Our offering includes a range of innovative tools and services to help meet clients’ needs on HR-related matters. For today’s employers, managing a global workforce requires complying with local labor and employment laws, staying abreast of rapidly changing regulations, handling the growing demands of labor unions and works councils, and moving talent quickly across borders. It also means developing strategies to retain high-potential employees, especially during reorganizations and spinoffs. To achieve these objectives, it’s essential for employers to stay up-to-date on the latest employment trends in areas such as workforce restructuring, reward programs, and labor and human rights.
- Advising generally on the interpretation and application of Vietnam’s labor laws;
- Advising on drafting and involving in the negotiation of labor contracts, collective labor agreements and labor rules;
- Advising on drafting and completing enterprises’ internal procedures and regulations related to management of employees;
- Advising on orders and procedures of disciplining employees and material responsibility;
- Advising on orders and procedures of processing allowances, insurances for employees when labor relationships are terminated;
- Advising and representing clients in labor dispute resolutions, including strikes;
- Advising on conditions, orders and procedures of recruiting and managing foreign workers, drafting application dossiers for work permits required for foreign workers in Vietnam;
- Advising on procedures of immigration, temporary residence, salary, income tax and money transfer to overseas of foreign workers;
- Advising on laws and practices related to bringing Vietnamese workers overseas.
Business activities of enterprises are always dependent on and regulated by relevant laws. For effective operation, enterprises need to well control legal risks arising from their operations. Large enterprises tend to build a legal team with good lawyers to help them apply for permits, provide legal advice and resolve labour disputes during their operation.
However, not all businesses have the financial resources to build their own legal department. For businesses that do not have their own legal team, legal retainer service of separate law firms will be the smart choice.
Understanding this issue, Apolat Legal offers businesses a comprehensive legal consulting service at a reasonable fee. Each business choosing the legal retainer service of Apolat Legal will be supported by a consistent team during the time of using service. By this way, Apolat Legal can clearly understand the clients and help the clients save time and avoid providing duplicated information. In addition, businesses only have to pay a fixed monthly fee to receive helpful advice from Apolat Legal for all day-to-day legal needs of business.
Legal retainer service of Apolat Legal includes but not limited to the followings works:
- Answering, consulting on provisions, and policies of law and giving legal solutions for each specific matter according to the Client’s requirements in multiple practice areas such as investment, construction, real estate, bidding, enterprise administration, banking, security, insurance, commerce, labor, sales and other areas relating to the Client’s business operation (excluding financial and tax advice).
- Examining, reviewing and confirming the legality of documentations which the Client have drafted or implemented in respect of business operation, giving legal advice for such documentations as required by the Client.
- Supporting the Client in preparation of all documentation for contract negotiations or parleys (if requires).
- Supporting the Client in drafting documentations relating to business transactions between the Client and any third party.
- Consulting with the Client about business discussions, negotiations, parleys, claims, disputes or lawsuits with any third party or any competent State agency relating to the Client’s business operation. (Scope of consultancy excludes representing for the Client in implementation of specific matters or of claims at competent State agencies or of litigation procedures at Court or Arbitration).
- Consulting with the Client about general solutions relating to each specific claim, dispute or lawsuit.
- In case any Client’s partner needs our legal support, then, as the Client’s request or that of such partner, we shall consider whether providing our legal services for such partner or not; and if we choose providing, we shall be committed to not causing any damage to the Client or any conflict of rights and legal interests between the Client and such partner.
- Supporting and consulting the Client on drafting the Charter, Internal Working Regulation, regulations relating to enterprise organization, management and administration and other essential documents during Client’s business operation.
By professional services, thoroughness and experiences in various legal fields, Apolat Legal is the trusted partner of all businesses.
Terminating the indefinite-term labour contract with the employee, is there any solution for the employer?admin
When signing the indefinite term labor contract with the employees, employers are supposed to establish a long-term relationship in which the employees have prevailed over the employers to decide whether to continue a relationship or end it. The Labour Code 2019 has better protected the employees in the labour relationship when allowing the employees to terminate the indefinite term labor contract by sending an advance notice at the specific time prior, while this right is not applicable for the employees.
1. Regulations on the indefinite labor contract
An indefinite term labor contract is a contract in which the two parties neither fix the working term nor the time of termination of the agreement’s validity. The Labour Code 2019 allows the parties to terminate the indefinite-term labour contract in the following cases:
- Firstly, the employers and the employees reach a mutual agreement on terminating the contract.
- Secondly, the employee is disciplined in the form of dismissal.
- Thirdly, employers/employees unilaterally terminate the labour contract in accordance with the law.
2. Some solutions can also be referred by the employer when wishing to terminate the indefinite-term labor contract
Before deciding on dismissing/ retrenching/ terminating the labour contract with the employee, the employer should be conscious and ensure that its actions are in accordance with the law. In fact, there are many decisions on dismissing/ retrenching/ terminating with the employee are emotion-based determination, being issued when the boss losing temper and not comply with the lawful regulations. As a result, the employer is used by the employee and has to compensate a vast amount of money, and in addition to this, the employer also has to reinstate the employee. Therefore, when terminating the labour contract with the employee, the employer, depending on specific situation, should take into account the following options:
- The first, the employer should begin with negotiation to terminate the employment contract. This is the preferable method to apply due to its advantages of safest in legal aspects, time-saving. However, since this is an agreement, the parties must reach a mutual agreement for termination. Therefore, the employer must flexibly apply both harsh and soft negotiation measures to persuade the employee to sign the agreement. Besides, employers need to pay to employers an extra amount of money to convince them to sign the termination agreement.
Obviously, this is the safest solution in legal, but its implementation depends on goodwill between the parties, the flexibility and convincing ability of the employer, and the most important thing, how much they agree to pay the employee.
- The second, applying the dismissal discipline. This method has lower cost but more risky to the employer. Since to dismiss an employee, the employer complies with many requirements on procedures as well as the legal basis, which can be mentioned as follows:
(i) The internal labour regulations come into effect and record circumstances of dismissing an employee in accordance with the law. The discipline applied to the employee is complied with this basis;
(ii) The application of the dismissal labour discipline is still in the handling term under the law;
(iii) Comply with regulations, procedures for taking disciplinary measures in accordance with the labour code 2019; such as proving the employee’s violation; notifying the invitation of taking disciplinary actions, the presence of the representative organization of the employee at the grassroots level and taking disciplinary measures labor must be recorded in writing;
(iv) Not included in the cases of not allowed to apply the labour discipline toward the employee, who is under certain conditions such as being on annual leave with the consent of the employer; being on sick leave, being detained or temporarily held in prison; a female employee is pregnant,e.t.c
(v) Must not infringe the health, honor, life, prestige, or dignity of employees and other prohibited behaviors as prescribed in The Labour code 2019;
(vi) Other requirements depending on certain circumstances.
The drawback of this method is most closely adhering to formality conditions. Since the failure in complying with regulations on formality and procedures when processing labour discipline, even it just a small mistake, can become a basis for the employee to file a lawsuit against the employer and request compensation due to wrongly terminate the labour contract. In reality, there are many judgments related to labor disputes, which the employee is judged to win because of the negligence of following the formality requirements of the employer.
- The third, carrying out the method of changing structure, technology or economic reasons. Like applying dismissal, the application for this method needs following closely the regulations of formality, and simultaneously proving that changes of structure, technology, or economic reasons which leads to the fact that the employer is forced to cut down on the labor force after finding all measures but cannot arrange work for the employee.
The application of this method is quite complicated and can cause many risks to employers because it is difficult to prove the changes in restructure, technology, or economic reasons. And, proving the employer has applied all the essential methods is even more challenging. Moreover, there are a lot of other difficulties which the employer must face when collecting opinions of the employee, formulating plans, and informing competent authorities.
Apart from the above measures, the employer can be flexible in simultaneously applying the negotiation measures while in the phrase of starting taking the labor disciplines/changes of structure, etc, and apply other methods to make the employee feel that he is no longer fit the job, thereby gaining the upper hand to reach agreement on the termination of the labour contract.
1. The new regulation on the age of retirement and the health care for female employee
The Government promulgated two Decrees guiding the implementation of some contents of the Labor Code 2019, specifically the Decree No. 135/2020/ND-CP dated November 18th, 2020 regulating the retirement ages and the Decree No. 145/2020/ND-CP dated December 14th, 2020 defining and providing guidance on the implementation of many contents of the Labor Code on working conditions and industrial relations.
1.1 The Decree No. 135/2020/ND-CP dated November 18th, 2020 regulates the retirement ages
1.1.1 The age of retirement
According to the Decree No. 135/2020//ND-CP, from January 01st, 2021, employee working in normal working conditions shall retire from work at the age of 60 and 03 months for male and 55 and 04 months for female. In the following years, the age of retirement of each year shall be increased by 03 months for male until they reach at the age of 62 in 2028 and by 04 months for female until they are 60 years old in 2035. Therefore, comparing with the current regulation, the age of retirement for male shall increase from 60 to 62 by 2028 and from 55 to 60 by 2035 for female.
1.1.2 Retirement before or after reaching the specified age of retirement
Depending on the circumstances, the employees can retire earlier or later than the age of retirement regulated. Specifically, the employees doing heavy lifting or working in hazardous environments can retire sooner, while working in highly-skilled jobs or the private sector can retire later. Generally, the maximum extension will be five years.
1.2 The Decree No. 145/2020/ND-CP dated December 14th, 2020 defines and provides guidance on the implementation of several contents of the Labor Code on working conditions and labour relations, details as follows:
In this Decree, the key points on health care for female employees are the regulations about the break of female employees during menstruation and female employees during the period of nursing a child under 12 months, specifically:
The female employee is entitled during her menstruation to a 30-minute break every day and during the period of nursing a child under 12 months is entitled to a break of 60 minutes every day which shall be included in the number of working hours and shall still receive the same wages as stated in her labour contract. In case a female employee does not want to take a break and employer allows her to work, a female employee is entitled to receive an additional salary for the work performed in the break, in addition to the salary pursuant to her labour contract.
Besides, the Decree No. 145/2020/ND-CP has the new provision on requiring employers who have more than 1000 female employees must install lactation and storing breastmilk rooms in the workplace.
The Decree No. 145/2020/ND-CP will take effect from February 1st, 2020.
2. The Government promulgated the new project on supporting to reduce the electricity price, electricity bills (the second time) for customers using electricity
The above project is approved when the Government promulgated Resolution No. 180/NQ-CP on the new project on supporting to reduce the electricity price, electricity bills (the second time) for customers using electricity on December 17th, 2020 based on proposal of the Industry and Trade Ministry. Specifically, according to the report of the Industry and Trade Ministry sent to the Prime Minister of the Socialist Republic of Viet Nam to propose the project on supporting to reduce the electricity price, electricity cost (the second time):
- The retail price of domestic electricity from level 1 to level 4 shall be reduced by 20%;
- To decrease electricity price from the retail level applied to business by retail price applied to the manufacturing industry for the customer that is tourist accommodation establishments or customer having warehouse during circulation;
- Establishments use for isolating, centralized medical examination for patients with suspected infection, already infected with COVID-19 shall receive a 100% reduction in electricity bill;
- Medical establishments used for examination, testing and treating the suspected and infected patients with COVID-19 are entitled to a 20% discount on their electricity bill; and
- Customers shall be assisted to reduce electricity price, electricity bills for 03 months with invoices in October, November, December 2020.
The Government assigned the Ministry of Industry and Trade to cooperate with the Ministry of Finance and related agency for implementing, ensuring strictness, right subject, and not allowing the policy to be abused for bad purposes.
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For many existing businesses, especially technology companies, “retaining good employees” is one of the most urgent need, even “vital” to the company. Accordingly, many founders of companies have applied the plan to issue bonus shares for their Employees while they do not clearly understand the conditions, performance method or legal risks that may arise for both company and employee when issuing shares to use as bonuses to the employees.
In fact, all the big companies that succeed in issuing ESOP (Employee Stock Ownership Plan) for the employees, that the press often mentions, have one thing in common – those are public joint-stock companies, this is also a prerequisite for applying the method of issuing bonus shares to employees. The act of issuing bonus shares for the employees is a public activity that encourages employees to work hard for the company’s development. Moreover, a public company must meet certain requirements to perform this program. Meanwhile, small and medium enterprises are usually not able to meet these requirements. The offering of bonus shares to employees while failing to meet the legal requirements may make the transaction to be invalidated under Article 117 of the current Civil Code.
In essence, shares of an ordinary joint-stock company can only be divided into two types:
(1) Shares that Existing Shareholders currently own; and/or
(2) New shares are issued to increase charter capital
For ordinary joint-stock companies, there is no direct regulation on issuing bonus shares to employees. Therefore, if the enterprise wants to award the shares to Employees, it must first determine the source of bonus shares for Employees created from which sources, then carry out the corresponding procedures.
For the shares owned by existing shareholders, the donation of shares to the Employees will be implemented by the way that all or some existing shareholders agree to donate a certain amount of shares to the Employer. These shares donated are performed through a civil agreement between Existing Shareholders and Workers. With this method, the obligation to donate shares is an obligation of the existing Shareholders but not the Company. Therefore, the Company will not offer any shares and will not increase its charter capital. In this case, the Shares of Existing Shareholders will be reduced equal to the number of shares donated to Employees.
From the legal aspects, the share donation of existing shareholders to employees is a reasonably safe option for the company because this is only civil transactions between individuals, the constraint of taxes, company’s approval, etc., is not much. However, the method is not always applicable to all companies because the retaining of employees is for the company’s benefit, while the shareholders donating shares must sacrifice their interests (reduced the percentage of equity capital in the company).
In case where the Company awards shares to the Employees from the Company’s capital source, ordinary joint-stock companies can only perform in the form of releasing additionally private offering shares and employees buy such new issued shares following the law of enterprises. This will also lead to the result of increasing the Company’s charter capital. Moreover, the parties must comply with many regulations on taxes and labour-related.
Besides, this method has encountered a lot of issues such as:
- Lack of cash flow to compensate for the increase in the charter capital of the company, which leads to the risk of virtual capital increase. The nature of ESOP can be understood as employees are entitled to buy a certain amount of shares additionally issued by the public company at a preferable price than the market price; or donated a certain amount of stock by the company. The difference between the actual proceeds earned from the Employees and the value of the share offered will be offset from valid revenues by Public companies.
Meanwhile, for ordinary companies, when donating shares to Employees, there is no money source to offset the above difference. In many cases that the Employees are recognized as shareholders and the Companies registers to increase the charter capital, but there is no actual capital contribution. This will lead to the virtual capital increase and the invalid of issuing shares to donate employees.
- Regarding paying employees’ income tax: According to the Personal Income Tax Law, the employees receiving Shares from bonuses, no payment, or lower payments than price value can be determined as having personal income from salaries/ wages. But the Employees must only pay tax when they transfer the donated shares. However, the current share bonus for Employees only applies to a public joint-stock company, so this provision of personal income tax may not apply to the donation of shares of the ordinary joint-stock company.
- Other issues on the conditions of the offering of individual shares and the implementation of registration procedures with business registration offices…
Within the scope of this article, the writer only presents the basic risks that the founders, existing shareholders of the company (joint-stock) need to acknowledge before awarding shares to employees. Depending on the form that the parties wish to fulfill, the concerns to be considered shall change accordingly. Therefore, the founders and existing shareholders should consult lawyers before any implementation of this incentive method.
If you have any questions or require any additional information, please contact Apolat Legal – An International Law Firm in Viet Nam.
This article is for general information only and is not a substitute for legal advice.