In June 2012, the National Assembly of Vietnam passed the Amended Labor Code No. 10/2012/QH13, which will be effective from 1 May 2013, and the Union Law No. 12/2012/QH13, which will be effective from 1 January 2013. In addition, the Ministry of Labor, Invalids and Social Affairs is also preparing the draft the Law on Employment (whose purposes and content are still unclear and expected to overlap with the Labor Code in several aspects) and revising the Law on Vocational Training. With all 4 main laws on employment and labor matters having been revised or expecting to be adopted, the legal framework for several employment and labor matters has changed.
Specifically, the Amended Labor Code introduces several additions to the current Labor Code, including, among other things, the concept of labor subleasing, 6-month maternity leave, a 2-year work permit, revised working and rest times, and a new role for upper-level labor unions in enterprises without grass-root unions or set labor disciplines. Many observers have commented that these new provisions provide employees with greater benefits; however, the impact of these amendments on employers and the economy as a whole is still a matter of concern.
Besides, the Union Law and the Draft Employment Law also place companies in an even more costly situation. The Union Law seems to require all companies, whether foreign-invested or local, to pay a mandatory union fee of 2% of total payroll used to contribute to insurance. The Draft Employment Law, on the other hand, introduces the new concept of "Employment Insurance Fund", which requires contribution similar to the current Unemployment Insurance Fund. Whether Employment Insurance Fund will replace the unemployment insurance regime, or this will be another separate fund which will cost more to the employers and employees, is still in question.
In the year ahead, it is expected that numerous Decrees and Circulars that implement the current Labor Code will also be revised to comply with the Amended Labor Code. All these changes are expected to have a significant impact on enterprises and organizations that recruit labor in Vietnam.