1. What measures have been put in place to protect employees or avoid redundancies during the coronavirus pandemic?

To set the scene, Vietnam's current Labour Code was finalised on 20 November 2019 – a month before COVID-19 started in China – and took effect from 1 January 2021. For this reason, the Labour Code does not contain provisions to address the labour issues which have arisen due to the pandemic.

It is also worth noting that Vietnam's labour regulations tend to favour the rights of employees over their employers. With this pro-employee principle in mind, the Labour Code offers various legal measures and tools to safeguard the legitimate rights and benefits of workers. These measures remained in force during the pandemic. In general, an employer cannot use the pandemic as a justification for mass redundancies without the consent of the staff in question or without reporting to the labour authorities. Below are some of the main strategies that an employer can opt for in cases of mass redundancies:

  • Temporary contract suspension

An employer can consider temporarily suspending the labour contracts and postponing the salaries of their employees during this period of suspension. However, this requires the consent of the workers concerned before the measure can be applied.

  • Work suspension due to a dangerous epidemic

The Labour Code allows an employer to require their employee to stop working due to some special, specific reasons. These include natural disasters, fire, dangerous epidemics, or an economic depression. The pandemic can be regarded as a dangerous epidemic and, therefore, an employer can invoke this provision. As a result, the employer is entitled to suspend the work of their employee, provided that both sides can agree on the new wage to be paid during the period of suspension. Under the Labour Code, this new salary must meet the following conditions:

  • During the first 14 working days, it must not be lower than the applicable regional minimum wage as stipulated by the Government. For context, in 2021, the applicable regional minimum wage was around USD 135 – USD 195 per month;
  • After the first 14 working days, it is subject to the parties' agreement.
  • Retrenchment

In response to pandemic-induced difficulties, an employer can lay off multiple staff members without their consent on the grounds of changes in organisational structure, technology, or products; an economic depression; or changes in government policies. However, in practice, this measure is neither simple nor straightforward to implement. This is because the Labour Code sets out very strict procedures and requirements for the employer to validate the redundancies. These include:

  • Providing evidence of the existence of the ground and its relationship to the demand for lay-offs;
  • formulating a comprehensive labour-usage plan;
  • consulting employee representatives through a workplace dialogue process;
  • offering the affected staff new positions and, only after this offer has been rejected, including these workers in the to-be-laid-off list of the labour-usage plan; and
  • sending a 30-day advance notice to the provincial People's Committee and affected employees.
  • Unilateral termination

An employer has the right to unilaterally terminate a labour contract with an employee due to the pandemic or other force majeure events following a change in government policies to prevent the spread of COVID-19. However, this measure cannot be applied to certain kinds of workers. Exceptions include staff receiving medical treatment or those on maternity leave.

Like retrenchment, to be able to exercise the right of unilateral termination, it must be shown that:

  • the employer has taken all necessary measures to mitigate the negative impacts of the pandemic or other force majeure events to their business, which ultimately turned out to be unsuccessful; and
  • lay-offs or a reduction in the workforce is the only option for the employer to save their business.

Furthermore, advance notice to the affected worker is required.

In short, employers have to meet a wide range of conditions to reduce their workforce in compliance with the law. To strengthen the rules set out in the Labour Code during the pandemic, the labour authorities of Vietnam also issued various official letters to guide employers. These included Official Letter No. 1064/LDTBXHQHLDTL dated 25 March 2020. Issued during the first wave outbreak, which began on 23 January 2020, it guided the payment of wages and benefits for employees during work suspension due to COVID-19. Meanwhile, Official Letter No. 2844/LDTBXHPC dated 25 August 2021, issued during the fourth wave outbreak, addressed certain concerns around the implementation of labour policies.

Further to the above regulations, which remain in place to protect workers against dismissal or mass redundancies, the Government has also issued new policies to provide financial support to both companies and their staff. For example, according to Resolution No. 116/NQ-CP of the Government dated 24 September 2021 and Decision No. 28/2021/QD-TTg of the Prime Minister dated 1 October 2021:

  • any employee (excluding those working in government agencies) participating in Unemployment Insurance as of 30 September 2021 will be granted a financial package from VND 1.8 million (around USD 80) to VND 3.3 million (around USD 150) subject to the duration of his or her Unemployment Insurance contribution without Unemployment Allowance payment;
  • any employer (excluding government agencies) that participated in Unemployment Insurance before 1 October 2021 will not have to contribute to the Unemployment Insurance Fund from 1 October 2021 to 30 September 2022.

2. Following the covid-19 pandemic, have new employee rights or protections been introduced in respect of flexible or remote working arrangements?

No new regulations have been issued to validate remote working arrangements. However, from time to time during the pandemic, the Government did issue some policies which encouraged companies to adopt 'hybrid' working. For instance, these included reducing the number of staff in offices or factories to one-third or half of the usual workforce to enable social distancing in the workplace.

3. Does an employer need a reason in order to lawfully terminate an employment relationship? If so, state what reasons are lawful in your jurisdiction?

According to the Labour Code, a cause is mandatory to constitute a lawful labour termination. Below are the reasons set out in the Labour Code:

  • The labour contract expires or the work set out therein is completed;
  • The employee is imprisoned, dies, is expelled, etc.;
  • A mutual labour termination agreement with the employee is concluded;
  • The employer terminates its operation or does not have a legal representative or a legally authorised representative;
  • The employee is disciplined in the form of a dismissal;
  • The employee unilaterally terminates their labour contract;
  • The employer unilaterally terminates the labour contract with the staff member based on objective reasons or due to a fault on the part of the worker, i.e.:
    • The employee repeatedly fails to meet KPIs as set out in their labour contract or the employer's performance review policy/performance improvement plan ("PIP") (the PIP must go through a consultation with employee representatives through a workplace dialogue process before it is issued);
    • The employee becomes ill and remains unable to work after receiving treatment for 12 consecutive months (in the case of an indefinite-term labour contract), or six consecutive months (for a definite-term contract of between 12 and 36 months), or more than half the duration of the contract in the case of a definite-term contract of fewer than 12 months;
    • The employer is forced to reduce their operations after unsuccessfully trying all measures to recover from a natural disaster, fire, dangerous epidemic, hostility, relocation or downsizing as requested by a competent authority;
    • The employee fails to attend the workplace after the period of a labour contract suspension has expired;
    • The employee has reached the retirement age, unless otherwise agreed;
    • The employee arbitrarily leaves their job without a satisfactory explanation for a period of at least five consecutive working days; and
    • The employee provided untruthful statutory information when entering into a labour contract and this fact adversely affected their recruitment;
    • The employer retrenches or is under a change of control;
    • The foreign employee's work permit expires.

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Originally Published by Legal 500

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