Co-authored by Andrea Wilson of DFDL
From the start of 2018, Vietnam has been introducing a number of changes to its employment laws. The most eye catching of these changes is an increase in the criminal penalties that can be imposed for breaking employment laws. As a result, employers face up to three years of imprisonment for breaking employment laws. The government has also increased Vietnam’s minimum wage and amended social insurance rules.
One amendment to the country’s criminal code introduces enhanced criminal liability for an employer’s unlawful dismissal of an employee. Employers face this increased criminal liability in addition to any civil liability that the employer might face under local labor laws for the same dismissal.
Previously, the criminal code made it an offense for an employer, “for self-seeking purposes or another private motive” to, “unlawfully force an employee to leave his or her job, causing serious consequences.” The amended criminal code clarifies that it is an offense to “unlawfully dismiss” an employee, or to “use force or threats to cause an employee to resign.”
The revised criminal code also increases criminal penalties for an unlawful dismissal. The penalties now include a fine of up to 200 million Vietnamese dong (VND) (approximately USD 8,786 : GBP 6,371 : EUR 7,138) or a term of imprisonment of up to 3 years. Under the revised law, an offender may also be prohibited from holding certain positions in organizations if: (i) he or she is found guilty of unlawfully dismissing two or more people; (ii) he or she dismisses a pregnant woman whose pregnancy was known to the offender; or (iii) the offense causes very serious consequences to the dismissed individual, such as suicide.
Regional minimum wage increased
Based on the National Salary Council’s plan, the regional minimum wage has increased by 6.5 percent effective January 1, 2018. The amount varies from VND 2,760,000 (USD 121: GBP 88: EUR 99) per month to VND 3,980,000 (USD 175: GBP 127: EUR 1) per month depending on the region.
Expanded Compulsory Social Insurance Scheme
Two new categories of employee have been added to the scope of Vietnam’s compulsory social insurance scheme. Effective January 1, 2018, Vietnamese employees working under short fixed-term employment contracts lasting under three months, as well as foreign employees working in Vietnam under work permits, practice certificates, or practice licenses, will be required to pay into Vietnam’s compulsory social insurance scheme. The social insurance contribution rates for employers and employees are set at 17.5 percent and 8 percent respectively.
The basis for calculating an employee’s social insurance contributions has also been widened to include some benefits that were previously excluded from the calculation.
As a result of the enhanced criminal penalties, employers will want to ensure they are following proper procedures and have grounds to dismiss in any termination situation.
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.