Under the Labour Code 2012,  a labour contract means an agreement between an employee and an employer on a paid job, working conditions, and rights and obligations of each party to the labour relationship. A labour contract between an employer and its employee can fall into one of the following types:

  • Seasonal Contract: a seasonal contract (or contract for a specific job) is a labour contract with the duration of less than 12 months;
  • Definite Term Contract: a definite term contract means a labour contract with the duration of between 12 months and 36 months. The term of a definite term contract can be extended one time only. Thereafter, the employer must enter into an Indefinite Term Contract (see below); and
  • Indefinite Term Contract: an indefinite term contract means a labour contract in which the two parties do not fix the term nor the time of termination of the contract.

A Seasonal Contract may become a Definite Term Contract, and a Definite Contract may become an Indefinite Term Contract if the employee continues to work for the employer after the termination date (See more here).

Except for short-term labour contracts (less than three months), a labour contract must be entered into in writing. In general, the parties to a labour contract are free to negotiate their own employment terms, provided that these terms are not less favourable to the employee than those set out in labour laws. Under Labour Code 2012, a labour contract must cover the following crucial matters in detail rather than referring to the internal regulations of the employer, among other things:

  • Main information about the employer and relevant employees, such as name and address, etc;
  • Job description and workplace;
  • Term of the employment;
  • Wage, allowances and other additional payments;
  • Working hours and holidays;
  • Personal protective equipment of the employee;
  • Social insurance and health insurance;
  • Training and skill improvement.

Employees are well protected under Vietnamese labour laws. The employer is, therefore, not entitled to terminate a labour contract at will. An employer can only unilaterally a labour contract with an employee on certain grounds, including, among other things:

  • the employee repeatedly fails to perform his/her work;
  • the employee suffers prolonged illness;
  • reduction of production and job by the employer due to force majeure;
  • the employee is dismissed due to a breach of disciplinary regulations;
  • the employer undergoes organizational restructuring, technological changes or economic difficulties;
  • the employer is merged, consolidated, divided or undergone other corporate restructuring;  and
  • the employer ceases operation.

The employer must give an advance notice (usually 45 days) to the employee before terminating a labour contract unilaterally (See more here). In some cases, the employer must obtain “opinions” from the trade union and/or notify the labour management authority of its proposed termination of labour contracts.

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