Invalid labor contract and legal consequences

The Labor Contract (“LC”) is the most significant basic in a working relationship between Employee and Employer. If contents of agreement do not fit to the law, it may be disabled in part or whole. Hence, in purpose that the Employee and Employer could take well acknowledge and defend their rights and interests in the best way, this Article would like to brief a procedure for announcement of invalid labor contract (“ILC”).

1. Enter into the LC;
2. The inspector detects the content of the LC;
3. The inspector asks to amend the LC due to the violations prescribed in Article 50 of the Labor Code;
4. Within 05 working days, after receiving the record on violated cases, the employer and employee must amend and supplement the violated labor contract;
5. Within 03 working days, after the expiry date of amending and supplementing the violated labor contract, if two parties fail to amend and supplement, the Head of inspectorate team or independent labor inspectors or persons assigned the specialized inspectorate task shall send the record together with copies of violated labor contracts to the Chief Inspectors of the provincial Department of Labor, Invalids and Social Affairs where enterprise locates its head office;
6. Within 03 working days, after receiving the record on violated case, the Chief Inspectors of the provincial Department of Labor, Invalids and Social Affairs shall consider and issue decision on announcement of the ILC;
7. Decision on announcement of the ILC must be sent to the employer and employee;
8. Within 03 working days, after receiving the decision on announcement of the partial invalid labor contract, the employer and employee must amend and supplement the labor contract by signing Annex of the LC or concluding new LC as prescribed in law;

(i) During the time as from the LC is announced to be partially invalid until two parties amend and supplement the part already announced to be invalid, rights and interests of employee shall be solved according to Labor Regulations or Collective Labor Agreement (if any) and provisions of law on labor;

(ii) If the ILC has a wage lower than provision of law on labor or the Labor Regulations or the Collective Labor Agreement being applied, two parties shall make a new deal. The employer is responsible for returning the difference between the agreed salary and the salary mentioned in the ILC according to the fact working time of employee but not exceed 12 months;

9. Within 15 working days, after receiving the decision on announcement of the completely invalid labor contract due to the incompetent signer,the People’s Committee of Commune where the enterprise located its head office or production and business establishment or branch shall guide parties to re-sign the labor contract:

(i) The LC being re-signed by properly competence will be valid from the signing date;

(ii) During the time as from the employee started working under the LC being signed by the incompetent signer until re-signing the LC with the properly competence, the rights and interestsof each parties shall comply with the agreements in the invalid contract because it was signed ultra vires;

(iii) The time that the employees started working under the labor contract being signed by the incompetent signer until re-signing the LC with the properly competence would be counted as the working time, and it shall be a basis for implementing regimes as prescribed in the Labor Code;

10. Within 03 working days, after receiving the decision on announcement of the completely invalid labor contract because whole its content provided rights and interests of employee at the levels lower than law provisions on labor or the Labor Regulations, Collective Labor Agreement being applied, the employer and employee are responsible to conclude the new LC as prescribed by the Law on labor;

(i) Rights and interests of each parties shall be conducted under the Labor Regulation or the Collective Labor Agreement and the provisions of Law on labor;

(ii) If the wage is lower than the regulations of law on employment, or the Labor Regulations, or the Collective Bargaining Agreement, the employer has the responsibility to pay the difference between the agreed salary and the salary in the invalid labor contract according to the actual working time of employee but not exceed 12 months;

11. Within 03 working days, after receiving the decision on announcement of the completely invalid labor contract because the mentioned works is prohibited by the law, the employer and employee are responsible for concluding the new LC under the law;

(i) When failing to conclude the new LC, the employer has responsibility to pay an amount for employee that be agreed by two parties but at least each working year equal to one (01) month regional minimum salary which is announced by the Government at the time of decision on announcement of the completely ILC;

(ii) The working time of employee shall be calculated in year. If the period is under 06 months it shall be rounded to a half of year; if the period from full 06 months ro 01 year shall be rounded to 1 year;

(iii) The wage used as the basis for calculating a severance pay shall be the average wage of 06 months before terminating the noticed ILC. In case the average wage of 06 months before terminating the noticed ILC is lower than the region-based minimum wage announced by the government at the time of invalid decision of the employment contract, the region-based minimum wage shall be applied;

12. Within 03 working days, after receiving the decision on announcement of the completely ILC becauseits content restrained or prevented the rights of establishment and operation of Trade Union of employees, the employer and employee are responsible for signing the new LC as prescribed by the Law on labor;

(i) Rights and interests of each parties will be performed under the Labor Regulation or  the Collective Labor Agreement and the Law on labor;

(ii) The wage that is the basis for calculation of severance pay is the average wage of 06 months before termination of the employment contract that precedes the invalidated employment contract. In case the average wage of 06 months before termination of the employment contract that precedes the invalidated employment contract is lower than the region-based minimum wage announced by the government at the time of complete invalidation of the employment contract, the region-based minimum wage shall apply; If the contents about wage prescribed are lower than the regulations of law, the Labor Regulation or  the Collective Labor Agreement that are applied, the employer has responsibility to return the different amount between the agreed salary and the salary in the ILC according to the actual working time of employee but not exceed 12 months;

(iii) The time the employee started working under the ILC until this contract shall be re-signed, it will be counted as the working time used as the basis for implementation regime prescribed by the Labor Code./.