Types of employment contract in Vietnam

In order for employers and employee, especially those who are foreigners working in Vietnam to have a better understanding about the types of employment contract in Vietnam, ALB & Partners Law Firm is pleased to give a brief advice on this subject. Hopefully, it will be useful for all parties involved in the employment relationship, preventing any conflicts and disputes afterwards arising.

1. Definition of employment contract according to the labor laws of Vietnam:

The definition of an employment contract (also labor contract) is defined in Clause 1, Article 13 of the Labor Code 2019 as follows: An employment contract is an agreement between an employee and an employer on a paid job, salary, working conditions, rights and obligations of each party in the labor relations.

Note: To determine whether a contract is considered as an employment contract or not, Vietnamese law is not based on the name but its contents. In case the employer and employee agree to sign a contract in another name but the relevant contents indicate paid work, salary, administration and supervision of one party, then it is still considered an employment contract.

2. Forms of employment contract in Vietnam:

In principle, the Labor Law 2019 allows employment contracts to be entered into in two forms, in writing and electronically whose legal validity is the same.

Specifically, Clause 1, Article 14 of the Labor Code 2019 stipulates that employment contracts must be entered into in writing and made into 02 copies, one of which is kept by the employee, and the other is kept by the employer. In addition, an employment contract can also be electronically entered into in the form of a data message in accordance with the law on electronic transactions with the same value as a written labor contract.

However, the two parties can verbally enter into a labor contract for a term of less than 1 month, except for the cases specified in Clause 2, Article 18, Point a, Clause 1, Article 145, and Clause 1, Article 162 of the Labor Law 2019.

3. Contents of employment contract in Vietnam:

According to Clause 1, Article 21 of the Labor Code 2019, a labor contract must have the following main contents:

The employer’s name, address; full name and position of the person who concludes the contract on the employer’s side;

• Full name, date of birth, gender, residence, identity card number or passport number of the person who concludes the contract on the employee’s side;

• The job and workplace;

• Duration of the employment contract;

• Job or position-based salary, form of salary payment, 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.

4. Classification of employment contract:

Clause 1, Article 20 of the Labor Law 2019 uses the time criteria for classification of labor contracts. Accordingly, a labor contract includes an indefinite term labor contract and a definite term labor contract:

• An indefinite term labor contract is the one in which the two parties do not determine the term and the time of contract termination;

• A definite term labor contract is the one in which the two parties determine the term and the time of contract termination within 36 months from the effective date of the contract.

5. Transformation of employment contract:

In reality, there might be some cases that after a definite term labor contract expires, the employee still continues working. At that time, the employer and employee shall comply with the provisions of Clause 2, Article 20 of the Labor Code 2019 as follows:

• Within 30 days upon expiration of the labor contract, the employer and the employee must sign a new one. During the time when a new labor contract has not been signed, the rights, obligations and interests of both parties shall be performed according to the previously signed contract;
• If after such 30 days as from the expiry of the labor contract, but the two parties do not sign a new one, the signed definite term labor contract becomes an indefinite-term one.
• In case the two parties sign a new labor contract which is a definite term, it is only allowed to sign that type one more time, after that, if the employee continues to work, he/she must sign an indefinite term one, except for the contract for the person hired as a director in a state-owned enterprise and the cases specified in Clause 1, Article 149, Clause 2, Article 151, and Clause 4, Article 177 of the Labor Code 2019.

The foregoing is an overview of types of employment contract in Vietnam. For further information on this subject, feel free to contact ALB & Partners, a professional law firm in Vietnam. With a team of experienced lawyers, we are pleased to assist Clients in any legal issues related to labor laws in Vietnam. Kindly send us your requests via our email address: [email protected]