A labor contract is legally binding between the employee and the employer regarding working conditions, rights, and obligations of each party in the labor relationship, salary, etc. The dispute related to the labor contract is a typical dispute in labor, arising from the misunderstanding of the parties about the labor contract regulations in the labor relationship. In this post, we will analyze some basic contents that businesses and employees need to pay attention to when drafting and entering into labor contracts in Vietnam.
1. Definition of the labor contract
According to Article 13 of the Labor Code 2019, the labor contract is an agreement between the employee and the employer on a paid job, salary, working conditions, rights and obligations of each party in the labor relations.
Therefore, the labor contract is the basis for ensuring the rights and obligations between the employee and the employer; it is also the basis for dispute settlement (if arising). Before employing a person, the employer shall enter into a labor contract with such person.
A labor contract shall be entered into in writing or in the form of electronic data conformable with electronic transaction laws. However, the parties may enter into an oral contract with a term of less than 01 month, except in the following cases: the subjects of the labor contract are seasonal jobs or certain jobs lasting for less than 12 months; entering into labor contracts with a person aged under full 15 years or the employee who are domestic workers.
2. The remarkable contents when drafting and entering into labor contracts
2.1. Types of labor contract
Article 20 of the Labor Code 2019 stipulates two types of labor contracts as follows:
- Indefinite-term labor contract: a contract in which the parties do not determine its term and time of termination.
- Definite-term labor contract: a contract in which the parties determine its term and time of termination within 36 months from the date the contract takes effect. For this type of contract, the law does not stipulate a minimum term, but only a maximum contract term of 36 months.
The law stipulates quite specifically the cases in which the enterprise can terminate the labor contract with the employee. The termination of the labor contract by the enterprise that does not fall under the cases specified in the law is considered a violation of the law and this enterprise must bear the consequences for the illegal termination of the contract. Therefore, since entering into a contract, the enterprise should carefully consider factors such as professional qualifications, enterprise needs, working consciousness of personnel, etc. to determine the type of signed contract and the appropriate duration of the contract. The enterprise can enter into 1-2 fixed-term labor contracts, after conducting the process of employees working, the enterprise shall decide whether to continue entering into labor contracts and determine its time of termination or not.
2. Contents of a labor contract
The parties have the right to freely agree on terms that are not prohibited by law, however, to ensure the legitimate rights and interests of employees as well as limit disputes arising in the labor relationship, the law stipulates that the labor contract must contain the following principal contents:
- Name and address of the employer, and full name and title of the person entering into the contract on the employer’s side;
- Full name, date of birth, gender, residence, identity card number, or passport number of the person entering into the contract on the employee’s side;
- Job(s) and workplace;
- Term of the contract;
- Job- or position-based salary, the form of salary payment, the due date for payment of salary, allowances and other additional payments;
- Regimes for promotion and pay rise;
- Working hours, rest periods;
- Personal protective equipment for the employee;
- Social insurance, health insurance and unemployment insurance;
- Basic training and advanced training, occupational skill development.
Moreover, when the employee performs a job directly related to business secrets or technological secrets as prescribed by law, the employer may reach a written agreement with the employee on the content and duration of protection of business secrets or technological secrets, interests, and compensation in case of violation.
3. Competence to entering into labor contracts
When entering into a contract, the enterprise and the employee need to check and consider about the competence of the contract’s subject to ensure the validity of the labor contract.
- Competence to enter into labor contracts of the enterprise: The legal representative of the enterprise or the person authorized according to regulations of the Law. In enterprises, it is common for the legal representative to authorize the deputy general director, the head of the administrative and human resources department, etc. to sign labor contracts. The employee should request to see the Letter of Authorization of the person signing the contract to ensure the validity of the contract.
Competence to enter into labor contracts of employees:
- An employee aged full 18 years or older;
- An employee aged between full 15 years and under full 18 years, with the written consent of his/her legal representative;
- A person aged under full 15 years and his/her legal representative; or
- An employee in a group of employees who is lawfully authorized by other employees in the group to enter into a labor contract.
In addition, the parties should note the following regulation, whether on the employer’s side or the employee’s side, the person authorized to enter into a labor contract may not re-authorize another person to enter into a labor contract.
This is post “Notes for drafting and entering into labor contracts”. We hope this article was useful to you.