Employment agreements are fundamental to establishing a legally sound and productive working relationship in Vietnam. These contracts outline the terms and conditions of employment, protecting the rights and obligations of both employers and employees. Understanding the nuances of Vietnamese labor law regarding employment agreements is crucial for businesses operating in the country to ensure compliance and avoid potential disputes.
In Vietnam, employment agreements must adhere to the Labor Code, which stipulates various requirements regarding contract types, essential clauses, probationary periods, and termination procedures. Properly drafted employment agreements are essential for clarity, legal compliance, and fostering a positive employer-employee relationship.
Types of Employment Agreements
Vietnamese labor law recognizes two primary types of employment agreements: fixed-term and indefinite-term contracts.
| Contract Type | Description document.
Essential Clauses Required in Employment Contracts
To ensure legal compliance and clarity, employment agreements in Vietnam must include specific essential clauses. These clauses outline the fundamental aspects of the employment relationship and protect the rights of both parties.
| Clause | Description
Essential Clauses Required in Employment Contracts
Vietnamese labor law requires that every employment contract includes the following clauses:
- Name and address of the employer and the full name, date of birth, gender, place of residence, identity card number or other personal identification of the employee.
- Job title and description of the work.
- Term of the labor contract.
- Salary, payment method, payment timeline, bonuses, and allowances.
- Working hours and rest periods.
- Equipment provided to the employee.
- Training and professional development.
- Social insurance, health insurance, and unemployment insurance.
- Regulations on labor protection, occupational safety, and hygiene.
- Effective date of the labor contract.
Probationary Period Regulations and Practices
A probationary period allows employers to assess an employee's suitability for the job before offering a permanent position. In Vietnam, the Labor Code specifies the following limits on probationary periods:
- Up to 30 days: For jobs with a professional or technical title requiring intermediate-level qualifications, and for skilled workers.
- Up to 60 days: For jobs with a professional or technical title requiring college-level qualifications or higher.
- Up to 6 days: For other jobs.
During the probationary period, the employee's salary must be at least 85% of the agreed-upon salary for the position. At the end of the probationary period, the employer must notify the employee of the results. If the employee meets the requirements, the employer will offer a formal employment contract. If not, the employment can be terminated.
Confidentiality and Non-Compete Clauses
Confidentiality and non-compete clauses are used to protect an employer's business interests.
- Confidentiality Clauses: These clauses prevent employees from disclosing sensitive information, such as trade secrets, customer lists, and business strategies, both during and after employment.
- Non-Compete Clauses: These clauses restrict an employee from working for a competitor or starting a competing business for a specified period after leaving the company.
The enforceability of non-compete clauses in Vietnam is subject to certain conditions. The scope, duration, and geographical area of the restriction must be reasonable and necessary to protect the employer's legitimate business interests. Compensation must be provided to the employee during the non-compete period.
Contract Modification and Termination Requirements
Modifications to an employment contract require the mutual agreement of both the employer and the employee. Any changes must be made in writing and signed by both parties.
Termination of an employment contract can occur under various circumstances, including:
- Expiration of a fixed-term contract.
- Mutual agreement between the employer and employee.
- Employee's resignation (subject to notice periods).
- Employer's unilateral termination for specific reasons outlined in the Labor Code (e.g., employee's serious misconduct, poor performance, or business restructuring).
Employers must provide advance notice of termination, with the length of the notice period depending on the type of contract and the reason for termination. Upon termination, the employer is required to pay severance allowance to employees who have worked for at least 12 months, except in cases of employee misconduct.
