THINGS YOU SHOULD NOTICE WHEN SIGNING LABOR CONTRACTS
Labor relations are an indispensable relationship in our daily life. Thanks to labor relations, people can meet their other needs. However, entering into a healthy employment relationship is not something that everyone can achieve. When participating in labor relations, employees will encounter many related problems in signing employment contracts, working and leaving jobs, etc. As a result, we would like to present some related information in entering into employment contracts for your reference.
1. WHAT IS A LABOR CONTRACT?
Article 13 of the 2019 Labor Code stipulates that an employment contract is an agreement between an employee and an employer on a paid job, salary, working conditions, and the rights and obligations of each party in labor relations. In case the two parties agree by another name but with contents showing paid employment, salary and the management, administration and supervision of one party, it is also considered as an employment contract. Before accepting employees to work, the employer (employer) must enter into a labor contract with the employee (employee).
Article 14 of the 2019 Labor Code stipulates that employment contracts can be presented in writing, and employment contracts are entered via electronic means in the form of data messages and verbal labor employment contracts for contracts with a term of less than one month.
The Labor Code stipulates that entering into employment contracts is voluntariness, equality, good faith, cooperation, and honesty; freedom to enter into an employment contract which is not contrary to the law, the collective bargaining agreement, and social ethics.
2. CONTENTS THAT NEED TO BE NOTICED IN THE LABOR CONTRACT
The reality in Vietnam shows that the rights of employees in labor relations are still not guaranteed. There are many cases of employers taking advantage of employees’ ignorance to suppress and put them into employment contracts with unfavorable terms. Therefore, employees must understand the Labor Code and carefully read the employment contract before signing it to protect their legal rights. Employees must pay attention to the following contents in the employment contract:
- Time and salary of probation
Under the law, when entering an employment contract, an employee and an employer can sign a contract with agreed terms on probation. This critical stage creates the basis for official labor relations later. However, many employees often underestimate the importance of the probationary period, thus not enjoying the full benefits during the probationary period.
The probationary period is specified in Article 25 of the 2019 Labor Code. Accordingly, the probationary period is no more than 180 days for the position of enterprise executive under the Enterprises Law, Management Law, and use of state investment in enterprises; no more than 60 days for jobs with professional titles requiring professional or technical qualifications from college or higher; no more than 30 days for jobs that require a secondary vocational certificate, professional secondary school or the positions of or for technicians, and skilled employees; and no more than 06 working days for other jobs.
Regarding the probationary salary, the law allows the parties to freely agree on an appropriate wage, depending on the job’s nature, the employee’s working capacity, etc. However, the minimum level of the agreement must equal 85% of the salary of that job. Many employees do not know or ignore this vital provision. Therefore, most employers will take advantage of the employee’s ignorance to “exploit”, set the probationary salary below the prescribed level, or even not pay the probationary salary
Article 27 of the 2019 Labor Code stipulates that, at the end of the probationary period, the employer shall inform the probation result to the employee. If the result is satisfactory, the employer shall keep implementing the employment contract. If the result is unsatisfactory, the employment contract or the probationary contract shall be terminated. It should be noted that, during the probationary period, either party has the right to terminate the probationary agreement or employment contract without prior notice and compensation.
- Salary and other benefits
When working, salary and other benefits such as social insurance, health insurance, allowances, annual leave, and salary increase regime, … are the basic things that employees care about. Therefore, employees must be careful with this clause when negotiating an employment contract.
Salaries are specified in Chapter VI of the 2019 Labor Code. Salary is an amount the employer pays the employee under an agreement to perform the work, including the salary according to the job or title, allowances, and other additional amounts.
The law does not regulate the maximum or the fixed salary for each job, so the employer and employee can freely negotiate based on workload, working ability, working environment, etc. However, the law stipulates the statutory minimum wages that an employee will receive. The statutory minimum wages are the minimum wages of workers who do the most straightforward jobs in normal working conditions that are sufficient to support themselves and their families and appropriate for socio-economic development.
Thus, when signing an employment contract, the employee needs to know how much the minimum wage prescribed by law is, from which there is a basis for considering the regulations on the salary regime in the employment contract. At the same time, it is also necessary to pay attention to the rules on allowances and social insurance, …
- Taking disciplinary measures at work
Under Article 124 of the 2019 Labor Code, there are four disciplinary measures: reprimand, deferment of a pay rise for up to 6 months, demotion, and dismissal. However, enterprises often set out other measures of labor discipline, for example, penalties to reduce/deduct wages, sending to do other jobs, etc. Penalties to mitigate/remove and salaries are among the most common forms employers use. It is elementary to see that the regulation going to work late will penalize salary reduction/deduction, or if we do not do a good job, we will be punished for salary reduction/deduction, etc. However, the employer is doing it wrong since this is not legally prescribed as a labor discipline.
In addition to applying the form of disciplinary action not specified in the Labor Code, when the employer applies the form of dismissal – specified in the Labor Code, the employer still often violates the discipline prescribed in Clause 1 of Article 122 of the Labor Code such as: There is no participation of the representative organization of employees at the establishment of which the employee being disciplined is a member; The employee is not present and has no right to defend himself, ask a lawyer or a representative organization of the employee to defend; in case the person is under 15 years old, the legal representative must be present; The handling of labor discipline is not recorded in the minutes.
Therefore, employees need to pay special attention to the regulations on labor discipline in the labor contract as well as the labor rules and regulations of the company where the employee intends to work.
- Termination of employment contract
Unilateral termination of employment contracts is a matter of frequent disputes. Employees need to understand the regulations on unilateral termination of the employment contract.
The cases in which the employee and the employer are entitled to terminate the employment contract unilaterally are specified in Article 35 and Article 36.1 of the 2019 Labor Code. Apart from Clause 1 Article 36, the employer must not unilaterally terminate the employment contract with the employee, especially in the cases specified in Article 37 of the 2019 Labor Code. In exceptional circumstances, the employer may unilaterally terminate the employment contract such to changes in structure and technology, economic reasons (Article 42 of the 2019 Labor Code); fulfilling complete entire whole division, partisan division, consolidation, the merger of the enterprise, sale, lease, conversion of the enterprise, transfer of the right to ownership or right to employment of assets of the enterprise or cooperative (Article 43 of the 2019 Labor Code).
In the case of unilateral termination of the employment contract specified in Articles 35 and Article 36.1 of the 2019 Labor Code, both the employee and the employer are obliged to notice in advance at a reasonable time. The law does not prescribe a specific time; the determination of a reasonable time depends on the nature of the work, working position, and subjective and objective factors that employees and employers encounter. In the cases specified in Articles 42 and 43 of the 2019 Labor Code, the employer must develop and implement a utilization plan and consult with the employees’ representative organization.
In general, the issues that employees need to pay attention to when signing an employment contract are the probationary period, salary, other social welfare regimes, labor discipline, and regulations on unilateral termination of the employment contract. Hopefully, this article can help you negotiate, sign, and implement employment contracts.
Best regards.
TNTP & Associates International Law Firm
