injured, or suffering from occupational diseases and are undergoing treatment or rehabilitation as prescribed by a competent medical facility, except in cases specified in point b, clause 1, Article 36 of this Code.
2. Employees who are on annual leave, personal leave, or other types of leave approved by the employer.
3. Female employees who are pregnant; employees who are on maternity leave or raising children under 12 months old.
The legal system governs employment contracts.
FAQ - Frequently Asked Questions about Employment Contracts
According to Article 8 of Decree 28/2020/ND-CP:
1. Employers shall be fined for any of the following acts: Failure to enter into a written labor contract for work with a duration of 3 months or more; failure to enter into the correct type of labor contract with the employee; entering into a labor contract that does not include all the essential contents of a labor contract; entering into a labor contract in the case of hiring an employee as a director in a state-owned enterprise in violation of the law, according to one of the following levels:
a) From 2.000.000 VND to 5.000.000 VND for violations involving 01 to 10 employees.
b) From VND 5.000.000 to VND 10.000.000 for violations involving 11 to 50 employees;
c) From 10.000.000 VND to 15.000.000 VND for violations involving 51 to 100 employees;
d) From 15.000.000 VND to 20.000.000 VND for violations involving 101 to 300 employees;
e) From VND 20.000.000 to VND 25.000.000 for violations involving 301 or more employees.
2. A fine of VND 20.000.000 to VND 25.000.000 shall be imposed on employers who commit any of the following acts:
a) Retain the original copies of the employee's personal identification documents, diplomas, and certificates when concluding or executing employment contracts;
b) Forcing employees to provide monetary or other property guarantees for the performance of the labor contract;
c) Entering into an employment contract with an employee aged 15 to under 18 without the written consent of the employee's legal representative.
3. Remedial measures
a) To compel the return of the original personal identification documents, diplomas, and certificates withheld from employees for violations of the regulations specified in point a, clause 2 of this Article;
b) To compel the return of the money or property withheld from the employee, plus interest on the withheld amount calculated at the highest interest rate for demand deposits published by state-owned commercial banks at the time of the penalty for the violation specified in point b, clause 2 of this Article;
c) Compelling the conclusion of the correct type of employment contract with the employee in cases of failing to conclude the correct type of employment contract with the employee as stipulated in Clause 1 of this Article.
According to Article 40 of the 2019 Labor Code, employees who terminate their employment contracts illegally will lose the following rights:
The employee must compensate the employer with half a month's salary as stipulated in the employment contract, plus an amount equivalent to the salary for the days without prior notice (if the notice period requirement is violated).
No severance pay will be provided.
Employees must reimburse their employers for training costs as stipulated in Article 60 of the 2019 Labor Code.
Therefore, to terminate an employment contract legally and ensure their rights after leaving the job, employees can choose from the above-mentioned termination options. If, for some reason, it is not possible to terminate the employment contract legally, employees should consider their potential penalties to minimize losses.
See the detailed instructions for handling the following 6 cases: