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.

The “civil contract” will include the commercial terms that are (or likely are) not allowed under the Labour Code 2012. These terms could be:

·         an agreement that the employee will resign from the employment contract after a fixed term. This agreement could allow the parties to agree on a fixed-term arrangement longer than three years as currently restricted by the Labour Code 2012.

·         an agreement that the employee will not resign during a certain period. This agreement could allow the parties to overcome the employee’s statutory rights to terminate the employment contract at will under the Labour Code 2012.

·         an agreement of the employee not to compete with the employer after termination of the employment contract. This agreement could allow the parties to overcome the employee’s satutory rights to work and to freely choose jobs/workplaces under the Labor Code 2012.

Under the proposed two-contract structures, the employee can still exercise his/her rights under the employment contract in accordance with the Labour Code 2012. However, if such exercise is in contrary to the civil contract signed with the key shareholder or director of the employer, then the key employer or key director may have a claim for breach of contract against the employee.

This post is written by Nguyen Thuc Anh and edited by Nguyen Quang Vu.