Guiding the implementation of a number of
articles on labor contract, labor discipline and material responsibility provided in the Government’s Decree No. 05/2015/ND-CP of January 12, 2015, detailing and guiding a number of provisions of
the Labor Code

 _________________________

Pursuant to the Government’s Decree No. 106/2012/ND-CP of December 20, 2012, defining the functions, tasks, powers and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

Pursuant to the Government’s Decree No. 05/2015/ND-CP of January 12, 2015, detailing and guiding a number of provisions of the Labor Code;

At the proposal of the Director of the Labor and Wage Department;

The Minister of Labor, War Invalids and Social Affairs promulgates the Circular guiding the implementation of a number of articles on labor contract, labor discipline and material responsibility provided in the Government’s Decree No. 05/2015/ND-CP of January 12, 2015, detailing and guiding a number of provisions of the Labor Code.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Circular guides the implementation of a number of articles on labor contract, labor discipline and material responsibility provided in the Government’s Decree No. 05/2015/ND-CP of January 12, 2015, detailing and guiding a number of provisions of the Labor Code (below referred to as Decree No. 05/2015/ND-CP).

Article 2. Subjects of application

Employees, employers, organizations representing labor collectives, and other related agencies, organizations and individuals defined in Article 2 of Decree No. 05/2015/ND-CP.

Chapter II

LABOR CONTRACTS

Article 3. Authorization for entry into a labor contract

1. A written authorization for entry into a labor contract, in case the person representing the employer to enter into a labor contract as defined at Point a, b or c, Clause 1, Article 3 of Decree No. 05/2015/ND-CP does not personally enter into the labor contract, made according to Form No. 01 provided in the Appendix to this Circular.

2. Authorization to an employee representing a group of employees provided at Point d, Clause 2, Article 3 of Decree No. 05/2015/ND-CP to enter into a labor contract shall be made in writing. Such written authorization must comprise the following principal contents:

a/ Full name, date of birth, gender, permanent address, occupation, and signature of the authorized employee;

b/ Full name, date of birth, gender, permanent address, occupation, and signature of every employee in the authorizing group of employees;

c/ Content of and time limit for authorization.

Article 4. Wage, other regimes and welfares stated in a labor contract

Wage, wage allowances and other additional payments as agreed upon in a labor contract under Point a, Clause 5, Article 4 of Decree No. 05/2015/ND-CP include:

1. Wage, which is the time-based wage level for a job or title according to the wage scale or table made by the employer under labor law as agreed by the two parties. For an employee enjoying a product- or piecework-based wage, it is the time-based wage level used to determine product unit cost or piecework-based wage.

2. Wage allowances, which are the wage allowances agreed by the two parties, specifically as follows:

a/ Wage allowances used to compensate for poor working conditions, complexity of jobs, low living standards or labor attraction which are neither included nor fully included in the wage level agreed upon in the labor contract;

b/ Wage allowances related to the employee’s process of job performance and results of job performance.

3. Other additional payments, which are the additional payments agreed by the two parties, specifically as follows:

a/ Additional amounts, which can be determined as specific amounts in addition to the wage level agreed upon in the labor contract, and are regularly paid in each period of wage payment;

b/ Additional amounts, which cannot be determined as specific amounts in addition to the wage level agreed upon in the labor contract, and are regularly or irregularly paid in each period of wage payment relating to the employee’s process of job performance and results of job performance.

Other regimes and welfares, including bonus provided in Article 103 of the Labor Code, bonus for initiatives; mid-shift meal payment; allowances  for gasoline, telephone, travel, accommodation, and childcare; allowances for employees whose relatives die or get married, for employees’ birthdays, or for employees facing difficulties caused by labor accidents or occupational diseases; and other supports and allowances, shall be written in a separate item in the labor contract under Clause 11, Article 4 of Decree No. 05/2015/ND-CP.

Article 5. Labor contracts with elderly employees

1. Elderly employees are persons who continue to work after reaching the age prescribed in Article 187 of the Labor Code.

2. When continuing to work after reaching the age prescribed in Article 187 of the Labor Code, the elderly employee and employer shall agree to modify and supplement the labor contract in accordance with the labor law regarding elderly employees.

3. A labor contract with an elderly employee must have the contents provided in Clauses 2 and 3, Article 166, and Clauses 2, 3, and 4, Article 167, of the Labor Code.

Article 6. Agreements on suspension of labor contracts when employees are appointed or assigned to act as representatives of the State’s contributed capital amounts

Suspension of labor contracts when employees are appointed or assigned to act as representatives of the State’s contributed capital amounts under Article 9 of Decree No. 05/2015/ND-CP is prescribed as follows:

1.  Suspension of a labor contract shall be made in writing. Such written suspension must comprise the following principal contents:

a/ Names and addresses of the employer and his/her at-law representative;

b/ Full name, date of birth, gender, residence address, identity card or passport number of the employee;

c/ Information on the suspended labor contract: serial number of, and date of signing, the contract;

d/ Contract suspension duration: time of starting and time of terminating this duration;

dd/ Reasons for contract suspension;

e/ Rights and responsibilities of the parties within and after the contract suspension duration.

 2. If, upon the expiration of the contract suspension duration, an employee is again appointed or assigned by a competent authority to act as a representative of the State’s contributed capital amount, he/she shall notify such to his/her employer in order to agree to continue suspending the labor contract. A written agreement on continued suspension of the labor contract must comprise the principal contents like those of the written suspension of labor contract.

Article 7. Notifying provincial-level state management agencies in charge of labor of restructuring or technological changes and economic reasons

1. Before laying off 2 or more employees under Clause 3, Article 13 of Decree No. 05/2015/ND-CP, an employer shall notify such in writing 30 days in advance to the employees counting from the date of sending a notice to the provincial-level state management agency in charge of labor.

 2. A written notice provided in Clause 1 of this Article must comprise the following principal contents:

a/ Names and addresses of the employer and his/her at-law representative;

b/ Total number of employees and number of laid-off employees;

c/ Reasons for laying off employees, and time the employees quit jobs;

d/ Estimated funds for payment of job loss allowance.

3. The provincial-level state management agency in charge of labor shall receive laid-off employees, and monitor and examine employers in laying off many employees.

Article 8. Severance pay and job loss allowance

1. Wage used as a basis for calculating severance pay or job loss allowance is the average wage paid under the labor contract as provided in Clause 1, Point a, Clause 2, and Point a, Clause 3, Article 4 of this Circular, for 6 consecutive months before the employee quits or loses the job.

2. In case an employee working for his/her employer under consecutive labor contracts under Clause 2, Article 22 of the Labor Code terminates the last labor contract, the working period used for calculating his/her severance pay or job loss allowance is the total period during which he/she has worked for the employer under such contracts. If the employee unilaterally terminates the last labor contract in contravention of law or he/she is disciplined in the form of dismissal, the actual working period under the last labor contract shall not be used for calculating severance pay. Wage used as a basis for calculating severance pay or job loss allowance is the average wage provided in Clause 1 of this Article before the last labor contract is terminated.

Example 1: Ms. Nguyen Thi A works under three consecutive labor contracts in Company B; the first labor contract has a term of 12 months performed from January 1, 2004, through December 31, 2004 (1 year); the second one has a term of 36 months performed from January 1, 2005, through December 31, 2008 (4 years); and the third one is an indefinite-term contract performed from January 1, 2009, through December 31, 2015 (7 years) when she unilaterally terminates the contract in contravention of law. The employer has paid unemployment insurance premiums for her consecutively from January 1, 2009, through December 31, 2015 (7 years). Before terminating the third labor contract, her average wage is VND 4,500,000/month as provided in Clause 1 of this Article.

Because Ms. A unilaterally terminates the third labor contract (the indefinite-term one) in contravention of law, her actual working period under this contract (7 years) shall not be used for calculating severance pay. So, the severance pay for her shall be calculated as follows:

- For the 2 previous labor contracts, the working period used for calculating her severance pay is: 1 year + 4 years = 5 years (from January 1, 2004, through December 31, 2008);

- The severance pay to be given by Company B to Ms. A is: 5 years x VND 4,500,000/month x 1/2 = VND 11,250,000.

3. Wholly state-owned enterprises or enterprises equitized from state enterprises, when terminating labor contracts with employees who used to work in state agencies, organizations, units or enterprises and moved to work for the former prior to January 1, 1995, but had not yet received severance pay, job loss allowance, or, lump-sum allowance before demobilization or demobilization allowance for employees who used to work in  armed forces units, shall give severance pay or job loss allowance for the period during which these employees had worked for the former, and severance pay for the period during which these employees had worked for such state agencies, organizations, units or enterprises as provided in Clause 2, Article 38 of Decree No. 05/2015/ND-CP.

Employees’ period of working in state agencies, organizations, units or enterprises prior to January 1, 1995, includes their actual working period in state budget-salaried state administrative agencies, state non-business units, political organizations, socio-political organizations or armed forces units, and period of working in other state agencies.

4. In case an employee who has actually worked for his/her employer for full 12 months or more loses his/her job, but his/her working period used for calculating job loss allowance is under 18 months, his/her job loss allowance must equal at least 2 months’ wage.

Example 2: Mr. Nguyen Van C works in Company D from September 1, 2007, through December 31, 2015. Because of changes in production technology, Company D cannot arrange any job for Mr. C, so he has to terminate his labor contract. The Company has paid unemployment insurance premiums for him from January 1, 2009, through December 31, 2015 (7 years). Before losing the job, his average wage is VND 4,500,000/month as provided in Clause 1 of this Article. So, the job loss allowance for Mr. C shall be calculated as follows:

- The working period used for calculating job loss allowance is: 8 years and 4 months - 7 years = 1 year and 4 months (16 months).

- The job loss allowance equaling at least 2 months’ wage to be paid by Company D to Mr. C is: VND 4,500,000/month x 2 = VND 9,000,000.

5. In case an employee terminates his labor contract after his/her enterprise or cooperative is merged, consolidated, split or separated, the employer shall give severance pay or job loss allowance for the period during which the employee has worked for the former and the period during which the employee has worked prior to the merger, consolidation, splitting or separation of the enterprise or cooperative.

Example 3: Mr. Nguyen Thanh H had worked for Company P since June 1, 2002. In 2006, Company P was merged with Company Q into Company PQ and has officially operated since October 1, 2006. Mr. H continued to work in Company PQ through December 31, 2015, and then he has to quit the job because of the company’s organizational restructuring. His employer had paid unemployment insurance premiums for him from January 1, 2009, through December 31, 2015 (7 years). Before losing the job in Company PQ, his average wage is VND 5,400,000/month as provided in Clause 1 of this Article. So, the job loss allowance for Mr. H shall be calculated as follows:

- The actual working period of Mr. H is 4 years and 4 months in Company P, and 9 years and 3 months in Company PQ. The total actual working period is 13 years and 7 months;

- The working period used for calculating job loss allowance is: 13 years and 7 months - 7 years = 6 years and 7 months, rounded to 7 years;

- The job loss allowance to be paid by Company PQ to Mr. H is: 7 years x VND 5,400,000= VND 37,800,000.

Article 9. Responsibilities of the succeeding employer after transfer of the right to own or use assets of an enterprise

1. To modify and supplement existing labor contracts or enter into new ones with employees to be further employed, employees to be retrained for continued employment, and employees to work on a part-time basis in the enterprise.

2. To give  severance pay under Article 48 or job loss allowance under Article 49 of the Labor Code, when the employee terminates his/her labor contract, for the period during which he/she has actually worked for the employer and severance pay for the period during which he/she has actually worked in the enterprise before it transfers the right to own or use its assets (including the period of working prior to January 1, 1995, in the unit within the state sector where he/she has been last recruited before moving to work for this enterprise).

Example 4: Mr. Dao Xuan K had worked at People’s Committee of District T (a state administrative agency) since September 1, 1990. On November 1, 1993, he moved to work in Company S (a state enterprise). On September 1, 2007, Company S was equitized into Joint-Stock Company S’. He continues to work in Company S’ until December 1, 2015, when he lawfully terminates his labor contract. The employers have consecutively paid unemployment insurance premiums for him from January 1, 2009, through December 1, 2015. Before quitting the job in Company S’, his average wage is VND 5,500,000/month as provided in Clause 1 of this Article. So, the severance pay for Mr. K shall be calculated as follows:

- The actual period of working in the state sector prior to January 1, 1995, is 3 years and 2 months;

- The actual period of working in Company S (before it is equitized) is 13 years and 10 months;

- The actual period of working in Joint-Stock Company S’ is 8 years and 3 months;

- The period of payment of unemployment insurance premiums is 6 years and 11 months;

- The working period used for calculating severance pay is: 3 years and 2 months + 13 years and 10 months + 8 years and 3 months - 6 years and 11 months = 18 years and 4 months, rounded to 18.5 years;

The severance pay to be given by Company S’ to Mr. K is: 18.5 years x VND 5,500,000 x 1/2 =VND 50,875,000.

Chapter III

LABOR DISCIPLINE, MATERIAL RESPONSIBILITY

Article 10. Registration and effect of internal working rules

1. A written confirmation of the receipt of the dossier for registration of internal working rules, made by the provincial-level state management agency in charge of labor defined in Clause 2, Article 28 of Decree No. 05/2015/ND-CP, must comprise the following principal contents:

a/ Name of the provincial-level state management agency in charge of labor;

b/ Full name and title of the dossier recipient;

c/ Name and address of the registering enterprise, agency, organization, cooperative, household or individual; particularly, full name and identity card number of the  household’s head or of individual if internal working rules are registered by households or individuals;

d/ Hour and date of receiving a complete dossier;

dd/ Signature of the dossier recipient.

2. The provincial-level state management agency in charge of labor shall make an internal working rules register according Form No. 2 provided in the Appendix to this Circular.

3. A written notice issued by the provincial-level state management agency in charge of labor, of the unlawfulness of the internal working rules as provided in Clause 3, Article 28 of Decree No. 05/2015/ND-CP must comprise the following principal contents:

a/ Name of the provincial-level state management agency in charge of labor;

b/ Name and address of the registering enterprise, agency, organization, cooperative, household or individual; particularly, full name and identity card number of the household’s head or of the individual if internal working rules are registered by households or individuals;

c/ Unlawful contents of the internal working rules which are required for modification and supplementation (clearly stating at/in which point, clause or article of which legal document the unlawful contents are provided,  and contents required for modification and supplementation);

d/ Signature, full name and title of the competent person of the provincial-level state management agency in charge of labor.

4. An employer that employs fewer than 10 employees is not required to register his/her/its internal working rule; if an internal working rule is issued in writing, its effect shall be decided by the employer and stated therein; if not issuing an internal working rule in writing, the employer and his/her employee shall agree on the contents related to labor discipline and material responsibility, and state such contents in the labor contract for implementation.

Article 11. Labor discipline for employees nursing children under 12 months of age

Employers may not impose labor discipline on employees who are nursing children under 12 months of age under Article 29 of Decree No. 05/2015/ND-CP who fall into one of the following cases:

1. Nursing blood children under 12 months of age;

2. Nursing lawfully adopted children under 12 month of age under the law on marriage and family;

3. Nursing surrogacy-born children under 12 month of age, for employees being surrogate mothers under the law on marriage and family.

Article 12. Holding of meetings for labor discipline

1. A meeting for labor discipline shall be held under Clause 2, Article 30 of Decree No. 05/2015/ND-CP when all persons defined in Clause 1, Article 30 of Decree No. 05/2015/ND-CP are present.

2. In case the employer has issued a written notice of the participation in the meeting but one of the participants is still absent, the employer shall issue another notice.

3. In case the employer has issued a written notice 3 times (excluding the times of postponement or cancellation, or times of changing the venue, of the meeting) but one of the participants is still absent, the employer may hold the meeting, unless the employee is exempt from labor discipline under Clause 4, Article 123 of the Labor Code.

4. In case the person representing the employer to enter into a labor contract lawfully authorizes in writing another person to enter into the labor contract under Clause 1, Article 3 of Decree No. 05/2015/ND-CP, when holding the meeting for labor discipline, the authorized person shall convene and chair the meeting.

The authorized person may issue a decision to impose labor discipline in the form of reprimand. For other forms of labor discipline, he/she shall, after the meeting finishes, complete the dossier and request the employer to make consideration and issue a decision on labor discipline, and shall organize the implementation of such decision.

Article 13. Employees absent from work with plausible reasons

An employee shall be regarded as being absent from work with a plausible reason under Clause 2, Article 31 of Decree No. 05/2015/ND-CP in one of the following cases:

a/ Due to a natural disaster or fire, he/she cannot show up at the workplace despite taking all remedial measures;

b/ The employee or his/her blood parent, adoptive parent, parent in-law, spouse, offspring, lawfully adopted child or surrogacy-born child being nursed by the employee under the law on marriage and family is sick as certified by a lawful health establishment.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 14. Effect

1. This Circular takes effect on January 1, 2016.

2. Circular No. 19/2003/TT-BLDTBXH of September 22, 2003, guiding the implementation of a number of articles of the Government’s Decree No. 41/CP of July 6, 1995, detailing and guiding a number of articles of the Labor Code regarding labor discipline and material responsibility, which was amended and supplemented under the Government’s Decree No. 33/2003/ND-CP of April 2, 2003, ceases to be effective on the effective date of this Circular.

3. Wage used as a basis for payment of wages to employees during the period they suspend working or take annual leaves, public holidays or paid leaves for personal reasons, and for advance payment of wages under Article 26 of Decree No. 05/2015/ND-CP is the wage stated in the labor contract as provided in Clause 1, Point a, Clause 2, and Point a, Clause 3, Article 4 of this Circular.

4. To amend and annul a number of articles and clauses in the Minister of Labor, War Invalids and Social Affairs’ Circular No. 23/2015/TT-BLDTBXH of June 23, 2015, guiding the implementation of a number of articles regarding wage provided in the Government’s Decree No. 05/2015/ND-CP of January 12, 2015, detailing and guiding the implementation of a number of articles of the Labor Code, as follows:

a/ To amend Point c, Clause 1, Article 4 as follows:

“c/ Daily wage shall be paid for a workday determined on the basis of monthly wage divided by the number of normal workdays in a month under regulations selected by the enterprise, which must not exceed 26 days”;

b/ To amend Clause 1, Article 5 as follows:

“1. An employee enjoying a monthly wage shall be paid once a month or once a half-month and at the time of wage payment”.

c/ To amend Point a, Clause 1, Article 6 as follows:

“a/ The actually paid hourly wage of a normal workday shall be determined based on the wage actually paid for the current job in the month in which the employee works overtime divided by the number of actual working hours in the month (no more than 208 hours for jobs in normal working conditions and environment, excluding overtime hours). In case of daily or weekly wage payment, the actually paid hourly wage shall be determined based on the actually paid wage of a workday or workweek (excluding overtime pay and additional amount paid for night work) divided by the number of actual working hours in the day or week (no more than 8 hours/day, excluding overtime hours).

The above actually paid hourly wage excludes overtime pay, additional amount paid for night work, wage for working on public holidays or paid leaves under the Labor Code; bonus as provided in Article 103 of the Labor Code and bonus for initiatives; mid-shift meal payment; allowances for gasoline, telephone, travel, accommodation, and childcare; allowances for employees whose relatives die or get married, for employees’ birthdays or for employees facing difficulties caused by labor accidents or occupational diseases, and other supports and allowances not relating to the performance of their jobs or titles in the labor contracts”.

d/ To annul Clause 2, Article 9.

Article 15. Transitional provisions

The concluded or issued labor contracts, collective labor agreements, internal working rules and other lawful regulations and agreements which offer more benefits to employees than this Circular shall continue to be implemented; for regulations and agreements which are no longer compliant with this Circular, related parties shall review and revise them, and carry out procedures for promulgating new ones in accordance with this Circular.

Any problems arising in the course of implementation should be reported to the Ministry of Labor, War Invalids and Social Affairs for prompt guidance and supplementation.