Article 31 of the Old Labour Code is an important legal basis in case a company which sells its assets wishes to transfer the employees associated with such assets to the buyer. From 1 May 2013, under the New Labour Code, it is not clear if it is possible to transfer employees as a result of asset sale.

Article 31 of the Old Labour Code provides that in cases where an enterprise transfers ownership of the assets of the enterprise to another company, the succeeding employer will be responsible to continue performance of the labour contract of the employee. In the case where all available employees are unable to be utilized, there must be “a plan for labour usage” in accordance with law. An employee whose labour contract is terminated pursuant to the provisions of this Article 31 will be entitled to a job loss allowance in accordance with Article 17.1 of the Labour Code.

From 1 May 2013, the New Labour Code will take effect and repeal the Old Labour Code. Under the New Labour Code, if an employer transfers ownership of its assets to another company then such employer only has the obligation to prepare a labour usage plan (phương án sử dụng lao động). There is no requirement that the succeeding employer must continue performance of the labour contract with the employee as provided in Article 31 of the Old Labour Code. It is therefore not clear if the transfer procedures under Article 31 of the Old Labour Code could continue to apply even after 1 May 2013 in case of transfer of assets.