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.

The employment contract will also contain a clause in which the employer has the right to transfer the employee from a senior level position to the position with minimum wage whether at will or subject to certain conditions.

This arrangement, which is permitted by the Labour Code 2012, will give the employer an indirect right to terminate the contract since the senior manager will likely resign from the company to look for other opportunities if he/she is transferred to an entry-level position with minimum wage.

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