WHAT EMPLOYEES NEED TO PAY ATTENTION WHEN SIGNING THE LABOR CONTRACT
From 1 January 2021, the 2019 Labor Code came into effect and replaced several provisions of the 2012 Labor Code. However, the practical application of the new law has revealed certain shortcomings and challenges, and has not completely guaranteed the rights of employees. When signing labor contracts with employers, a lack of understanding or underestimation of unfavorable terms in the contract can limit employees’s rights in the employment relationship. In this article, TNTP will analyze specific legal regulations regarding the points to consider in labor contracts to help employees gain a clear understanding and exercise caution when establishing employment relationship.
1. Probationary period
Article 24 of the 2019 Labor Code provides detailed regulations regarding probationary periods. Accordingly, employers and employees can agree on the terms of probation within the content of the labor contract or the probationary contract.
Note: Probation is not allowed if the employee works under an employment contract with a duration of less than 01 month.
The probationary period for employees is determined by the law in Article 25 of the 2019 Labor Code. The probationary period also depends on the agreement of the parties; however, it is subject to the nature and complexity of the work, and the probationary period is specified as follows:
– Not exceed 180 days for the position of enterprise executive prescribed by the Law on Enterprises, the Law on Management and use of state investment in enterprises;
– Not exceed 60 days for positions that require a junior college degree or above;
– Not exceed 30 days for positions that require a secondary vocational certificate, professional secondary school; positions of or for technicians, and skilled employees;
– Not exceed 06 working days for other jobs.
In cases where employers stipulate a probationary period for employees that exceeds the regulations in Article 25 of the 2019 Labor Code, it will be considered a violation of the law and may result in administrative penalties.
According to the provisions in Article 26 of the 2019 Labor Code, the probationary salary will be agreed upon by the parties, but it must be at least 85% of the standard salary for the position. This is a regulation that employees need to be aware of because, in practice, employers might take advantage of employees’s lack of legal knowledge to pay salaries lower than the standard, which affects the rights of employees.
The 2019 Labor Code also stipulates cases when ending the probationary period in Article 27. According to this, after the probationary period ends, the employer is required to inform the employee of the probationary results. If the employee has achieved positive results, the employer shall keep implementing the concluded employment contract. On the other hand, if the results are not satisfactory, the labor contract or probationary contract will be terminated.
Note: During the probationary period, either party has the right to terminate the concluded probationary contract or labor contract without prior notice and compensation obligation.
To ensure the rights of employees, when signing a labor contract or probationary contract, employees should pay attention to whether there is an agreement on probation, the duration, salary, and the consequences when the probationary period ends, in order to minimize potential unjust losses.
2. Salaries and other benefits
When entering into an employment relationship, salary is always the most important concern for employees, alongside social benefits such as social insurance, health insurance, bonuses, leave, and salary increment policies. Therefore, provisions related to salary and employee rights in the labor contract are crucial and should be carefully considered.
The provisions on salary, bonuses, and salary increments in the 2019 Labor Code are stipulated from Article 90 to Article 140. According to these provisions, the salary in the labor contract is paid based on the agreement between the employee and the employer. The salary level is determined according to the job or job title, along with other allowances and supplements.
The law stipulates that the salary based on the job or job title should not be lower than the minimum wage set by the Government. Therefore, employees need to pay special attention to the minimum wage to avoid the employer proposing a salary that does not comply with regulations, which could affect other financial entitlements of the employee, such as overtime pay, night shift work pay, or severance pay…
3. Labor discipline
Currently, the 2019 Labor Code only specifies 4 forms of labor discipline in Article 124, which include:
(i) Reprimand.
(ii) Deferment of pay rise for up to 6 months.
(iii) Demotion.
(iv) Dismissal.
However, in reality, many employers misapply labor disciplinary actions or apply forms of labor discipline not specified or allowed by labor law, such as:
– Deducting from the salary as a form of punishment: This is not a form of labor discipline. Therefore, if the employer stipulates content related to deducting from the salary in the labor contract or applies this form to employees, it would violate the regulations in Article 127.2 of the 2019 Labor Code.
– Termination: The conditions for applying the disciplinary termination involve the participation of the labor representative organization at the base where the disciplined employee is a member. Additionally, the employee must be present during the labor disciplinary hearing and have the right to defend themselves. Furthermore, the disciplinary process must be documented in minutes. In practice, it is evident that many employers do not fully meet these requirements when applying the termination form to employees, which affects employees’ rights and violates labor laws as per Article 122.1 of the 2019 Labor Code.
Therefore, the provisions on labor discipline, as well as the internal labor regulations and company policies at the place of employment, are also important considerations for employees before signing a labor contract.
4. Terminate labor contract
Based on practical experience and TNTP’s expertise in resolving labor disputes, one of the most common disputes is the unilateral termination of a labor contract. Therefore, to avoid similar disputes, employees need to be aware of the following issues:
1. The right to unilaterally terminate the labor contract of the employee and the employer:
Accordingly, employees have the right to unilaterally terminate a labor contract in cases specified in Article 35 of the 2019 Labor Code. For employers, the right to unilaterally terminate the contract is regulated in Article 36 of the 2019 Labor Code.
Furthermore, if any of the cases specified in Article 37 of the 2019 Labor Code occur, the employer does not have the right to unilaterally terminate the labor contract with the employee.
Note: Article 42 and Article 43 of the 2019 Labor Code provide regulations for specific cases. According to these articles, the employer has the right to unilaterally terminate the labor contract due to changes in organizational structure, technology, or economic reasons; division, separation, merger, amalgamation; sale, lease, changes in the form of business; transfer of ownership or use rights of business assets, or cooperative unions.
2. Procedures for unilateral termination of a labor contract: Unilateral termination of a contract by one party must be notified in advance to the other party when unilaterally terminating the labor contract according to Article 35 and Article 36.1 of the 2019 Labor Code. In the case of specific situations for the termination of labor contracts as specified in Article 42 and Article 43 of the 2019 Labor Code, the employer must implement a labor utilization plan and consult with the labor representative organization at the base.
Above are our legal insights on the issues employees should pay attention to when signing a labor contract. We hope that through this article, TNTP can help you better understand this topic. If you have any questions, please don’t hesitate to contact TNTP for more specific advice.
Best Regards.
TNTP International Law Firm and Associates
+84903503285
