Under Article 22.2 of the Labour Code 2012, where a definite term labour contract or seasonal labour contract (Old Contracts) expires, and the employee continues to work, then within 30 days from the expiry date of such Old Contracts (Expiry Date) the parties must enter into a new one; if the new labour contracts is not established, then the Old Contracts will become an indefinite term contract or a definite term contract with term of 24 months collectively (New Contracts). This provision has been interpreted in different manners as follows:

Many Courts take the view that if an employee under the Old Contract continues his/her job after the Expiry Date, then a New Contract would be established automatically, and the term of such a New Contract would be calculated from the day immediately after the Expiry Date. This may be a strict view which is in favour of employees. There are some arguments supporting the Courts’ view. Particularly, (1) in case the employee continues to work during the 30-day period after the Expiry Date, there is an absence of contract governing the employment relationship. Therefore, a New Contract must be established automatically, and (2) the 30-day period after Expiry Date is provided for the parties to complete the paperwork only.
In contrast, one (mostly from the employers’ view) may argue that: (1) the 30-day period is in order for the parties negotiate and prepare a new labour contract, in case of unsuccessful negotiation, the employment relationship would be terminated, and (2) the New Contract would be entered into automatically if the parties fail to sign a new contract during 30-day period only. In both cases, if a New Contract is signed, then such New Contract should be backdated to the day immediately after the Expiry Date.

While there is no official guidance on this legal issue, to mitigate the risks, the employers should conduct the procedures to terminate the Old Contracts unless they intend to maintain employment relationships with their employees.

This blog post is contributed by Nguyen Hoang Duong, a trainee at Venture North Law.

Vietnam Business Law