The laws of Vietnam are complex and new legislation is constantly being introduced. What follows is no more than an introductory overview that we hope will assist investors to decide which areas of law they will need to research further.

This summary is, necessarily, selective and is no substitute for detailed legal advice.

Wide ranging protection for employees is provided by the following legislation:-

- The Labour Code of 23 June 1994 ("The Code")

- Decree 197 CP of 31/12/94: giving further details in respect of wages and bonuses

- Decree 12 CP of 26/l/95: giving further details in respect of Regulations on Social Insurance

- Decree 6 CP of 20/l/95: giving further details in respect of safety and sanitation

- Decree 198 CP of 31/12/94: giving further details in respect of Labour Contracts

- Decree 196 CP of 31/12/94: giving further details in respect of Collective Labour Agreements.

(All together referred to as "The Employment Legislation").

The Code alone has some 198 sections detailing the rights of employer and employee. For the purposes of this section, we highlight only the main features.

It should be noted that the protections of the Employment Legislation apply to both local Vietnamese and expatriates working in Vietnam.

It is not possible to contract out of the terms of the Employment Legislation.

1. Recruitment

1.1 Any Vietnamese wishing to work for a foreign enterprise must obtain a permit to do so from the Ministry of Labour.

1.2 Priority should be given to hiring Vietnamese citizens. Expatriates should only be employed if there are no suitably qualified Vietnamese available.

1.3 Enterprises are required to draw up plans to train Vietnamese workers so that they can replace foreign workers as quickly as possible.

1.4 All employees should be over 18 years of age unless permission is obtained from parents/guardians when employment may commence at age 15.

1.5 Special provisions apply in relation to. junior workers (aged 15-18), senior employees (60 years old for men, and 55 years old for women), the disabled, and those with highly specialised skills.

1.5 Particular protection is given to women employees.

2. Contracts of Employment

2.1 All workers must have a contract of employment which covers the following provisions:

- the nature of the work
- working hours/breaks
-location of the job
-duration of the contract
- employment protection and conditions on safety/hygiene
- provisions relating to health and safety and social security

If an employee is called for Military service or Public service the contract will be suspended for the duration of that service.

2.2 Ordinarily, the Contract must be signed directly by the employer and employee, though an authorised signatory may sign on behalf of a group of workers.

2.3 The contract may take one of three forms:-

(a) a contract for in indefinite term, or
(b) a contract for a defined duration of 1-3 years, or
(c) a seasonal or fixed term contract for less than I year

(Contracts of less than 3 months or relating to domestic servants, may be oral, but still must adhere to the terms of the Code.)

2.4 Trial / probationary Periods are permitted during which the employee must receive a minimum of 70% of the normal wage. The periods permitted are as follows:-

(a) a maximum of 60 days for those educated above secondary /high school level.

(b) a maximum of 30 days for those educated up to secondary /high school level.

(c) a maximum of 6 days for manual labourers.

If the probationary period expires and the employee continues working, the employer shall be deemed to have accepted the employee.

2.5 Any amendments to the terms of the contract must be agreed upon by the employee.

2.6 An employee cannot be prohibited front entering into more than one contract of employment (i.e. with different employers) at a time provided he fulfils all his obligations under his contract.

3. Collective Labour Agreements

These are encouraged by the State particularly where they go beyond the minimum requirements of the Code.
A Collective Agreement must

- be negotiated between a representative of the enterprise and the Labour Union, if either side wishes there to be a collective agreement.

- be approved by a minimum of 50% of the workforce

- be for a period of 1-3 years, (though the initial agreement may be for less than 1 year)

- cover all aspects of employment as with a contract for an individual employee.

4.1 Trade Unions

Employees have a right to form labour unions. Any attempts to prevent the formation of unions is prohibited.

4.2 Within 6 months of the setting up of an enterprise the trade unions for the province in which the enterprise is located must establish a union.

4.3 An employee active in union work must be permitted a minimum of 3 days off per month for such activities.

4.4 The employer is required to co-operate closely with the union at all times.

5.1 Dismissal/Termination

A contract may be terminated
(1) by agreement between the parties;
(2) after the expiry of its term if it is for a fixed duration; or
(3) on the conviction or subsequent imprisonment of an employee.

Termination by the Employee

If an employee wishes to terminate a contract of indefinite term he may do so unilaterally, without any reason, provided he gives the employer 45 days notice. If an employee wishes to terminate a fixed term contract of 1-3 years, he may do so on 30 days notice if-

(a) he is unable to continue to perform the contract for family reasons or
(b) is elected to public office.

He may additionally terminate on 3 days notice due to maltreatment or non-payment by the employer.

No specific reference is made to an employee under an indefinite term contract being permitted to terminate due to the employer's misconduct or to the notice (if any), required in that situation. On the face of it, such an employee must, in any circumstances, give 45 days notice.

Similarly, there is no reference made to an employee being permitted to terminate a contract of I3 years other than for the reasons above. In particular there is no parallel provision to that of an employee being able to give 45 days notice without specifying a reason. In practical terms, however, it is likely that an employee would be able to achieve this result using reason (a) above.

Termination by the Employer

There is no provision for an employer to terminate a contract except in limited and defined circumstances. Simple notice to terminate, however long is not by itself permissible, unless, of course, the employee agrees.

A contract may only be terminated by the employer in limited circumstances.

All other breaches, other than those where the employee is dismissed for defalcation, require discipline in the manner stated in the Code.

Labour Conditions

The employment legislation sets out the requirements in great detail.

Employees in foreign invested enterprises must be paid minimum wages. This is applicable only to the most simple, unskilled jobs.

6. Hours/ Holidays

- standard hours are 8 per day or 48 hours per week. For each 8 hour period there must be a minimum 30 minute break which counts as worked time

- overtime, which commences after the standard hours have been completed, must not exceed 4 hours in one day or 200 hours per year

- Night workers must have a 45 minute break during each 8 hour period.

- shift workers are entitled to a break of 12 hours between shifts

- employees are entitled to 1 full day off per week. If this is impossible, then time off must average 4 days per month

- employees with more than 12 months service must receive between 12 and 16 days paid holiday per year depending on the location, age of employee, and the strenuousness of the work. This is in addition to public holidays.

- if, for any reason, an employee does not take their full holiday entitlement, they are entitled to be paid in lieu.

7. Health and safety

7.1 Employers are obliged to comply with detailed regulations.

7.2 Employees must comply with the rules laid down by the employer, and use safety equipment provided. They have a right to refuse to work if the risk of an accident exists or has not been overcome.

7.3 All labour accidents and occupational diseases must be investigated by the employer in conjunction with the Trade Union representative, and reported to the Ministry of Labour in accordance with their requirements.

7.4 The employer is responsible for the cost of treating an employee injured, through no fault of his or her own in a work related accident or who has contracted an occupational disease. The employer must also pay the levels of compensation set down in the Social Insurance legislation for work accidents and occupational diseases.

8. Inspection

The Ministry of Labour and Ministry of Health may appoint inspectors to review occupational health and safety. They may inspect without warning and have the power to suspend all a part of an enterprise's operations if they are in any way dissatisfied. Decisions of an inspector are binding and must be implemented.

9. Disputes/Strikes

9.1 Direct negotiations between employer and employee should be attempted in the first instance. Trade unions should always be involved in any dispute resolution process. If that fails then:-

9.2.1 For enterprises with more than 10 employees:-

They must establish a Conciliatory Council made up of equal numbers of representatives of the trade Union and Management who must then try to resolve the dispute. Either party may appeal the decision of a Conciliatory Council to the People's Court.

9.2.2 For enterprises with less than 10 employees:-

They must refer the dispute to a single labour conciliator appointed by the local Labour Office. Either party has a right of appeal to the People's Court.

9.2.3 Disputes regarding termination of an employee's contract may go directly to the People's Court.

9.2.4 Collective Labour Disputes

Just as for an individual labour dispute, these should be referred to either the enterprise's own Conciliation Council or a single Labour Conciliator, if direct negotiation fails to solve the matter.

10. Labour Conduct Codes

All enterprises with more than 10 employees must have a written internal code of conduct, formulated after consultation with the Union and registered with the local Labour Office, setting out the rules and regulations in relation to the running of the enterprise. It must comply with the terms of the Employment Legislation.

NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

If you would like further advice please contact: David Ellis, Johnson Stokes & Master, 16th Floor, Princes Building, 10 Chater Road, Hong Kong; Tel 2843 4226; Fax no. : 2845 9121. Alternatively do a text search "Johnson Stokes and Master" and "Business Monitor".