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Vietnam Legal Update – Issuance of New Decree Implementing Labor Code 2019


On December 14, 2020, the Government issued Decree No. 145/2020/ND-CP guiding the implementation of the new Labor Code 2019 (“Labor Code 2019”) on working conditions and employment relationship, which will take effect from February 1, 2021 (“Decree No. 145”).  Decree No. 145 replaces ten guiding decrees of the previous Labor Code 2012, and is one of the most comprehensive decrees in labor-related area, covering a wide range of important topics including without limitation to, labor contracts, termination of labor contracts, labor outsourcing, salaries, internal labor rules, gender equality at the workplace and labor disputes. 

1.   Internal Labor Rules 

Employer with ten or more employees must issue the internal labor rules in writing.  Where the number of employees is below ten, there is no requirement for written internal labor rules, but the employer and employee must agree on labor discipline and liabilities in the labor contract.1

Internal labor rules must include the additional topics set out below, in addition to the five main topics under the previous law (i.e., code of conduct, working hours, safety and hygiene, protection of assets and business secrets, disciplinary measures and liabilities): 

  1. protection against sexual harassment at the workplace and handling of sexual harassments;

  2. temporary transfer of employees to positions different from their job description; and

  3. persons with authority to handle labor disciplines.2

2.   Sexual Harassment at the Workplace

Labor Code 2019 added several important provisions regarding sexual harassment at the workplace, and Decree No. 145 provides more details on regulations against sexual harassment at the workplace. 

Sexual harassment at the workplace includes:

  1. physical behaviors including act, gesture, interaction, impact on body that is sexual or sexually implicit;

  2. verbal sexual abuse in a face-to-face conversation, via a phone call or other electronic means which carries sexual contents (whether explicit or implicit);

  3. non-verbal sexual abuse including body language, display or description of materials which are visually sexual or connected with sexual activity; such display/description could be direct or by way of electronic means.3

A workplace is broadly defined.  Simply put, it refers to any place where an employee works in effect under agreement with or according to the assignment by an employer.  It even includes work-related place or space (e.g., workshop, dinner, communication via electronic means, transport vehicles provided by an employer).4

3.   Wage Scale

Under the Labor Code 2019 and Decree No. 145, the employer can decide the wage scale in consultation with the representative organization of employees, and the employer is required to announce it at the workplace before implementation.5  The requirements for 5% wage gap between each level of the wage scale, and notification to labor authorities have been removed.

Before Decree No. 145, the employer was required to formulate its wage scale ranging from a position requiring the lowest technical qualification to a position requiring the highest technical qualification.  The gap between each wage level must be at least 5% and should be sufficient to encourage the professional development of the employees.6  The employer was also required to notify the district Office of Labor, Invalids, and Social Affairs.7

4.   Report on Labor Use 

At the time of establishment, the employer will be required to declare the estimated number of employees with the business registration authority (i.e., the relevant Department of Planning and Investment) in accordance with the streamlined procedures under Decree No. 122/2020/ND-CP.  Before Decree No. 145, the employer is required to make initial declaration of labor use at the Department of Labor, Invalids and Social Affairs (“DOLISA”).9

The employer will also be required to make periodic reports on change of labor use by June 5 (for any change during the first half of the year) and by December 5 (for any change during the whole year) to DOLISA via the National Public Service Portal and notify the district-level social insurance authority (where the employer’s headquarter, branch, or representative office is located) of such change by using the pro-forma report attached to Decree No. 145.10

5.   Labor Contract with a Hired Director in State-Owned Enterprises 

Labor contract signed with a hired director of a State-owned enterprise must contain certain clauses as specified by Article 5 of Decree No. 145.  The contract term with the hired director is maximum 36 months; in case the hired director is a foreigner, the contract term must not exceed the term of his/her work permit.  This requirement applies to 100% State-owned enterprises and State-owned enterprises of which the State holds more than 50% charter capital or total voting shares.  Labor contracts with hired directors of enterprises with the State holding up to 50% charter capital are treated as normal labor contracts under the Labor Code 2019.11

6.   Notice on Unilateral Termination of Labor Contract 

Where the employee or the employer unilaterally terminates the labor contract with an advance notice in accordance with the Labor Code 2019, the terminating party will be required to give an advance notice to the other party.  The notice period will be at least three working days, 30 days or 45 days for fixed-term contracts less than 12 months, fixed-term contracts from 12 to 36 months and indefinite-term contracts, respectively. 

Certain jobs and businesses are subject to a different advance notice requirement.  Decree No. 145 specifies those jobs and businesses as follows:

  • managerial positions in enterprises as prescribed in the Law on Enterprises (such as a sole proprietor, unlimited liability partner, chairman of the members’ council, member of the members’ council, company’s president, chairman of the board of management, member of the board of management, director or general director, and other managers as stipulated by the company’s charter) and the Law on Management and Use of State Capital Invested in Production and Businesses of Enterprises;

  • aircraft crew; aircraft technical maintenance staff and aviation repair staff; flight dispatch and flight operation staff;

  • crew working on Vietnamese ships operating overseas; and crew outsourced by Vietnamese enterprises to foreign seagoing vessels; and

  • other cases as stipulated by law.14

If the employee or employer in the above categories wishes to unilaterally terminate the labor contract, they must serve an advance notice of at least (i) 120 days for indefinite-term labor contract and labor contract with a term of 12 months or more, or (ii) one fourth of the labor contract term for a labor contract with a term of fewer than 12 months.15

7.   Void Labor Contract

Decree No. 145 allows an employee and employer to opt for one of the followings if the labor contract between them is partially void:

  1. to amend the contract in accordance with the collective labor agreement and the laws; and

  2. to terminate the labor contract;16

It remains unclear as to whether the labor contract termination in this situation would be a mutual termination or a unilateral termination that either party may initiate.  This may be subject to further clarification or interpretation by the labor authorities.  

Before Decree No. 145, the permitted options are to amend the contract or sign a new contract within three working days to continue the labor relationship. 17

Where a contract is held void due to a signing by an unauthorized signatory or violation of principles on entering a labor contract18 (i.e., the labor contract has not taken effect at all), Decree No. 145 allows the parties to (i) re-sign the contract in accordance with laws or (ii) terminate the contract.19  Before Decree No. 145, where the contract is held void due to a signing by an unauthorized signatory, the only option available is to re-sign the contract in accordance with the law.20

8.   Labor Outsourcing 

A labor outsourcing enterprise must deposit VND 2 billion (approximately USD 86,000) as a condition for the issuance of an operating license.21  The deposit can only be used for specific purposes such as payment of salary, social insurance costs where the labor outsourcing enterprise has no sufficient fund or fails to pay within 60 days from the due date.22  Under Decree No. 145, the scope of the permitted purposes is extended to cover the benefits enjoyed by dispatched employees under their labor contracts, collective labor agreements or internal rules of the labor outsourcing enterprise.23

Within 30 days from the drawdown date of the deposit, the labor outsourcing enterprise must replenish the deposit.24  Any failure to replenish the deposit can now be punishable by revocation of the operating license under Decree No. 145.25

9.   Overtime of More Than 200 Hours but Not Exceeding 300 Hours Per Year

Under Article 107.3 of the Labor Code 2019, aside from the prescribed situations where an employer is permitted to have its employees work overtime for more than 200 hours but not exceeding 300 hours per year, the Government is permitted to add other situations at its discretion. 

In Decree No.145, the Government added following situations:

  1. situations where there is an urgent work requirement which cannot be delayed due to objective factors/reasons and in direct connection with the public duties of the State agencies and the State units.  These are in addition to the special situations under Article 108 of Labor Code 2019 where an employer can require unlimited overtime from its employees in case of [army] mobilization, natural disasters and fire;

  2. provision of public service; medical examination and treatment service; education and vocational education service; and

  3. production and business at enterprise of which normal working hours are no more than 44 hours per week (for reference, the normal working hours at an enterprise should be no more than 48 hours per week).26


[Korean version]


1  Article 69.1 of Decree No. 145
2  Article 69.2 of Decree No. 145
3  Article 84.2 of Decree No. 145
4  Article 84.3 of Decree No. 145
5  Article 93 of the Labor Code 2019, Articles 41.1 and 43.1(b) of Decree 145
6  Article 93.1 of the Labor Code 2012, Article 7.2 of Decree 49/2013/ND-CP
7  Article 93.2 of the Labor Code 2012, Article 7.6 of Decree 49/2013/ND-CP
8  Article 4.1 of Decree No. 145, Decree No. 122/2020/ND-CP
9  Article 8.1 of Decree No. 03/2014/ND-CP
10  Article 4.2 of Decree No. 145
11  Article 5 and Article 6 of Decree No. 145
12  Articles 35.1 and 36.2 of Labor Code 2019
13  Article 4.24 of Law on Enterprises 2020
14  Article 7.1 of Decree No. 145
15  Article 7.2 of Decree No. 145
16  Article 9.1 and Article 9.3 of Decree No. 145
17  Article 10 of Decree No. 44/2013/ND-CP
18  Article 15 of the Labor Code 2019.  The principles on entering a labor contract include voluntariness, equality, good faith, cooperation, honesty, and the freedom to enter labor contracts without contradicting the laws, the company’s collective labor agreement and social ethics.
19  Article 10.1 and Article 10.3 of Decree No. 145
20  Article 11.1 of Decree No. 44/2013/ND-CP
21  Article 21.2 of Decree No. 145, Article 5.2 of Decree No. 29/2019/ND-CP
22  Article 15.2, Article 18.1, Article 19.1 of Decree No. 145; Article 14, Article 17.1 and Article 18.1 of Decree No. 29/2019/ND-CP
23  Article 15.2 of Decree No. 145
24  Article 20.1 of Decree No. 145, Article 19.1 of Decree No. 29/2019/ND-CP
25  Article 20.2 of Decree No. 145, Article 19.2 of Decree No. 29/2019/ND-CP
26  Article 61 of Decree No. 145

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