thong dao+thu le trinh

RELATED ARTICLES

Notes for developing and applying the evaluation regulation of employees’ duty fulfillment under labor code 2019 (Part 2)

Part 2: notes for developing, promulgating and applying the evaluation regulation of employees’ duty fulfillment

Some factors to note and consider when developing the regulation for evaluating employees’ fulfillment of duties:

According to the regulations of the Labor Code 2019 and guiding documents, the regulation for evaluating employees’ fulfillment of duties has no specified and mandatory provision in terms of form as well as the necessary primary contents. This is an obstacle but also an advantage for employers when they can build these criteria according to their intention and management desire. However, in order for the regulation for evaluating employees’ fulfillment of duties to be approved by the competent authority, easy and practical, employers need to pay attention and consider the following factors, which are proposed and drawn from practical experience in the process of developing and promulgating in writing: 

1. First, any document containing contents that violate the law’s prohibition will not be recognized by the competent authority, unenforceable, or canceled by the competent authority if a dispute arises even if the document is issued under the correct procedure. Therefore, the preconditions for the regulation for evaluating employees’ fulfillment of duties to be fully effective is that it does not contain any content that violates the prohibition of the law or is restricted by the law or even doesn’t have content that is not permitted by law and not regulated when not fully satisfying statutory conditions.

2. In addition, as “the law” directly regulates the behavior, activities, the process of performing work of the employee and a legal management tool of the employer towards the employee, the Labor Regulations and the Collective Bargaining Agreement (if any) will first prevail to adjust incurred labor-related issues. Therefore, to meet legal regulations, the regulation for evaluating employees’ fulfillment of duties must also be appropriate, consistent and can supplement the provisions of the Labor Regulations, the Collective Bargaining Agreement (if any). Developing appropriate internal employee management documents, consistent and have no conflicting terms and with other regulations issued before by the employer as well as following the business development plan/orientation of the employer is also an important issue to be considered.

3. Also, as mentioned, the regulation for evaluating employees’ fulfillment of duties is not bound in terms of form and content. This is considered an advantage that is “rarely” given to employers in the labor law. Therefore, employers should take advantage of this to develop criteria for evaluating employees with the most appropriate measures with the peculiarity and distinctive characteristics in the business field and the culture of their enterprises.

4. For a group of jobs with quantifiable characteristics such as selling, production activities, taking care of customers, the employer should concretize the criteria for assessing the level of work completion of the employee in specific numbers and proportions for each position and title held by the employee. However, the above method will cause more difficulties for employers when evaluating employees doing jobs with qualitative characteristics such as tourism, accounting, legal, design, art, service, etc… At that time, the employer should consider job performance, processing time, workload or creativity, customer feedback/evaluation for employees, etc… to develop accurate evaluation criteria. These evaluation criteria should be summarized in the process of the actual operation of the enterprise to reflect the level of work completion of the employees most accurately.

5. “The frequency of not fulfilling duties” is a factor that needs to be focused on and clarified in the regulation for evaluating employees’ fulfillment of duties. If the employee is not achieved, fulfill duties, and how often and how long will be regarded as repeatedly fails to perform the job are issues that need clarifying. If these issues are unclear and not specific, the regulation will be difficult to apply or disputes with employees in real situations. Employers are recommended that identifying employees who regularly fail to complete work to take any action should only be considered if the employee fails to meet the work standard, at least for the second time or more within a reasonable limit period.

6. For each position, a different job title should have its criteria and level of evaluation instead of “same criteria” to create objectivity. In addition, in the process of developing these criteria, the employer should collect and consult opinions and suggestions of the employees, the manager and representative organizations of employees (including the internal trade unions or a representative organization of employees at the enterprise) to have an objective, multi-dimensional assessment and reach the consensus of the employees in the process of application and implementation.

7. For the regulation for evaluating employees’ fulfillment of duties to optimize the functions, employers need to classify the groups and levels of behavior corresponding to certain forms of labor discipline prescribed in the legally registered Labor Regulations. In this case, the Labor Regulations must mention and refer to the regulation for evaluating employees’ fulfillment of duties as an integral and indispensable part of the Labor Regulations.

8. For your further information, other factors that employers should also pay attention to improve these criteria such as refer to more criteria for evaluating employees in the equivalent labor market to create consistent, harmonious in its assessment criteria; it is advisable to clearly define the work completion levels associated with the corresponding form of reward and discipline for easy monitoring and implementation; factors of working attitude, discipline compliance, creativity and relationship with superiors and colleagues can also be considered as an assessment criterion.

Developing and completing the regulation for evaluating employees’ fulfillment of duties thoroughly, appropriately and receiving the consent of the employees will create many values for the employer, including (i) it will be a tool for the employer to assess and determine the employee’s capacity on a factual basis when necessary, without affecting the general psychology of other employees and the employer’s business activities; (ii) motivate employees to work effectively so as not to be screened or be recognized and rewarded; (iii) protect and minimize the risk of legal consequences in disputes, complaints and lawsuits of employees.

See more: Notes for developing and applying the evaluation regulation of employees’ duty fulfillment under labor code 2019 (Part 1).

Some notes when promulgating and applying the regulation for evaluating employees’ fulfillment of duties:

To apply the right to unilaterally terminate the labor contract because the employee repeatedly fails to complete the work, in addition to developing a clear and specific regulation for evaluating employees’ fulfillment of duties, the employer also has to promulgate and publicly apply these criteria according to specific procedures. One of the procedures that the employer must perform is to consult internal representative organizations of employees for the draft of assessment regulation of the fulfillment of duties before promulgating it for application. The consultation procedure with internal representative organizations of employees is carried out through dialogue at the workplace. Participants in the dialogue at the workplace will include representatives of the employer, employees or employees representative organizations. Usually, internal representative organizations of employees participating in the dialogue are internal labour unions. If the enterprise has not yet established internal trade unions, the immediate superior labour unions (also known as the district labor confederation) will act as a substitute.

To start the dialogue phase, the employer is responsible for sending a written proposal and the draft of assessment regulation of the fulfillment of duties to the representative organization of the employee for consultation. At that time, the representative organization of employees will hold dialogue under the law to collect opinions of the employees on the draft and aggregate it in writing to send to the employer. Based on these aggregated opinions, the employer and employee will discuss, exchange and unify contents. However, for companies that have not yet established internal labour unions, the employer will usually collect opinions or record confirmations from the employee directly to propose the immediate superior trade union to consider and approve the criteria draft to assess the fulfillment of duties.

After receiving the employee’s consent and the approval of the representative organization of the employee, the employer will promulgate complete the regulation for evaluating employees’ fulfillment of duties. At the same time, the regulation for assessing employees’ fulfillment of duties is notified to each department in the company for public and uniform application.

The conclusion:

Although the Labor Code 2019 has taken effect to replace the 2012 Labor Code and amended and supplemented with many regulations to protect better the interests of the employer, in which the legalization of “the regulation for evaluating of employees’ fulfillment of duties” to clarify the employer’s right to unilaterally terminate the labor contract when the employee repeatedly fails to perform the work the labor contract is an important change. However, the labor law in general and the judicial practice in Vietnam, in particular, are still developed and applied in the spirit of protecting the weaker party in labor relations – the employee. Therefore, we recommend that in all actions and decisions related to the development and application of these criteria in the management and administration or termination of the labor relationship, the employer should consider carefully, be cautious and ensure to fully meet conditions prescribed by the law and strictly comply with procedures for implementation. In case of necessity, the employer should consult a lawyer before proceeding to minimize the damage incurred.

 

Read more...

Notes for developing and applying the evaluation regulation of employees’ duty fulfillment under labor code 2019 (Part 1)

Part 1: The overview of The regulation for evaluating of employees’ fulfillment of duties

Stemming from severe legal consequences of unilateral terminations of the labor contract, regulations on the right of employees and employers to unilaterally terminate the labor contract have always been focused on by the State. Inheriting and promoting the provisions of the Labor Code 2012, the Labor Code 2019 has many amendments, supplements, updates and adjustments to these rights. In particular, the employer’s right to unilaterally terminate the labor contract is given more attention and protection to balance the employee’s interests, especially in the case that the employee repeatedly fails to perform their work according to the signed labor contract.

The overview of The regulation for evaluating employees’ fulfillment of duties:

The unilateral termination of the labor contract for the employee who repeatedly fails to perform the work according to the labor contract is determined based on assessment through specific criteria of employees’ fulfillment of duties established by the employer. However, employers still have many difficulties and obstacles in developing, promulgating and these criteria because they have not been disseminated and have no specific guidance. Therefore, this article will provide employers with an overview of the criteria for assessing the fulfillment of duties and some notes when effectively developing, promulgating and applying these criteria to ensure their legitimate rights of the employer and meet the regulations of laws.

The evaluation of how the employee’s work is considered complete or incomplete; or done at a normal or excellent level; or failure to complete at the normal or regular level under normal working conditions in the workplace is complex and difficult for employers and other workers managers. Moreover, in the context of the current global situation of the Covid -19 epidemic, changing the working method from directly at the workplace, the production, business location to working form with more flexibility such as online at home, rotation, remote management, it becomes even more challenging to assess work completion. At that time, what solution to control, manage, and adequately evaluate employees’ capacity and work performance to take appropriate action and handling plans is a big question being asked for employers. And the reasonable, objective and accurate criteria for assessing the fulfillment of duties will solve the above problem. 

In principle, the promulgation of the criteria for assessing the fulfillment of duties is not mandatory for employers. However, if the employer needs to unilaterally terminate the labor contract with the employee who repeatedly fails to complete the work, these criteria are mandatory. Not stopping at the above function, the regulation for evaluating of employees’ fulfillment of duties is also a valuable and effective tool of the employer in professionally managing, assessing and recognizing the capacity of the employee, thereby having the appropriate personnel policies to promote and retain potential employees and employees have exemplary achievements at work. At the same time, these criteria can also be considered the clearest reference table so that each employee can monitor and evaluate their work capacity against the target set by the employer, thereby making appropriate adjustments in the working process.

However, the current situation is that only a few employers pay attention, invest, and research to develop the criteria for assessing the fulfillment of duties comprehensively. Almost, the criteria for assessing the fulfillment of responsibilities are not clear and are only sporadically regulated in various notices and documents by the employer; or just “implicit” evaluation criteria among employees’ managers. In this case, the employer encounters the problem when there are employees who often work inefficiently, fail to meet the employer’s sales and work quality targets, and are assessed as no longer suitable to the employer’s needs. Still, the employer does not have clear and robust evidence and criteria to make assessments and conclusions about the employee’s job completion according to the signed labor contract. In addition, the employer also has no basis for deciding on appropriate forms of labor discipline or applying more severe measures than unilaterally terminating the labor contract. Therefore, usually, most employers often ask legal consultants with the desire to get the optimal solution for terminating labor contracts with these employees when they have fallen into a situation where there is no basis or the basis not strong enough, original or potentially risky of facing legal consequences due to illegal unilateral termination of labor contracts.

Thus, It can be seen that it is necessary to develop the criteria for assessment of the fulfillment and these criteria play an essential role, deciding whether the employer can apply or not the right to unilaterally terminate the labor contract because the employee does not complete the work according to the labor contract. Especially in the context of the current changing, volatile and difficult-to-control working environment, terminating the labor relationship with employees who cannot work, are not enthusiastic about the business is the solution optimized for cost and personnel. In addition, the proper recognition of the roles and functions of the regulation for evaluating of employees’ fulfillment of duties will give employers appropriate orientations and actions to build a complete employee management system.

See more: Notes for developing and applying the evaluation regulation of employees’ duty fulfillment under labor code 2019 (Part 2).

Read more...

Overview Of Penalties For Breach Of Contract (part 2)

P.2 – The amount of a contractual penalty and how to determine it in reality

Abstract. As mentioned in the previous article in the series of articles on the Agreement on Penalties for breach of contract, the contractual breach is one of the commonest remedies for loss and damages as well as a measure to secure the performance of contractual obligations of the parties. As such, the contractual penalties should be under the parties’ care as drafting the agreement on penalties for contractual breach to ensure the most effective imposition of the contractual penalties. However, the prevailing regulations of laws of Vietnam prescribe differently from each other on this matter, causing distinct interpretations when it comes to applying these regulations to reality.

See more_Overview Of Penalties For Breach Of Contract (part 1)

Within the scope of this Agreement on Contractual Penalty article series, the author will demonstrate the legal provisions as well as the practice of contractual penalty in reality and the inclination reflected from judicial opinions of competent tribunals in Vietnam on this matter.

1. The amount of a contractual penalty under the laws of Vietnam

The amount of a contractual penalty is one of the most important contents of the Agreement on penalty for breach of contract. At present, the amount of a contractual penalty is provided in three different regulations of laws, namely, Civil Code, Commercial Law, and the Law on Construction. In essence, all these regulations of laws agree that the contractual penalty is a result of an agreement and the parties reserve the right to negotiate the amount of contractual penalty to impose upon their transaction.

a. Civil Code 2015

Civil Code 2015 (“Civil Code”) is deemed a general law and can govern any type of transactions between individuals and legal entities, including commercial contracts, construction contracts, and other civil transactions. In general, any type of transactions under the jurisdiction of the laws of Vietnam shall be governed by Civil Code.

Regarding the maximum amount of a contractual penalty, formerly Civil Code 1995 provides that the maximum amount of a contractual penalty shall not exceed 5% of the value of the violated obligation. However, from Civil Code 2015 onwards, the parties to a transaction have the freedom to determine the amount of a contractual penalty without any limitation thereto. Civil Code 2015 remains the spirit of respect for the right to make commitments and agreements of the parties on the basis of freedom, provided that such commitments and agreements do not violate a prohibition by law or are not contrary to social morals. Accordingly, the prevailing Civil Code permits the parties to a transaction to negotiate with each other on an amount of a contractual penalty, unless otherwise provided by relevant law. The phrase “unless other provided by relevant law” is an update of Civil Code 2015 compared to its edition 2005. This supplementation is reasonable as the amount of a contractual penalty is also provided in other specialized regulations of laws, such as the Commercial Law and the Law on Construction.

As the prevailing Civil Code does not govern the maximum amount of a contractual penalty but permits parties to negotiate on the basis of free, this lack of regulations causes certain difficulties in the application and handling in reality. As a result, the freedom to negotiate can lead to a manifestly huge amount of the contractual penalty compared to the actual value of the violated obligation. In fact, there have been many similar cases where one party, usually the disadvantaged party to a transaction, commits a breach of contract without any loss or damage but still is suffered a contractual penalty at the amount that is many times as higher as the value of the contract or the value of the violated obligation. Currently, the Civil Code of Vietnam does not propose any specific mechanism to handle cases where an amount of a contractual penalty is too high or too low in a sense of the ridiculous compared to the actual value of the violated obligation. Taking the Civil Code of French 1804 amended by the Ordinance No. 2016-131 as a reference, the parties can agree on the amount of a contractual penalty on a basis of freedom; however, the judge may moderate or increase the agreed penalty if such penalty is manifestly excessive or derisory.

Notwithstanding the above facts, we may resort to several regulations of the Civil Code to modify the amount of a contractual penalty that is too high compared to the value of the violated obligations. Specifically, one of the basic principles of civil law is that “Individuals and legal entities must establish, perform and terminate their civil rights and obligations with good will and honesty. The imposition of an amount of a contractual penalty that is manifestly and unreasonably higher than the value of the violated obligation clearly demonstrates a lack of goodwill to the civil transaction. Moreover, another basis principle is that “all commitments or agreements shall not violate a prohibition by law or is not contrary to social morals”. Where one party with higher status to the transaction imposes an unreasonably huge amount of a contractual penalty, this imposition may be deemed contrary to social morals. In conclusion, although the Civil Code of Vietnam does not put a limitation on the amount of a contractual penalty, the parties can cite and apply the basic principles of civil law to modify the agreed amount of a contractual penalty that is manifestly and unreasonably higher than the value of the violated obligation or the value of the contract.

b. Commercial Law 2005

Commercial Law 2005 (“Commercial Law”) has a narrow scope of application and shall only be applied to commercial relations and activities. In contrast to the Civil Code, the Commercial Law provides that the maximum amount of a contractual penalty to commercial contracts shall not exceed 8% of the value of the violated obligation.

Accordingly, the Commercial Law has put a limitation on the amount of a contractual penalty that the parties are permitted to agree to impose. However, the Commercial Law does not provide any guidance on how to determine the value of the violated obligation. In reality, there are many violated obligations that are very hard to or even impossible to determine or estimate by money. Therefore, the lack of regulations on such matter can cause inconsistency or disagreement between the parties on the value of the violated obligation and pose significant challenges to the jurisdiction due to the lack of grounds for the determination of the value of the violated obligation.

c. Law on Construction 2014

Similar to the Commercial Law, the Law on Construction 2014 (“Construction Law”) is a specialized statutory text and has a narrower scope of application compared to the Civil Code. With respect to the maximum amount of a contractual penalty, Article 146.2 of the Construction Law provides that the amount of a contractual penalty shall not exceed 12% of the value of the violated obligation. However, the said maximum amount shall only be applied to construction works using the state budget.

Not only does the Construction Law omit the determination of the value of the violated obligation, it also does not provide any guidance on the maximum amount of a contractual penalty applicable to commercial construction work not using the state budget. Consequently, where both parties to a transaction are commercial legal entities, it is unclear whether to apply the Civil Code or the Commercial Law to govern the amount of a contractual penalty. 

In conclusion, the maximum amount of a contractual penalty are substantially different between the Civil Code, the Construction Law and the Commercial Law. Although the Construction Law and the Commercial Law are to govern unique relations and prioritized to be applied when it comes to such relations rather than the Civil Code, the lack of regulations and guidance on the determination of the value of the violated obligation causes various difficulties for the parties to agree on impose an amount of a contractual penalty and poses a considerable challenge to the jurisdiction in determining the maximum amount.

2. Determining the amount of a contractual penalty according to the value of the violated obligation under the contract

At the present, the laws have not provided yet any regulation or guidance on determining the value of the violated obligation as well as handling the exceeding amount of the contractual penalty. Therefore, the determination of the value of the violated obligation shall belong to the scope of work of the parties, lawyers as well as jurisdiction. In fact, there are obligations that can easily be determined into money. For example, in the event of sales contracts, where the seller commits a breach of contract by being late in delivery on time as agreed, the determination of the value of the violated obligation can be determined based on the value of the goods being delivered late, thereby determining the maximum amount of a contractual penalty for such breach.

However, there are cases where the value of the violated obligations cannot be determined. Specifically, the obligations that cannot be determined into money are usually not the main obligations of the contract and relate to human labor, such as the obligation to promote and advertise under the hotel management service agreement. Therefore, the failure to determine the value of the violated obligation can cause the lack of basis for the jurisdiction to accept the amount of the contractual penalty being presented by the aggrieved party.

Therefore, the parties can agree on the value of each obligation under the agreement to ensure the basis for the contractual penalty without wasting time and effort to prove the value of the violated obligations to the jurisdiction.

Regarding the handling of the amount of the contractual penalty that exceeds the maximum limit by law, in principle, the lack of regulations can lead to 02 ways of interpretation and resolution as follows: (1) nullifying all the contents of the agreement on contractual penalty due to the violation of the permitted maximum amount of the contractual penalty; and (2) similar to the handling by the Civil Code of the exceeding interest rate, which is only nullifying the exceeding amount and accepting the maximum amount of a contractual penalty of exactly 8% of the value of the violated obligations in terms of the Commercial Law and 12% in terms of the Construction Law. In reality, the jurisdiction tends to embrace the second one when it comes to contractual penalties exceeding the maximum limit by law. In my perspective, this way of handling is completely reasonable and consistent with the general spirit of civil laws. This is also an updated point of the Civil Code 2015 compared to its former versions on how to handle the amount of the contractual penalty exceeding the maximum limit by law. This approach not only ensures the right and interests of the entitled party but also breathes an air of equality and fairness into civil transactions.

In conclusion, apart from the conditions applicable to the agreement on penalties for breach of contract as mentioned in the previous article, the amount of a contractual penalty shall be a noteworthy matter for the parties to a contract. The parties need to determine correctly the governing law for their relations and are well aware of the limitation on the amount of a contractual penalty mentioned hereof. Moreover, the parties should take into consideration cases of the conflict of laws between the regulations of laws mentioned in this article, especially for the sector of commercial construction works not using the state budget. 

Read more...

Notes to ensure the validity of the authorization for others to exercise the rights of the capital contributor member

In the business operation and management of enterprises, it is prevalent for an organization, individual (the authorization) to authorize another individual (the authorized) to execute one or several duties (scope of the authorization) such as signing commercial agreements or participating in a meeting,… Nevertheless, it is an essential matter in some exceptional cases, most distinctly the authorization for others to exercise the rights of a capital contributor member. Besides, the capital contributor’s obligations must comply with and execute, for example, completing their contribution of capital within 90 days from the day being issued with the Enterprise Registration Certificate, the right(s) of them can affect the development of the enterprise itself and directly affect the benefits and interests. Therefore, apart from selecting a suitable and trustworthy person, they should consider certain matters to ensure the validity of the authorization for another person to exercise the rights of capital contribution. This article will mention some fundamental issues to secure the power of attorneys is valid.

1. The content of powers of attorney

According to the general principle, a capital contributor member, when authorizing an authorized representative will still have to take responsibility towards a third party for the duties resulting from the rights and obligations exercised by the authorized representative. However, a power of attorney should still stipulate the scope of authorization to clarify the tasks authorized representatives are obligated to execute and take responsibility for towards the principal. Simultaneously, if the authorized representative engages in activities beyond their capacities, the scope of the authorization will be the basis for determining the responsibilities according to Article 143 of the Civil Code 2015. It should be noted that none of the restrictions that the capital contributor member places upon their authorization regarding the execution of their rights and obligations in the Members Council shall be effective to a third party.

Powers of attorney appointing an authorized representative must be notified to the company and take effect only from the date the company receives the document. According to Clause 4, Article 14 of the Enterprise Law 2020, the document appointing an authorized representative must include the following principal contents:

  1. Name, enterprise identification number, head office address of the the capital contributor member;
  2. Number of the authorized representative and the respective ratio of capital owned by each the authorized representative;
  3. Surname, first name, contact address, nationality, the ID number of each individual the authorized representative;
  4. Term of authorization corresponding to each authorized representative; in which the starting date of representation shall be specified;
  5. Surnames, first names, signatures of the legal representative of the the capital contributor member and the authorized representative.

Therefore, if a power of attorney does not fully represent the statutory contents or can be expressed but the content is incomplete, is that power of attorney valid? From the author’s perspective, the Law on Enterprises does not provide a clear solution when a power of attorney lacks one of the prescribed contents or the information on such contents is ambiguous or insufficient. Before coming to conclusions, it is necessary to consider and evaluate each case. For instance, an organization has the right to appoint many authorized representatives to attend meetings of the Members Council. Although the powers of attorney do not specify the percentage of capital contribution for each authorized representative, they can be deemed not contrary to law provisions, not affecting the authorized representative’s rights because they own the same amount of capital contribution.

2. Form of powers of attorney

The next question is whether powers of attorney need to be notarized or not. With respect to this, when a member of an organization or an individual drafts a power of attorney for others to exercise their rights in the enterprise, the Law on Enterprises 2020 and guidance documents thereof don’t state that such power of attorney needs to be notarized. Therefore, the demand that a power of attorney has to be notarized in order to be valid depends on the provisions of the enterprise’s charter. In case the enterprise’s charter also does not mention this, it can be understood that the notarization of such power of attorney is not compulsory. However, in reality, the lack of notarization of powers of attorney of individuals usually leads to disputes concerning the documents’ validity…

Similarly, provisions on consular legalization regarding powers of attorney of company members who are foreign investors are not explicit. Therefore, if there is no provision in the charter, disputes relating to the form of these powers of attorney are very likely to arise. Furthermore, powers of attorney are not exempt from consular authentication according to the Law on Consular certification and Authentication. On that ground, depending on the point of view of each court, powers of attorney of foreign individuals/organizations can be accepted or declined. 

From the author’s perspective, companies’ charters should stipulate precisely the form of powers of attorney to ensure the validity of powers of attorney and avoid risks of disputes concerning the validity of powers of attorney. In case the charter does not provide for this, powers of attorney should be notarized and authenticated by consuls to avoid potential disputes regarding the validity of powers of attorney.

In conclusion, enterprises in general and capital contributor members, in particular, should consider powers of attorney when authorizing. By understanding the law,  they can foresee and prevent potential risks from happening, avoiding engaging in unfeasible “transactions” and wasting time handling the consequences, affecting third parties if that transaction involves other organizations/individuals, the worst case of which is doing harm and damaging the enterprise. Therefore, it is always helpful and necessary to be well-prepared from the very first stages.

Read more...