Types of employment contracts in Vietnam

Are you considering hiring employees in Vietnam? Understanding the types of employment contracts available in the country is essential for navigating the local labor market effectively. 

In this article, we'll explore the various types of employment contracts in Vietnam and the key considerations that accompany them. Whether you're a multinational corporation expanding your operations or a startup venturing into the Vietnamese market, this guide will help you make informed decisions when it comes to hiring and managing your workforce.

What is an employment contract under the law in Vietnam?

According to Article 13 of the Labor Code 2019,  an employment contract is an agreement between an employee and an employer on a paid job, salary, working conditions, and the rights and obligations of each party in labor relations. A document with a different name is also considered an employment contract if it contains the agreement on the paid job, salary, management, and supervision of a party.

An employment contract shall have the following major contents:

• The employer’s name, address; full name and position of the person who concludes the contract on the employer’s side;
• Full name, date of birth, gender, residence, identity card number, or passport number of the person who concludes the contract on the employee’s side;
• The job and workplace;
• Duration of the employment contract;
• Job- or position-based salary, a form of salary payment, the due date for payment of salary, allowances, and other additional payments;
• Regimes for promotion and pay rise;
• Working hours, rest periods;
• Personal protective equipment for the employee;
• Social insurance, health insurance, and unemployment insurance;
• Basic training and advanced training, occupational skill development.

If the employee's role involves handling sensitive business secrets or proprietary technological know-how, as stipulated by law, the employer is entitled to enter into a written agreement with the employee outlining the specifics and duration of safeguarding such confidential information. This agreement also delineates the benefits and compensation obligations in the event of any breach by the employee.

If the employee is engaged in agricultural, forestry, fishery, or salt production, both parties have the option to exclude certain provisions mentioned above. Additionally, they may negotiate additional agreements regarding the resolution in cases where contract execution is hindered by natural disasters, fires, or adverse weather conditions.

What are the types of employment contracts in Vietnam?

According to Article 20 of the Labor Code 2019, an employment contract shall be concluded in one of the following types:

• An indefinite-term employment contract is a contract in which the two parties neither fix the term nor the time of termination of the contract;
• A fixed-term employment contract is a contract in which the two parties fix the term of the contract for a duration of up to 36 months from the date of its conclusion.

Furthermore, electronic contracts (e-contracts) hold official recognition and are deemed equally valid as their written counterparts. Additionally, verbal labor contracts are acknowledged, provided they are valid for durations of less than one month. However, seasonal contracts are prohibited.

Companies with an employment count of ten or more individuals are required to register a copy of their company rules or internal labor regulations with the provincial labor department. These regulations encompass various aspects such as working hours, rest periods, company rules and directives, occupational safety and hygiene standards, protection of assets, business and technology confidentiality measures, and methods of sanctions.

What will happen when the employees continue to work after the fixed-term employment contract expires?

Clause 2, Article 20 of the Labor Code 2019 stipulates that if an employee keeps working when an employment contract mentioned in Point b Clause 1 of Article 20 of the Labor Code 2019 expires:

• Within 30 days from the expiration date of the employment contract, both parties shall conclude a new employment contract. Before such a new employment contract is concluded, the parties' rights, obligations, and interests specified in the old employment contract shall remain effective;
• If a new employment contract is not concluded after the 30-day period, the existing employment contract mentioned in Point b Clause 1 of Article 20 of the Labor Code 2019 shall become an employment contract of the indefinite term;
• The parties may enter into 01 more fixed-term employment contract.

Suppose the employee keeps working upon the expiration of this second fixed-term employment contract. In that case, the third employment contract shall be of an indefinite term, except for employment contracts with directors of state-invested enterprises and the cases specified in Clause 1 Article 149, Clause 2 Article 151, and Clause 4 Article 177 of the Labor Code 2019.

Forms of employment contract in Vietnam

The forms of the employment contract are specified in Article 14 of the Labor Code 2019, specifically:

(1) An employment contract shall be concluded in writing and made into two copies, one of which will be kept by the employee, the other by the employer, except for the case specified in

An employment contract in the form of electronic data conformable with electronic transaction laws shall have the same value as that of a physical contract.

(2)  Both parties may conclude an oral contract with a term of less than 01 months, except for the cases specified in Clause 2 Article 18, Point a Clause 1 Article 145, and Clause 1 Article 162 of the Labor Code 2019.

Conclusion

In conclusion, navigating the intricacies of employment contracts in Vietnam is crucial for businesses looking to establish a presence in the country. By understanding the different types of contracts available, from fixed-term to indefinite-term agreements, employers can ensure compliance with local labor laws while effectively managing their workforce. 

Whether you're hiring part-time workers for seasonal projects or offering internship opportunities to students, it's essential to prioritize transparency, fairness, and legal compliance in all employment arrangements. With this knowledge at hand, businesses can confidently navigate the complexities of the Vietnamese labor market and build successful and sustainable operations in the region.

For further insights, reach out to us at hello@vremote.work for a consultation to discuss tailored solutions for your organization's objectives.