Amendments to the Labour Code (the Code), which will take effect on 1 May 2013, provide increased protection for employees, whilst simultaneously extending employer’s rights in respect of technological or business secrets and retrenchment. The changes also implement a number of new concepts to Vietnamese labour law such as outsourcing.

The most significant changes to the Code include:

  • Probationary Periods

The permitted probationary period duration will be determined by reference to the level of professional qualification required to carry out the work.

The minimum wage applicable during the probationary period will increased to 85% of the employee’s post probationary period wage entitlement.

  • Technology or business secrets

Recognition of the employer’s right to a written confidentiality agreement with employees who are directly involved in business or technological secrets.

  • Retrenching employees

The introduction of a new ground of redundancy on the basis of ‘economic reasons’. Retrenched employees who have worked for more than a year will be entitled to one month’s salary for each year of employment. It will be the former employer’s responsibility to pay retrenchment allowances.

  • Discrimination

Sexual harassment will become a ground for an employee to unilaterally terminate a definite term labour contract.

  • Outsourcing

The introduction of provisions recognising the legal basis for outsourcing, in circumstances where the outsourcing arrangement does not exceed 12 months and the outsourced employee receives an equivalent salary.

  • Termination of contract

An employer will no longer be required to obtain consent from the executive committee of the trade union and to report to local labour authorities prior to unilaterally terminating an employee’s labour contract, except where the employees are trade union officers.

  • Maternity leave entitlement

The maternity leave entitlement will increase to 6 months

Action for employers

Employers should familiarise themselves with the changes to the Code ahead of 1 May 2013 and should implement changes to contracts, policies and practices as necessary.