Guide to Employment Law in Vietnam

1 First article Overview 1 Summary of Minimum Statutory Entitlements 2 Second article 3 And so on 5 Annual Leave 6 Maternity Leave 8 Form of Contract 9 Termination 12 Discrimination Laws 14 Data Privacy Legislation 16 The Mandatory Social Security Fund 17 Employee Compensation 18 Summary of Visa Requirements

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This booklet provides general advice only and should not be treated as a substitute for legal advice. While care has been taken to ensure that details are correct, no responsibility can be taken for losses arising from the reliance upon its contents. Should you have any specic questions please contact Dao Nguyen on +84 8 822 8860 or email at dao.nguyen@mayerbrownjsm.com. 2008. Mayer Brown LLP, Mayer Brown International LLP, and/or JSM. All rights reserved. Mayer Brown is a global legal services organisation comprising legal practices that are separate entities (Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; and JSM, a Hong Kong partnership, and its associated entities in Asia. The Mayer Brown Practices are known as Mayer Brown JSM in Asia.

Overview
The Labour Code of Vietnam was passed in June 1994 and was amended by the 2002 and 2006 Amended Law (collectively, the Labour Code). The new Law on Social Insurance, an important legislation relating to employees, took effect on 1 January 2007. A number of separate Decrees and Circulars, the Labour Code and the Law on Social Insurance create a uniform legal framework. The labour laws of Vietnam are characterised as providing a wide range of protection for employees. Although some exible changes have been brought about by the 2002 Amended Law, it is generally agreed that the labour legislation of Vietnam is strict and still favours employees. It should be noted that the labour laws of Vietnam apply to both local Vietnamese and expatriates working in Vietnam, and most importantly, it is not possible to contract out of the terms of the employment legislation. Generally an employer is encouraged to grant a more favourable treatment to its employees than that provided for by the laws. This Guide summarises the major features of the labour laws of Vietnam.

Summary of Minimum Statutory Entitlements

Wages
Vietnamese labour law states that the wages of employees are to be agreed upon in the labour contract and paid in consideration of the rate of production, and the quality and results of the work performed. Wages of employees may not be lower than the minimum wage stipulated by the State. Presently, the minimum wage1 for an employee working in a Vietnamese enterprise and for State sectors is VND 450,000 a month (approximately US$27.90)2. The minimum wage for an employee working in a foreign invested enterprise (FIE), foreign and international organisations in Vietnam is as follows: no less than VND 870,000 (approximately US$54.00) a month for FIEs located in Hanoi and Ho Chi Minh City no less than VND 790,000 (approximately US$49.00) a month for FIEs located in the suburbs of Hanoi and Ho Chi Minh City, or in the urban areas of Hai Phong, Bien Hoa and Vung Tau and no less than VND 710,000 (approximately US$44.00) a month for FIEs located in other areas of Vietnam. The minimum wage is reviewed and adjusted annually. Of course, Vietnamese law encourages businesses and organisations to apply minimum wage levels that are higher than the levels stipulated by the Government.

1 Minimum wage is applied to Vietnamese employees performing the simplest job in ordinary working conditions. 2 US$1 = VND 16,105 (dated 30 October 2007).

Guide to Employment Law in Vietnam 1

Hours
By statute, the normal working hours of each employee must not exceed 8 hours a day or 48 hours a week. The employer has the right to set working hours on a daily or a weekly basis, provided that employees are notied in advance. An employee who works for 8 consecutive hours has the right to a break of at least 30 minutes. Those who work the night shift have the right to a break of at least 45 minutes. Employees who work in shifts have the right to have at least 12 hours between each shift. It should be noted that break time is included in the number of hours worked. For each seven working days, an employee is entitled to a break of at least one day (24 consecutive hours). If an employee works for 10 hours or more in a day, the employer must arrange for an additional break time of at least 30 minutes during working hours, in addition to the regular break time in the normal working shift. Special working hours are applied to female, child, disabled and older employees. Overtime is strictly regulated by the laws of Vietnam. Specically, although an employer and an employee may agree on overtime, overtime may not exceed 50% of the usual working day. Where the working hours are determined on a weekly basis, the total number of working hours may not exceed 12 hours a day. The total overtime hours in a year may not exceed 200 hours, except in special cases where the total overtime may be up to 300 hours a year. The employer must strictly comply with the overtime regulation and the overtime payment.

Benets
Vacation
Labour laws of Vietnam provide that an employee working for an employer under normal working conditions for 12 months is entitled to annual leave of 12 days; this number increases to 14 or 16 working days for those employees who work in heavy or dangerous conditions (see also the section Annual Leave on page 5).

Bonuses
Bonus to be paid to an employee will be based on the annual production and business outcomes of an enterprise and the level of performance of the work by the employee. In practice, bonuses usually take the form of one months salary. A business must issue regulations on bonus, subject to consultation with the businesss executive committee of the trade union.

Pensions
Vietnam has a social security scheme which provides for allowances in the case of pensions. This scheme is formed from the contribution of the employer and the employee.

Workmens compensation
Workers compensation is regulated in the Labour Code. Generally, employees suffering labour accidents or occupational diseases will be entitled to compensation by the employer, the level of which depends on the loss of labour capacity. Vietnam also has a social security scheme that provides for allowances in case of injuries, illness, occupational diseases, maternity leave, allowances for deceased employees dependants, unemployment and pensions.

Social security
The Labour Code and the Law on Social Insurance provide that, in respect to employees who have labour contracts with a term of more than three months, until 2010, an amount equal to 20% of their wages must be contributed to the social insurance fund, and an amount equivalent to 3% of their wages must be contributed to the health insurance fund. The salary used to calculate the social insurance contribution is the salary stated in the labour contract. If such salary is higher than the 20 months minimum salary, then the monthly salary used to calculate the social insurance contribution is equal to the 20 months minimum salary3. The responsibility for these contributions is divided between the employer and the employee. Of the amount equal to 20% of wages that is contributed to the social security fund, employers must contribute 15% (including 3% to the sickness and maternity fund4, 1% to the labour accidents and professional diseases fund, and 11% to the pension and deceased employees dependants allowances fund5), and employees must contribute 5%6. In respect of the 3% contribution to the health insurance fund, the employer is responsible for 2%, and the employee is responsible for 1%. This obligation to contribute does not apply to retirees or to employees who have a labour contract with a term of fewer than three months; nevertheless, employers must pay these amounts directly to such employees as assistance to enable them to purchase insurance or use these funds at their discretion.

Other conditions
Maternity leave
A female employee is entitled to maternity leave prior to and after the birth of her child for a total period of four to six months, depending on working conditions and the nature of the work. Upon expiry of this period, and upon demand, the employee may agree with the employer on additional leave without pay.

Sick leave
If an employee suffers illness or injury and remains unable to work, he or she is able to take time off for treatment for a maximum period of 12 consecutive months with respect

3 Currently in practice, the minimum salary used to calculate social insurance contribution is the minimum salary of employees working for State owned enterprise and State administrative sectors (VND 450,000, approximately US$27.90). 4 Of the 3% payable to the sickness and maternity fund, the employer retains 2% to pay the employees in case of sick and maternity leave. 5 From 2010, the employer will pay an additional percentage of 1% to the pension and deceased employees dependants allowances fund (or so called employees survivors fund) until the employers total contribution to this fund reaches 14%. 6 Under the new Law on Social Insurance, this 5% is paid to the pension and deceased employees dependants allowance fund. From 2010, every two years, the employee will pay an additional percentage of 1% until the employees total contribution to this fund reaches 8%.

Guide to Employment Law in Vietnam 3

to an indenite-term contract, or 6 consecutive months with respect to a denite-term labour contract with a term of 12 to 36 months, or more than half the duration of the contract with respect to a contract that is for fewer than 12 months. After these time periods, if he or she is still ill, injured or unable to work, the employer has the right to unilaterally terminate the labour contract. An employee who is ill is entitled to enjoy sick benets paid from the social security fund as mentioned above if he or she has a doctors certicate to prove that he or she requires medical treatment at home or at a hospital7. Apart from the amount contributed to the social security fund, the employer is not required to pay salary to an employee on sick leave. An employee who suffers from an illness specied in the list of illnesses requiring longterm treatment, which is issued by the Ministry of Health, shall be entitled to sick leave benets for a maximum period of 180 days in a year payable by the social insurance.

Severance pay
Vietnamese labour law provides for three circumstances under which severance pay is paid upon the termination of a labour contract: (i) where an employee or an employer terminates a labour contract with an employee who has worked for more than 12 months (ii) where an employer illegally terminates a labour contract with an employee and as a result, is forced to take him/her back but he/she refuses to return to the work and (iii) in the case of redundancy due to changes of the business structure or technology. When an employer terminates the labour contract of an employee who has worked for more than 12 months, the employee shall receive an allowance equal to the aggregate amount of one-half of one months salary for each year of employment, plus salary allowances (if any). The employee may also terminate the labour contract in the circumstances specied by the laws and is entitled to severance pay if he/she has worked for the employer for more than one year. Such severance pay is payable even if the employee resigns to join an employers competitor. If the employee illegally terminates a labour contract, or is dismissed due to a violation of labour disciplines as specied by the laws, he or she shall not receive any allowances. When an employer illegally terminates the labour contract of an employee, who does not want to return to his/her job, he/she shall receive compensation and an allowance as mentioned in point (ii) above. If the employer does not allow the employee to return to work, and the employee agrees, the parties may discuss compensation with the employee in addition to the amount of compensation mentioned in point (ii) above. In addition, if a party breaches the notice period in advance of termination, the party in breach must pay compensation to the other party in an amount equal to the employees salary that would otherwise have been paid for the days for which notice was not given.

7 Under the new Law on Social Insurance, from 3% of the contribution paid to the sickness and maternity fund, the employer deducts 2% to pay the sickness and maternity benets to the qualied employees. The employer then, every quarter, will account for the amount payable to the employees to the social insurance.

In case of the redundancy of an employee working for an enterprise for at least one year due to changes of the structure or technology, the employer is responsible for retraining him/her for use in a new job. Otherwise, a severance pay equivalent to one month salary for each working year (no fewer than two months salary) must be paid to the employee.

Long service pay

The labour laws of Vietnam do not provide for long service pay except for the severance pay as mentioned above.

Annual Leave
Statutory entitlement
An employee who has been employed for 12 months is entitled to annual leave of 12 working days. This is in addition to public holidays. Where an employee has worked for a period of fewer than 12 months, his/her annual leave is calculated in proportion to the number of months that the employee has worked during the year. Those employees working in heavy or dangerous conditions will be entitled to annual leave of 14 or 16 working days. The number of annual leave days is to be increased in accordance with the length of employment in an enterprise by one additional day for every ve years of employment. When taking annual leave, the employee may be paid in advance an amount equal to at least the wages of the days on holiday. Travel expenses and wages to be paid during travel days are to be agreed on by the parties. An employee who for some reason fails to take his or her annual leave or has not used up all of his or her annual leave is to be paid the normal wage in lieu of those days not taken. If for any reason, an employee does not take their full holiday entitlement, they are entitled to be paid in lieu.

Contractual entitlement
A contractual entitlement to annual leave (i.e., entitlement in excess of the statutory entitlement) will be subject to agreement between the employer and the employee. Generally, the labour laws of Vietnam encourage an employer to grant more favourable treatment to its employees than those provided for by the laws.

Time of leave
The employer is entitled to determine the timetable for the annual leave provided that consultation from the executive committee of the trade union operating in the enterprise is obtained and the employees are notied in advance. The employees and the employer may agree on the annual leave being taken in instalments.

Guide to Employment Law in Vietnam 5

Payment in lieu
An employee who for some reason fails to take his or her annual leave or has not used up all of his or her annual leave is to be paid the normal wage in lieu of those days not taken.

Maternity Leave
Eligibility
A female employee is entitled to maternity leave prior to and after the birth of her child/ children for a total of four to six months. Where a female employee gives birth to more than one child at a time, she is entitled to 30 days extra leave for each additional child calculated from the second child onwards. During the period of raising a child younger than 12 months old, a female employee is entitled to a 60-minute break every day, and still receives the same wage. During maternity leave, a female employee who has paid social insurance is entitled to a social insurance allowance equal to 100% of her salary and an additional one months salary allowance. Note that, if a female employee takes a leave of absence to adopt a newly born baby with an age of less than four months, she is also entitled to enjoy social insurance.

Notication and certication requirements

There is no notication requirement imposed by the laws. However, where required, and with agreement of the employer, a female employee may take additional leave without pay at the end of the maternity leave. Furthermore, in order to return early (before the statutory maternity leave) she must have had at least two months rest after giving birth and have a doctors certicate conrming that her early return to work will not affect her health. She must give advanced notice to her employer. In this case, the female employee is still entitled to the maternity leave allowance as well as the normal wages for the days worked.

Period of maternity leave

Under the Labour Code, a female employee will be entitled to take a continuous period before and after giving birth between four to six months as maternity leave. The employee may agree with her employer on the commencement of the leave and additional leave without pay.

Payment for maternity leave

During maternity leave, a female employee who has paid social insurance is entitled to a social insurance allowance equal to 100% of salary and an additional one months salary allowance8.

8 Under the new Law on Social Insurance, from 3% of the contribution paid to the sickness and maternity fund, the employer deducts 2% to pay the sickness and maternity benets to the qualied employees. The employer then, every quarter, will account the amount payable to the employees to the social insurance.

Note that, if a female employee takes a leave of absence to adopt a newly born baby, she is also entitled to enjoy social insurance benets, or be paid by the employer a sum equal to the amount of social insurance benets.

Prohibition against termination

An employer may not dismiss or unilaterally terminate a labour contract with a female employee due to the reasons of marriage, pregnancy, maternity leave or taking care of her under 12 months old child, except for in circumstances where the enterprise terminates its operation.

Sickness benets
Eligibility
If an employee suffers illness or injury and remains unable to work, he or she is able to take time off for treatment for a maximum period of 12 consecutive months with respect to an indenite-term contract, or 6 consecutive months with respect to a denite-term contract with a term of 12 to 36 months, or more than half the duration of the contract with respect to a contract that is for fewer than 12 months. After these time periods, if he or she is still ill, injured or unable to work, the employer has the right to terminate the labour contract.

Rate of sickness allowance

An employee who is ill is entitled to enjoy sickness benets paid from the social security fund if he or she has a doctors certicate to prove that he or she requires medical treatment at home or at a hospital. Apart from the amount contributed to the social insurance fund, the employer is not required to pay a salary to an employee on sick leave. The time period of sickness allowance depends on the working conditions of the employee and the rate and period of social security contribution. The amount of sickness allowance is 75% of the salary used to calculate the social security contributions immediately prior to the leave of the absence period. An employee who suffers from an illness specied in the list of illnesses requiring longterm treatment, which is issued by the Ministry of Health, shall be entitled to sick leave benets for a maximum period of 180 days in a year. In this case, the rate of sickness allowance is 75% of the salary used to calculate the social insurance of the immediately previous month. Upon expiry of this period, if the employee still requires medical treatment, the employee may be entitled to an additional leave with a lower allowance, depending on the time of social security contribution.

Requirement for a medical certicate

The employee must obtain a doctors certicate (sick leave certicate) to prove that he or she requires medical treatment at home or at a hospital.

Guide to Employment Law in Vietnam 7

Record keeping
The laws of Vietnam do not provide for record keeping in terms of sickness allowance, except for employees suffering occupational diseases, therefore, a health record book must be retained. Although it is not required by law, it is recommended that employers retain employment records regarding sickness records for personnel management. Note that, as the new Law on Social Insurance requires the employer to deduct its contribution made to the sickness and maternity fund to pay directly to the employees, the employer should request the employees to present proper documents and keep these documents to serve the accounting with the social insurance.

Prohibition against termination

The labour laws of Vietnam permit an employer to unilaterally terminate a labour contract with an employee if the employee is still ill, injured or unable to work after he/ she has taken time off for treatment for a maximum period of: 12 consecutive months with respect to an indenite-term contract 6 consecutive months with respect to a denite-term contract with a term of 12 to 36 months or more than half the duration of the contract with respect to a contract that is fewer than 12 months. However, it is stated that when the employees health is recovered, he/she may be considered to return to his/her position.

Form of Contract
A labour contract may be oral or in writing. Those with a term of fewer than three months may be in the form of an oral contract, while those with a term of three months or more must be in the form of a written contract. The labour contract must comply with the standard form issued by the Ministry of Labour, Invalids and Social Affairs and include compulsory items as provided for by law, such as specication of the work, working and rest time, salary, place of work, term of the contract, labour safety and hygiene, and social security. Apart from these compulsory items, enterprises can, based on their particular industry, provide for additional items, such as those relating to responsibilities to protect the trade secrets of an enterprise, etc. A labour contract is to be signed directly between the employee and the employer. An employee may enter into labour contracts with multiple employers, but he or she must be able to fully perform the work specied in each. In addition to the labour contract, the employment between the employer and the employee is also regulated by the collective labour agreement and internal labour

regulations (the internal labour regulations are compulsory for enterprises using more than 10 employees), both of which must be registered with the provincial labour department. The employer should make sure that the provisions of the labour contract and those of the collective labour agreement and the internal labour regulations are consistent.

Termination
Termination by notice
The parties to a labour contract may terminate the contract by agreement upon: the expiration of the contract the completion of the tasks stated in the contract or for any reasons agreed to by the parties, provided that the reasons do not violate the provisions of Vietnamese law. The provisions for the termination of a labour contract of Vietnamese law seem to favour employees, as they permit employees working under indenite-term contracts to terminate the contract at their discretion by giving at least 45 days advance notice. Apart from the above cases, any termination of the labour contract by one party is considered to be a unilateral termination, which is highly regulated by the labour laws9. Vietnamese labour law prohibits the illegal termination of a labour contract by either employees or employers. Additionally, employers and employees must abide by the advance notice period for unilateral termination or termination of the labour contract. The circumstances in which an employer or an employee may terminate a labour contract are specied by laws. The employer and the employee are required to give an advance notice of 3 days, 30 days or 45 days, depending on the specic circumstance of the unilateral termination and on the type of the labour contract. Vietnamese labour law has a state statute requiring employers to provide 45 days advance notice for those employees with indenite-term contracts, 30 days advance notice for those with a denite-term contract from 12 to 36 months, and 3 days notice for those employees with a contract of fewer than 12 months, under certain circumstances involving layoffs and plant closing. However, the labour laws require employers to discuss and reach an agreement with the executive committee of the local trade union before the employer unilaterally terminates a labour contract with an employee. Where no agreement is reached unilaterally, the two parties must report to the local labour authority or organisation. 30 days after the date of making a report, the employer is entitled to make a decision regarding the layoffs and be responsible for that decision. A mass layoff is not dened under Vietnamese labour law, and there is no limit on the number of employees that may be laid-off. However, the law does permit an employer

9 The circumstances of unilateral termination are specied by the Labour Code and the employer may not go beyond these circumstances. Consultation with the executive committee of the trade union must take place and the time limit for notication must be complied with.

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to make a decision on reducing the number of employees in limited circumstances, such as changes to the employers enterprises technologies or structure. The employer must publish a list of employees who have become redundant and, on the basis of business requirements, seniority, skill, family conditions, and other factors of each employee, the employer can gradually reduce the number of employees provided that the executive committee of the trade union of the enterprise is consulted in accordance with the procedures, as required by labour laws. Employers are required to provide severance pay for employees who are laid off in an amount equivalent to the aggregate of one months salary for each year of employment, but no fewer than one months salary.

Termination by payment in lieu of notice

According to the labour laws, the employer or the employee violating the provisions on advance notice must compensate the other party an amount equivalent to the employees salary for the days during which no notice was given.

Employees entitlement upon termination

Accrued wages and unused annual leave
Employers and employees are required to settle all amounts due to each other within seven days (30 days in special cases as specied by law) from the date on which the labour contract is terminated. Severance allowance equivalent to one-half months wage for each year of working is payable to an employee who has worked for at least one year. Such severance allowance is not payable if the employee is dismissed for disciplinary reasons or if the employee illegally terminates the labour contract as provided for by law.

End of year payments

The labour laws do not provide for how the annual bonus will be paid in case of termination of a labour contract. However, in practice, if an annual bonus is paid under a contractual agreement, the employee will be entitled to the proportion payment thereof. However, if the employee unilaterally terminates the labour contract illegally, he/she will not be entitled to such payment.

Severance payments
The labour laws of Vietnam provide for the payment of severance as follows: (i) when an employer or an employee terminates a labour contract under which the employee has worked for more than 12 months, the employee shall receive an allowance equal to the aggregate amount of one-half of one months salary for each year of employment, plus salary allowances (if any). In the case of termination of a labour contract, due to dismissal or illegal unilateral termination by the employee, the employee shall not receive any allowances (ii) when an employer illegally terminates the labour contract of an employee, who does not want to return to his/her job, he/she shall receive the severance pay as

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mentioned in point (i) above and compensation and an allowance for those working days at which the employee would have worked if his/her contract had not been terminated. If the employer does not allow the employee to return to work, and the employee agrees, the parties may discuss compensation to the employee in addition to the amount of compensation mentioned in point (i) above. In addition, if a party breaches the notice period in advance of termination, the party in breach must pay compensation to the other party in an amount equal to the employees salary that would otherwise have been paid for the days for which no notice was given and (iii)when due to changes in the structure or technology, an employee, who has worked for more than one year, becomes unemployed, the employer is required to provide severance pay for employees who are laid off in an amount equivalent to the aggregate of one months salary for each year of employment, but not fewer than two months salary (see also the subsection Severance pay on page 4).

Set-o against gratuity and retirement scheme payments

Set off against gratuity and retirement scheme is not provided for by the laws of Vietnam.

Long service payments

Long service payments are not provided for by the laws of Vietnam. The labour laws only provide for severance pay equivalent to one-half of one months salary (plus allowances if any) for each year of employment in the case of the termination of a labour contract with an employee who has worked regularly for the employer for one year or more. Such severance is not payable in certain circumstances of an employees dismissal due to his/her fault.

Employment protection
Requirement of valid reasoning
Labour contracts may only be unilaterally terminated for certain reasons as specied by law; any other reason is considered illegal, and the offending party may be required to pay compensation to the other party. The Labour Code of Vietnam specically provides for the circumstances and procedures in which an employer may unilaterally terminate a labour contract with an employee. Specically, an employer may only unilaterally terminate a labour contract if the: employee repeatedly fails to perform his or her work in accordance with the terms of the contract employee is dismissed on disciplinary grounds, as provided for by the law employee suffers illness or injury and remains unable to work after having received treatment for a period of 12 consecutive months with respect to an indenite-term contract, or for 6 consecutive months with respect to a denite-term contract with

Guide to Employment Law in Vietnam 11

a term of 12 to 36 months, or for more than half the duration of the contract with respect to one that is for fewer than 12 months employer is forced to scale down production and reduce the number of employees while trying to recover from a natural disaster, re or other event of force majeure as provided for by the Government and business ceases to operate. Vietnamese labour laws prohibit the illegal termination of a labour contract by either employees or employers. Additionally, employers and employees must abide by the advance notice period for unilateral termination or termination of the labour contract. Employees can lodge complaints about illegal termination, and employers must accept the employees return to his or her job in accordance with the terms of the labour contract. Additionally, the employee may receive an amount of compensation corresponding to the days not worked due to illegal termination. Employers may also lodge complaints against the illegal termination of contracts by employees. Employers may seek to recover expenses for training, and compensation equal to one-half of one months salary plus salary allowances (if any). An employee may make a claim either to a local labour conciliation council or a peoples court.

Remedies
If an employer unilaterally and illegally terminates a labour contract, contrary to the law, he or she must re-employ the employee to work in accordance with the signed labour contract and pay compensation equal to the total amount of the wages and allowances (if any) for the period the employee was absent from work, plus at least two months of salary and salary allowances (if any). If the employee refuses to return to work, in addition to such compensation, the employer must pay that employee a retrenchment allowance equal to the aggregate amount of half of one months salary for each year of employment, plus salary allowances (if any). If the employee illegally terminates the labour contract, he/she shall not be entitled to severance pay. Rather, he/she must compensate the employer an amount equivalent to half monthly salary plus salary allowances (if any). If the employee unilaterally terminates the labour contract, he/she must also reimburse the employer for any training costs paid by the employer.

Discrimination Laws
Generally
Vietnam does not have a separate law on discrimination as such. Rather, there are provisions of the Constitution, and the Labour Code on discrimination. Generally, discrimination on the grounds of sex, race, social class, religion, or belief is prohibited by laws. The Labour Code stipulates that every person has the right to work, to freely choose a job and improve his or her professional skills without discrimination due to gender,

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race, social class, religion, or belief. However, Vietnamese law also provides privileges to women, disabled people, and employees who are minors.

Disability discrimination
Article 125 of the Labour Code provides that the Government shall determine the proportion of disabled employees that business enterprises must recruit in certain trades and occupations. If an enterprise does not employ disabled workers, it must pay a levy into a fund established for the purpose of reducing the unemployment rate of disabled workers. Those enterprises that recruit more disabled workers than the stipulated proportion will be provided with State grants or low interests to enable the creation of suitable work for the disabled. Disabled workers must not work more than seven hours a day or 42 hours a week. Strict compliance with labour conditions, labour safety, and hygiene by the employer using disabled workers is also required.

Sex discrimination
Article 11 of the Labour Code states that an employer must give preference to females satisfying all the recruitment criteria for a vacant position in an enterprise. This privilege is also manifested in provisions on pregnant employees, and special regimes apply to female employees. The Labour Code states that the State will establish incentive policies and consider the reduction of taxes for businesses using a high number of female employees. Employers are required to implement an equality principle with respect to the recruitment of and employment of staff, training, salary increases, promotion, remuneration, social and health insurance, etc. The law also requires, however, that employers must give preference to female employees who satisfy the recruitment requirements for a vacant position in an enterprise. Employers are prohibited from conduct which is discriminatory towards female employees or conduct that degrades the dignity and honour of female employees.

Sexual harassment
Vietnamese labour laws prohibit employers from conduct that degrades the dignity and honour of female employees. However, there is no specic provision setting forth guidelines on this stipulation. The Criminal Code also does not provide clearly for this behaviour.

Remedies
There is only a general provision stating that an employer breaching the above prohibitions, depending on the seriousness of the breach, will be dealt with in accordance with the laws.

Costs
This is not provided for by the laws.

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Preventing discrimination and harassment

It is obvious that an employer must be responsible for its discrimination. In practice, the employer will not be liable for discrimination acts committed by its employees in the course of their employment, if it can prove its non-involvement in the acts.

Data Privacy Legislation

Generally
The right of privacy in Vietnam is guaranteed by its Constitution and the Civil Code. Specically, Article 73 of the 1992 Constitution of the Socialist Republic of Vietnam, as amended by the 2001 Constitution, provides for inviolability of domicile and privacy. This right applies to both public and private sector employment. Article 38 of the 2005 Civil Code also provides for the protection of privacy of individuals. Please note that there is no separate law on personal information protection as such in Vietnam. Rather, personal information of individuals is regulated by various pieces of legislation. The following are the regulations on personal information protection. (i) The Constitution of the Socialist Republic of Vietnam The current Constitution of the Socialist Republic of Vietnam was passed by the National Assembly at its VIII Session dated 15 April 1992 and was amended by Resolution No. 51/2001/QH10 of the National Assembly during its X Session, from 20 November 2001 to 25 December 2001 (together, the Constitution). The Constitution is the supreme law of Vietnam. It regulates, among other things, the right for personal information protection in Article 73.

Article 73. Inviolability of domicile and privacy

Citizens are entitled to the inviolability of their domiciles. No one can enter the domicile of another person without his/her consent, except in cases authorised by law. Safety and secrecy are guaranteed to citizens correspondences, telephone conversations and telegrams. Domiciliary searches and the opening control, and conscation of citizens correspondences and telegrams can only be done by a competent authority in accordance with the provisions of law. (ii) The Civil Code The Civil Code was passed by the National Assembly of Vietnam and took effect on 1 January 2006. Article 38 of the Civil Code provides for privacy as follows:

Article 38. Right to Privacy

An individuals right to personal secrets shall be respected and protected by law.

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 The collection and publication of information and materials relating to the private life of an individual must have the consent of that individual or, where that individual has died or lost the capacity for civil acts, the consent of his or her relatives, except in the cases where the collection and publication of information and materials is required pursuant to a decision of an authorised State body. Letters, telegrams, or other forms of electronic information of individuals shall be guaranteed safety and secrecy. Inspection of the letters, telegrams or telephone and/or other forms of electronic information may only be conducted in cases stipulated by law and decided by an authorised State body. (iii) The Penal Code The Penal Code was passed by the National Assembly during its X Session on 21 December 1999 and became effective on 1 July 2000. The Penal Code contains an article on the protection of personal information as follows:

Article 125. Infringement upon other persons privacy or safety of letters, telephone conversations/ and telegrams
Those who appropriate letters, telegrams, telex, facsimile or other documents transmitted by telecommunication means and computers or commit illegal acts of infringing upon the secrecy or safety of letters, telephone conversations or telegrams of other persons and who have been disciplined or administratively sanctioned for such acts but continue to commit violations, shall be subject to warning, a ne of between VND 1 million (approximately US$62.00) and VND 5 million (approximately US$310.40) or non-custodial reform for up to one year. Committing the crime in one of the following circumstances, the offenders shall be subject to non-custodial reform for one to two years or a prison term of between three months and two years: in an organised manner abusing their positions and/or powers committing the crime more than once causing serious consequences or recidivism. The offenders may also be subject to a ne of between VND 2 million (approximately US$124.10) and VND 20 million (approximately US$1,241.80), and a ban from holding certain positions for one to ve years.

The data protection principles

The fundamental principle of the laws of Vietnam on data protection is that gathering and publishing of private information must be subject to the employees agreement. The

Guide to Employment Law in Vietnam 15

opening, seizure, or destruction of correspondences, or other acts aimed at preventing communication of individuals, are prohibited unless provided for by law or an order of a State competent body.

The Mandatory Social Security Fund

There is no separate fund for retirement. Rather, Vietnam maintains a social security scheme. The Law on Social Security provides for the payment of the following forms of compulsory social insurance: sick leave benets maternity leave benets allowances for work-related accidents and occupational diseases retirement benets and survivors or deceased employees dependants benets. Furthermore, the Law on Social Security, for the rst time, provides for unemployment insurance. Such type of insurance is mandatory for Vietnamese employees working under indenite-term labour contracts and denite-term labour contacts between 12 to 36 months and for employers employing more than 10 employees. As the provision on unemployment insurance has just been introduced, how it works in practice is yet to be seen. The unemployment fund is made mainly from contributions of the employer (1% of the total salaries fund) and the employee (1% of the monthly salary) and support from the State budget (1%). To be eligible for unemployment insurance, the employee must have paid into the unemployment fund for at least a full 12 months within 24 months before becoming unemployed; the employee has registered with the social insurance agency; and the employee cannot nd a job within 15 days from the date of registration with the social insurance agency. The unemployment rate is 60% of the average monthly salary of six months immediately prior to unemployment. The time period for unemployment insurance shall be three, six, nine or twelve months depending on the time of payment to the unemployment insurance.

Obligation to contribute
The Labour Code provides that, in respect of employees who have labour contracts with a term of more than three months, until 2010, an amount equal to 20% of their wages must be contributed to the social insurance fund, and an amount equivalent to 3% of their wages must be contributed to the health insurance fund. The responsibility for social security and health contributions is divided between the employer and the employee (see also the subsection Social security on page 3).

Tax treatment of mandatory contribution

Contributions to the social security fund and health insurance are regarded as lawful expenses and are deductible for the purposes of the tax calculation of an enterprise.

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When do contributions need to be made

Contributions made to the social insurance must be paid before the payment of the salaries to the employees.

Exceptions
The obligation to contribute does not apply to retirees or to employees who have a labour contract with a term of fewer than three months; nevertheless, employers must pay these amounts directly to such employees as assistance to enable them to purchase insurance or use these funds at their discretion.

Schemes
There is only one compulsory social security scheme as mentioned above in Vietnam. In addition, the Law on Social Insurance also provides for voluntary social insurance applicable to employees only.

Employee Compensation
Employee injuries and workers compensation are regulated in the Labour Code and the Law on Social Insurance. Generally, employees suffering labour accidents or occupational diseases will be entitled to compensation (including salaries and costs) payable by the employer, the level of which depends on the loss of labour capacity. Specically, the employer has to pay at least 30 monthly salaries and salary allowances (if any) to employees losing 81% or more of labour capacity or the relatives of the dead employees if the labour accidents or the occupational diseases are not the employees fault. In case labour accidents or occupational diseases occur due to the employees fault, the employees are entitled to at least 12 monthly salaries and salary allowances (if any). For loss of labour capacity from 5% to 10%, the employee is entitled to compensation of at least 1.5 months salary and salary allowances (if any). For loss of labour capacity from 10% to 81%, each 1% of labour capacity loss shall be entitled to 1.5 monthly salaries plus 0.4 months salary and salary allowances (if any). In case the accident or occupational diseases are due to the employees fault, at least 40% of the corresponding above rate must be paid. Vietnam also has a social security scheme that provides for allowances in case of injuries, illness, occupational diseases, maternity leave, employees survivors allowance and pension payable by the social insurance. Generally, the labour laws require that an employer be responsible for the provision of protective equipment and ensure occupational safety and hygiene. The employer is responsible for the improvement of work conditions and workplace. Furthermore, people working in dangerous or toxic conditions must be materially compensated and are entitled to preferential treatment in terms of working hours and rest hours under the law. All labour accidents and professional diseases must be declared, investigated, recorded, and statistically noted, and periodically reported in accordance with the law.

Guide to Employment Law in Vietnam 17

Summary of Visa Requirements

Generally
Foreigners including overseas Vietnamese entering and exiting out of Vietnam for the purpose of employment must hold valid visas issued by the State competent agencies, unless otherwise stipulated by an international treaty to which Vietnam is a party.

The application
A dossier for a visa shall include: application in the prescribed form and passport or copy of passport. The dossier shall be submitted to the diplomatic representative agency of Vietnam in a foreign country or the Department for Management of Entry and Exit of Vietnam.

Supporting documents
The law does not provide for supporting documents that an applicant must submit but in practice, the State competent body may ask for other documents if necessary. It should be noted, however, that before making an invitation to a foreigner, enterprises, foreign branches, foreign representative ofces, and other organisations legally established and operating in Vietnam must apply to the Department for Management of Entry and Exit to prove their legal status. The dossier shall include: license or decision on the establishment operation registration document with certication of the provincial Peoples Committee where the organisation is located and document certifying the seal, and signature of the representative of the applicant. Once this dossier is submitted, it is valid for all invitations unless there is any change in the contents of the above documents, in which case, the change must be notied to the Department.

Factors taken into account by the State competent bodies

There are no provisions on what circumstances an application for visa may be favourably considered. However, in practice, an application may be favourably considered at the discretion of the Department for Management of Entry and Exit. Furthermore, the laws of Vietnam provide for the refusal of a visa in the following cases: forfeiting of documents, and intentional false statement upon application for entry for epidemic prevention serious violation of the law of Vietnam by the applicant and for national security reasons.

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Work permits
It should be noted that the employment of expatriates in Vietnam is restricted in terms of the number of expatriates to be employed by an enterprise. Specically, the number of expatriate employees an enterprise is entitled to hire may not exceed 3% of its total employees. Such a restriction is not imposed on foreign contractors, foreign branches and representative ofces, and international organisations, however, to employ expatriate employees, an organisation or a representative ofce must obtain an approval from the Chairman of the Peoples Committee under central authority. Work permits are not required for foreigners who work in Vietnam for fewer than three months, who are engaged by an employer to solve problems in emergency circumstances, members of Board of Management, general directors, vice general directors, directors, and vice directors of enterprises licensed in Vietnam, directors of foreign enterprises in Vietnam, foreign lawyers, chiefs of representative ofces and heads of branches. Expatriates sent by a foreign party to Vietnam to perform contracts signed with local partners also are exempt from the required work permit. Expatriates to be employed must meet certain conditions on health, and professional skills specied by law. Expatriates working for enterprises with a term of no fewer than three months in Vietnam must obtain a work permit from the provincial Department of Labour, Invalids and Social Affairs. The work permit shall be issued according to the term of the labour contract or the decision on sending the expatriate to Vietnam by the offshore enterprise, but shall not exceed a period of 36 months. A dossier for a work permit shall include: an application judicial record issued by the competent body of the country of residence of the applicant biodata in the form provided for by the Ministry of Labour, Invalids and Social Affairs with a photograph attached a health certicate copies of certicates of professional qualications and skills of the applicant and three photographs 3cm x 4cm in size. A work permit may only be extended if the employer has had a plan to train Vietnamese employees to replace expatriate employees but no Vietnamese employees are available. The extension shall not exceed 36 months and may be re-extended if the training for Vietnamese employees has still not been completed and an approval from the Chairman of the Peoples Committee where the enterprise is located is obtained. Such an extension will not be allowed if the expatriate employee is dismissed on disciplinary grounds.

Guide to Employment Law in Vietnam 19

Dependants of the applicant

Successful applicants may apply for his/her dependants to be brought to Vietnam. The laws of Vietnam do not provide for the procedures for application of dependants visas. In practice, the same procedures required for the applicant are applied to the dependants.

Time for processing

The organisation and individual inviting a foreigner must send a request to the Department for Management of Entry and Exit who will notify the Vietnamese diplomatic representative or the Vietnamese Consulate within ve days from the date of receipt of the request. The latter will notify the foreigner who must submit a dossier for visa. The visa will be granted within two days from the date of receipt of the dossier. In practice, the time may be longer or sooner, depending on specic cases.

Fees
If the application for visa is made in Vietnam, a fee of US$25 will be paid for the granting of a visa for single use, US$50 for the granting of a visa for multiple use for less than six months, and US$100 for six months or more. In case the application for visa is made to the Vietnamese diplomatic mission in a foreign country, a fee of US$25 will be payable for the granting of a visa for single use, a fee of US$40, US$70 or US$100 will be paid for a visa of multiple use of fewer than one month, six months and from six months to one year respectively.

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About Mayer Brown JSM

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