THE DRAFT OF THE LABOR CODE (5th DRAFT) (IN 2019) ON LABOR CONTRACTS

The Ministry of Labor, Invalids and Social Affairs is currently drafting the (amended) Labor Code (the “Draft”) with many important provisions on labor contract described as follows:

– The definition of labor contract is supplemented with the following: “Other agreements whose contents stipulate mandatory tasks, salaries and the management, operation, supervision of one party are determined to be labor contracts.” This has eliminated the current circumvention of the laws;

– The Draft has abolished seasonal labor contract which means only two (02) types of labor contract remain and they are: (i) fixed-term labor contract (not exceeding 36 months); and (ii) indefinite labor contract. Accordingly, if a labor contract expires but is not renewed then it will be immediately converted into an indefinite labor contract.

Furthermore, this labor contract conversion provision is not applicable in the following four (04) instances: employees who are employed to be directors of state-invested enterprises, elder employees, foreign employees and employees who are cadres of organizations representing employees at grassroots and currently serving an office term but whose labor contract has expired;

– The use of Annexes/Appendixes to renew labor contracts is not allowed;

– Regarding probation: the Draft requires that a probation contract will be made (if there is an agreement to undergo probation), unlike the current Labor Code which only provides that a probation contract “may be” made. At the same time, the probation time for jobs of managerial persons of enterprises per the Law on Enterprises is supplemented to be no more than 180 days;

– If the employer temporarily assign an employee to perform a job which is not stated in the labor contract due to business and production needs, provided that the assignment must be agreed by the employee in writing;

– On the right of employees to unilaterally terminate labor contract, regardless of labor contract type, the employees only have to give prior notice without stating a reason; some special cases do not require a prior notice; and in some specific business fields and jobs a prior notice must be given further ahead of time.

Moreover, in the case of unlawful unilateral employment termination by the employees, the Draft has abolished the provision on returning training fees;

– Regarding the right of employers to unilaterally terminate labor contract, the Draft has supplemented the following three (03) instances: (i) the employees are sufficiently of retirement age; (ii) the employees leave their jobs without an acceptable explanation for consecutively more than five (05) working days; and (iii) the employees provide untruthful personal information during the conclusion of their labor contract which affects their employment;

– Finally, the parties have fourteen (14) working days from the employment termination date to fully pay expenses related to the interests of each party, instead of seven (07) working days as currently stipulated.

Best regards,