CIRCULAR No. 13/2005/TT-BLDTBXH OF FEBRUARY 25, 2005 GUIDING THE IMPLEMENTATION OF POLICIES TOWARD LABORERS UNDER THE GOVERNMENT’S DECREE No. 187/2004/ND-CP OF NOVEMBER 16, 2004 ON TRANSFORMATION OF STATE COMPANIES INTO JOINT-STOCK COMPANIES

In furtherance of the Government’s Decree No. 187/2004/ND-CP of November 16, 2004 on transformation of State companies into joint-stock companies (hereinafter referred to as Decree No. 187/2004/ND-CP); after obtaining opinions of ministries, branches and Vietnam Labor Confederation, the Ministry of Labor, War Invalids and Social Affairs hereby guides the implementation of policies toward laborers as follows:

I. GENERAL PROVISIONS

1. This Circular applies to laborers currently working in to be-equitized State companies, where the State does not hold 100% of their charter capital, prescribed in Article 2 of Decree No. 187/2004/ND-CP.

2. Joint-stock companies shall have to inherit all obligations toward laborers according to Clause 1, Article 8 of Decree No. 187/2004/ND-CP, covering all contents already agreed upon in the labor contracts or collective labor accords (if any) between employers and laborers as well as other obligations prescribed by law.

3. The duration calculated for division of cash balances of reward and/or welfare funds as prescribed in Article 15 and assets for production and/or business invested with reward and/or welfare funds as prescribed in Clause 4, Article 10 of Decree No. 187/2004/ND-CP shall be the duration the laborers have actually worked in such enterprises up to the time of obtaining decisions on enterprise equitization.

4. Laborers entitled to purchase preferential shares according to Clause 1 of Decree No. 187/2004/ND-CP are those on the list of regular laborers of the enterprises at the time of equitization, including: laborers currently working under labor contracts with indefinite terms and labor contracts with a term of between full 12 months and 36 months, including those who are subject to postponement of labor contract performance awaiting jobs under decisions of enterprises’ directors; workers and officials recruited before August 30, 1990 (the effective date of the Ordinance on Labor Contracts) but have not yet signed labor contracts.

5. The working duration calculated for the purchase of shares at preferential prices is the total period of time (excluding odd months) the laborers have actually worked in State enterprises, agencies or units of State sectors, or the armed forces’ units up to the time of equitization, including the duration for which the laborers had received job-loss allowances, severance allowances or enjoyed demobilization entitlements.

6. The working duration calculated for entitlement to job-loss allowances or job severance allowances according to Clause 4, Article 37 of Decree No. 187/2004/ND-CP is the total period of time the laborers have actually worked in State enterprises, agencies or units of State sector, or the armed force units (excluding the duration for which the laborers had received job-loss allowances, severance allowances or enjoyed demobilization entitlements).

7. Apart from the duration the laborers have actually worked in enterprises as prescribed at Points 5 and 6, Section I of this Circular, the durations defined at Point d, Clause 3, Article 14 of Decree No. 44/2003/ND-CP of May 9, 2003, if any, shall also be calculated as durations of actual working in enterprises, agencies or units.

8. Working duration with odd months shall be prescribed as follows:

- Under 1 month, it shall not be calculated.

- From full 1 month to 6 months, it shall be calculated as 6 working months.

- From full 6 months to 12 months, it shall be calculated as 1 working year.

9. Time of equitization means the time of obtaining decisions of competent authorities allowing enterprises to carry out the equitization.

II. POLICIES TOWARD LABORERS AT THE TIME OF TRANSFORMING STATE ENTERPRISES INTO JOINT-STOCK COMPANIES

When obtaining decisions of competent authorities on the equitization of enterprises, the directors of to be-equitized enterprises shall, together with the Enterprise Renewal and Development Boards, work out labor plans (included in the equitization plans) for submission to competent authorities for approval according to Article 40 of Decree No. 187/2004/ND-CP and settle regimes for laborers as follows:

1. Elaboration of labor plans:

a/ To make the list of laborers of to be-equitized enterprises at the time of equitization according to a set form, covering:

- Laborers other than those subject to labor contract (directors, deputy directors, chief accountants);

- Laborers working under labor contracts with indefinite terms (including laborers recruited before August 30, 1990 but having not yet signed labor contracts);

- Laborers working under labor contracts with a term of between full 12 months and 36 month;

- Laborers working on a seasonal or piece-work basis for less than 12 months.

b/ To make the list of laborers eligible for retirement according to current regulations;

c/ To make the list of laborers whose labor contracts shall terminate, including those with expired labor contracts; those who voluntarily terminate their labor contracts or for other reasons as prescribed by law at the time of equitization;

d/ To make the list of laborers for whom jobs cannot be placed at the time of equitization and shall be subject to contract termination, covering the list of redundant laborers under the Government’s Decree No. 41/2002/ND-CP of April 11, 2002 on policies toward laborers redundant from the reorganization of State enterprises, which was amended and supplemented under the Government’s Decree No. 155/2004/ND-CP of August 10, 2004 (hereinafter referred to as amended and supplemented Decree No. 41/2002/ND-CP) and Circular No. 19/2004/TT-BLDTBXH of November 22, 2004 of the Ministry of Labor, War Invalids and Social Affairs guiding the implementation of a number of articles of amended and supplemented Decree No. 41/2002/ND-CP;

e/ To make the list of laborers who shall be transferred to work in joint-stock companies, including:

- Laborers whose labor contracts are still valid;

- Laborers who are taking leaves under three social insurance regimes (sickness; maternity; labor accidents or occupational diseases) but their labor contracts are still valid;

- Laborers who meet all conditions on age and fitness and shall be re-trained for continuing to work in joint-stock companies according to companies’ demands;

The lists of laborers specified at Items a thru e above shall be made by enterprises themselves according to set forms and included in labor plans.

2. Settlement of policies toward laborers:

a/ For laborers eligible for retirement as prescribed at Item b, Point 1, Section II of this Circular, the directors of to be-equitized enterprises and social insurance agencies where enterprises pay social insurance premiums (hereinafter called social insurance agencies for short) shall settle all social insurance-related interests for the laborers according to law provisions.

b/ For cases where labor contracts have expired as prescribed in Item c, Point 1, Section II, the enterprise directors shall apply the job-severance allowance regimes to laborers according to the provisions of Article 42 of the Labor Code and have to fulfill procedures for the social insurance agencies to settle social insurance-related interests for laborers according to law provisions.

c/ Laborers for whom new jobs cannot be placed as defined at Item d, Point 1, Section II shall be settled as follows:

c1. For equitized enterprises which obtain equitization decisions before December 31, 2005:

+ Redundant laborers being subjects defined in the amended and supplemented Decree No. 41/2002/ND-CP shall enjoy policies according to the provisions of such Decree and Circular No. 19/2004/TT-BLDTBXH of November 22, 2004 of the Ministry of Labor, War Invalids and Social Affairs guiding above-said amended and supplemented Decree No. 41/2002/ND-CP;

+ Laborers other than subjects governed by the amended and supplemented Decree No. 41/2002/ND-CP shall enjoy job-severance allowance or job-loss allowance regimes according to labor legislation and be supported with funding from the money amounts collected by the State from State enterprise equitization or from the fund in support of enterprise reorganization under the Finance Ministry’s guidance.

c2. For State enterprises, which obtain the equitization decisions after December 31, 2005, the interests of laborers for whom new jobs cannot be placed shall be settled according to labor legislation.

d/ For laborers who shall be transferred to work in joint-stock companies according to Item e, Point 1, Section II, the to be-equitized enterprises shall have to make lists thereof and carry out procedures for social insurance agencies to continue with the social insurance regimes and grant social insurance books (if such books have not yet been granted) according to regulations, then transfer such lists together with dossiers of laborers under enterprises’ management to the Managing Boards or the directors of joint-stock companies.

e/ To be-equitized enterprises shall have to pay social insurance premium debts to social insurance agencies as well as debts owed to laborers before being transformed into joint-stock companies or terminate labor contracts.

III. POLICIES TOWARD LABORERS WHEN ENTERPRISES HAVE BEEN TRANSFORMED INTO JOINT-STOCK COMPANIES

1. The Managing Boards and directors of joint-stock companies have the responsibilities:

a/ To receive the laborers defined in Item e, Point 1, Section II of this Circular and all relevant dossiers of such laborers.

b/ To continue realizing the commitments in labor contracts or collective labor accords signed previously with laborers according to law provisions.

c/ To organize job-retraining for laborers who must be restrained so as to continue working in joint-stock companies.

d/ For laborers newly recruited by joint-stock companies, to comply with law provisions.

2. Policies toward laborers who lose their jobs:

2.1. Laborers, who lose their jobs within 12 months as from the date the joint-stock companies are granted the business registration certificates according to the Enterprise Law due to reorganization under Item a, Clause 8, Article 36 of Decree No. 187/2004/ND-CP, shall be settled as follows:

a/ For laborers who lose their jobs before December 31, 2005:

- Laborers being subjects defined in the amended and supplemented Decree No. 41/2002/ND-CP shall enjoy policies toward redundant laborers, which are specified in such Decree and Circular No. 19/2004/TT-BLDTBXH of November 22, 2004 of the Ministry of Labor, War Invalids and Social Affairs. Funds for realization of such policies shall be supported by the Redundant Labor Support Fund.

- Laborers who lose or give up their jobs shall enjoy job-loss or job-severance allowances according to labor legislation. Funds therefor shall be provided from the money amounts collected by the State from the State equitization, prescribed in Article 35 of Decree No. 187/2004/ND-CP.

b/ For laborers who lose their jobs after December 31, 2005:

Within 12 months as from the date the joint-stock companies are granted the business registration certificates, if laborers transferred from State enterprises lose or give up their jobs, including those who voluntarily give up their jobs, for reasons of reorganization of production and/or business activities or technology renewal, such laborers shall be entitled to job-loss allowances according to Clause 1, Article 17 of the Labor Code; or job-severance allowances according to Clause 1, Article 42 of the Labor Code.

Sources for payment of job-severance or job-loss allowances shall come from the money amounts collected by the State from enterprise equitization or the fund in support of enterprise reorganization prescribed in Article 35 of Decree No. 187/2004/ND-CP and Section VI (management and use of proceeds from equitization) of the Finance Ministry’s Circular No. 126/2004/TT-BTC of December 24, 2004 guiding the implementation of Decree No. 187/2004/ND-CP.

2.2. In cases where laborers transferred from State companies to joint-stock companies lose or give up their jobs in the period from the second year to the fifth year as from the date the joint-stock companies are granted business registration certificates, they shall be entitled to job-loss allowances according to Article 17 or job-severance allowances according to Article 42 of the Labor Code. The joint-stock companies shall have to pay 50% of the total allowances mentioned above according to the provisions of the Labor Code, the remainder shall be paid from the money amounts collected by the State from State company equitization or the fund in support of enterprise reorganization as prescribed in Article 35 of Decree No. 187/2004/ND-CP. Past the above-said time limit, the joint-stock companies shall have to pay the total job-loss or job-severance allowances to laborers, including the amount for the duration the laborers  worked for the State sector.

3. Policies toward laborers to be re-trained for continuing to work in joint-stock companies:

a/ During the period of re-training, joint-stock companies shall continue to pay salaries to laborers at the levels agreed upon by the involved parties which, however, must not be lower than 70% of the salary levels inscribed in the signed labor contracts. In cases where 70% of the salary levels inscribed in the labor contracts are lower than the common minimum wage level of VND 290,000/month as prescribed in the Government’s Decree No. 203/2004/ND-CP of December 14, 2004 prescribing the minimum wage level, the allowances shall be paid as equal to such minimum wage level.

b/ Joint-stock companies shall continue to pay social insurance premiums for laborers during the period of re-training according to law provisions (at the salary levels inscribed in the apprenticeship contracts).

c/ The procedures for apprenticeship contracts shall comply with law provisions.

d/ The funding sources for providing support for re-training shall comply with the provisions of Item b, Clause 1, Article 35 of the Government’s Decree No. 187/2004/ND-CP  and Item b, Point 1, Section VI of above-said Circular No. 126/2004/TT-BTC.

e/ After the period of re-training, the joint-stock companies shall have to arrange jobs for laborers. If the re-trained laborers refuse to work as committed, they shall have to compensate training expenses and other costs, if any.

IV. IMPLEMENTATION ORGANIZATION

1. The directors of to be-equitized enterprises shall, together with the Enterprise Renewal and Development Boards, have to elaborate plans on labor rearrangement, determine the number of necessary laborers according to production and business requirements, the number of laborers for whom new jobs cannot be arranged and the number of laborers subject to contract termination at the time of equitization, then submit them to competent authorities for approval and settlement of policies toward laborers according to law provisions.

Within 30 days after the settlement of policies toward laborers, the directors of to be-equitized enterprises shall have to report the results of transformation of State companies into joint-stock companies (made according to a set form). Such a report shall be made in 8 copies and sent to the agency approving the equitization plan; the Ministry of Labor, War Invalids and Social Affairs; the Ministry of Finance; the provincial/municipal Labor, War Invalids and Social Affairs Services and the Labor Federations of the localities where the enterprises are headquartered; the branches’ trade unions, the social insurance agencies where enterprises pay social insurance premiums; one copy shall be archived at enterprises.

2. The social insurance agencies where enterprises pay social insurance premiums shall have to effect social insurance policies toward laborers before and after the equitization of enterprises according to the State’s regulations.

3. The provincial/municipal Labor, War Invalids and Social Affairs Services and the Enterprise Renewal and Development Boards of ministries, branches, provinces or centrally-run cities shall have to coordinate with the provincial/municipal Labor Federations and branches’ trade unions in guiding, monitoring and inspecting the implementation of Decree No. 187/2004/ND-CP and relevant legal documents for laborers, then sum-up and report thereon to the Steering Committee for Enterprise Renewal and Development (the Government Office), the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Finance.

4. This Circular takes effect 15 days after its publication in the Official Gazette and replaces Circular No. 15/2002/TT-BLDTBXH of October 23, 2002 of the Ministry of Labor, War Invalids and Social Affairs guiding policies toward laborers upon transformation of State enterprises into joint-stock companies under the Government’s Decree No. 64/2002/ND-CP of June 19, 2002 on transformation of State enterprises into joint-stock companies.

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