Vietnam Business Law is a website managed by lawyers of Venture North Law Limited (VNLaw). Venture North Law Limited (VNLaw) is a Vietnamese commercial law firm. We won the Rising Law Firm of the Year Award at the Southeast Asia Law Awards for the years 2020 and 2021 held by The Legal 500. Very few Vietnamese law firms have achieved a similar regional recognition.
In September 2019, the Government issued new Decree 75/2019 providing administrative sanctions regarding violation of the Vietnam new competition law. Decree 75/2019 details violation in competition including violation of (a) competition-restricting agreements, (b) abuse of a dominant market position or monopoly position; (c) economic concentration; and (d) unfair competitive practices. Set out below are some notable changes in Decree 75/2019:
To control contracts between a Vietnamese joint stock company (JSC) with its related persons, the Enterprise Law 2014 requires such a contract to be approved by the Board or the Shareholders Meeting of the JSC. If the related party contract is to be approved by the Board, the law prohibits a Board member with related interests from voting on such contract. However, if the Board Chairman is the Board member with related interests, the law does not make clear that the Board Chairman should also not involve in other steps relating to approval of the related party contract. These other steps include preparing the draft Board resolutions, convening and chairing the Board meeting to consider the contract. These steps could be key to decide whether the related party contract could be approved.
When a company hires a senior manager, it usually wants to (1) hire the manager for a fixed term only, and (2) have the flexibility to fire the senior manager if he/she does not perform as expected. However, under the Labour Code 2012, a fixed-term contract is limited to three years, and to fire or to change the work of an employee, the employer must satisfy various strict conditions.
To overcome these restrictions, the employer may specify in the employment contract with the senior manager that the senior manager is employed to work for two different jobs. These two jobs are:
· The senior-level job that the employee is recruited for. The senior-level job will provide the senior manager with all the salaries and benefits associated with such job; and
· an entry-level job with minimum wage and benefit.
A good employment contract for a senior position, like any other employment contract, is the one that can balance the needs of the employer and the employee. A senior-level employee usually seeks attractive salary, incentives, benefits, while problems like non-competition and non-disclosure are the major concerns of an employer. On the other hand, both sides may want certain same things in an employment contract, for example, long-term contract (fixed or indefinite term), ability to terminate the contract without cause, indemnification for wrongful termination of employment contract, and so on.
Unfortunately, under Vietnamese employment laws, there are certain restrictions that prevent the parties, especially the employer side, from having an employment contract that can reflect accurately their commercial needs. This is because Labor Law 2012 is drafted in favor of the employee side due to the view of the State that the employee is the one who is in a weaker position in a labor relationship.
One potential solution to overcome the restrictions under the Labour Code 2012 for contract with a key personnel is to have a separate “civil contract” between the key personnel and the key shareholder or director of the employer in addition to the normal employment contract.