Labour matters in the EU-Vietnam Free Trade Area (EVFTA)

The International Labor Organization (ILO) is an international organization founded in 1919, after World War I and became the first specialized agency of the United Nations in 1946. The main purpose of the ILO is Promoting the rights of the employee in the workplace, promoting employment opportunities, enhancing social protection, and enhancing dialogue with people about work-related issues. Until now, the organization has 186 members worldwide and contributes to addressing labor-related issues around the world.

Vietnam has joined the ILO since 1992 and has its office located in Hanoi in 2003. The purpose of the ILO Vietnam is to promote workplace rights, promote sustainable working opportunities, social protection, and promote dialogue on issues related to employment.

The ILO Basic Conventions regulate the rights of the labor market in Vietnam to decide and support the labor market management needed by trade liberalization. Recently, the EU-Vietnam Free Trade Area (EVFTA) has been discussed, EU member states and Vietnam are all members of the ILO, therefore it may be argued that EVFTA has advocated compliance with the ILO approved and implemented standards. In addition, EVFTA encourages the expansion and improvement of initiatives to promote the company’s labor standards or corporate social responsibility. In the future, EVFTA and the ILO will work around issues such as modern slavery and child labor, risk management and increased transparency in labor relations.

The above fields are important fields for cooperation, considering the positive aspects of labor management, the impact of poor labor management on trade opportunities, therefore emphasize the role of labor management for the sustainability of the trade.

In Vietnam, there are many policies on the protection of workers’ rights and the protection of child labor, but the settlement of policies related to labor management, workplace communication has becoming improved. Until now, Vietnam has signed several Free Trade Agreements (FTA), some of which have provisions on labor issues, which require Vietnam to have the labor provisions which consist of the free trade. Vietnam’s current labor policies are gradually improving in order to be in line with the integration trend of the world and to preserve the best integration environment for domestic and foreign investors, therefore it brings the high efficiency in the economic development of the country.

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Policies on labour and trade coming into force from the middle of April, 2018

03 policies on labour and trade coming into force from the middle of April, 2018 (April 11 – 20, 2018).

1. Employment litigation involving sending of workers abroad

This is the most noticeable content of the Decree No. 24/2018/ND-CP on settlement of complaints and denunciations in the fields of labour, vocational education, sending of Vietnamese employees to work abroad under labour contracts, employment, occupational safety and hygiene.

According to the Decree, procedures for lodging complaints about sending of Vietnamese employees to work abroad under labour contracts are as follows:

- File the first-tier complaint to the complaint handling officer or make the complaint to the court;

- File the second-tier complaint or make the complaint to the court if the complainant is not satisfied with the outcome of handling the first-tier complaint;

- Make the complaint to the court if the complainant is not satisfied with the outcome of handling the second-tier complaint or the complaint is not handled within the required time limit; 

If the respondent is not satisfied with the outcome of handling the second-tier complaint, he/she has the right to initiate the administrative lawsuit to the court.

Further details are available in the Decree No. 24/2018/ND-CP coming into force from April 15, 2018.

2. Taxation policies on transfer of motor vehicles of entities enjoying privileges in Vietnam

Decision No. 10/2018/QD-TTg dated March 01, 2018 provides amendments to the Decision No. 53/2013/QD-TTg on temporary import, re-export, destruction, and transfer of motor vehicles and two-wheeled mopeds of entities enjoying diplomatic immunity and privileges in Vietnam.

According to the Decision, taxation policies on transfer of motor vehicles of these entities are as follows:

- Regulations on import duties applied to second-hand motor vehicles prescribed in Decree No. 122/2016/ND-CP and Decree No. 125/2017/ND-CP shall apply;

- The date of transfer associated with these entities is the date on which the use purpose of the vehicle is changed according to the transaction papers made between the buyer and the vehicle owner;

The date of transfer associated with diplomatic officials, administrative and technical coordinators of diplomatic missions must also correspond to the expiration of term of office of vehicle owner in Vietnam.

- These entities shall declare and pay taxes and fees as prescribed.

The Decision No. 10/2018/QD-TTg is coming into force as from April 20, 2018.

3. Promulgation of 24 forms used in commercial mediation

On February 26, 2018, the Ministry of Justice promulgated the Circular No. 02/2018/TT-BTP providing guidance on forms used in commercial mediation.

24 forms used in commercial mediation are issued together with the Circular, including:

- The application form for accreditation as ad hoc commercial mediator;

- The application form for establishment of a commercial mediation center;

- The application form for addition of commercial mediation activities of an arbitration center;

- The record of commercial mediation activities;

- Mediators record;

- The records of mediation remunerations.

This Circular also provides for reporting on commercial mediation as follows:

- Each of commercial mediation institutions and Vietnam-based branches or representative offices of foreign commercial mediation institutions shall submit annual reports on its organization and commercial mediation activities to the Department of Justice of province where the its head office is located.

- An annual report presents the period from January 01 to December 31 and includes:

+ Actual data obtained from January 01 to October 31 inclusively; and

+ Estimated date obtained from November 01 to December 31 inclusively.

- Annual reports must be submitted by November 15.

The Circular No.02/2018/TT-BTP is coming into force from April 20, 2018.

Source: thuvienphapluat

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Employee Subject to Unilateral Termination of the Labor Contract Could Claim Unemployment Insurance

Unemployment insurance is a measure to assist workers in a market economy. In addition to providing financial support to stabilize the lives of employees during the period of unemployment, the main purpose of unemployment insurance is to help the unemployed to find a suitable and stable job, through vocational training, counseling and job referral.

When the labor contract is unilaterally terminated by the employee, the employee does not need to have a certificate from the employer that the legal termination is legal, to be eligible for Unemployment Insurance (UI).

Within 03 months since the date of termination of the labor contract, the employee who doesn’t obtain a new job and wish to receive UI only need to submit an application for unemployment insurance and one of the document following documents:

i) The labor contract or contract has expired or has been completed under a labor contract;

ii) Resignation decision;

iii) Decisive dismissal;

iv) Disciplinary decision on dismissal;

v) Notice or agreement to terminate the labor contract or contract of employment.

The unemployed shall receive a Decision on unemployment insurances within 15 working days from the filing date. From the 16th day, the unemployed shall be entitled to unemployment insurance as requested.

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Non-Compete Agreement In Labor Contract

The principle “freedom to work” is recognized and respected by the Labor Code 2012. However, this regulation may harm legitimate business interests of employers when employees, during the performance of the labor contract or especially after the termination of the labor contract, reveal the business or technology secrets to compete with the employers. Therefore it is necessary to create the limits on the freedom to work, for the purpose of preventing workers from revealing employers’ business or technology secrets. Law in many countries around the world has recognized “Non-Compete Agreement” as a tool to enforce security programs.

The Labor Code 2012 and sub-law documents do not mention to the definition of “Non Compete Agreement”, but make the provision that: “When an employee performs a job which is directly related to business or technology secrets as prescribed by law, the employer may reach a written agreement with the employees on the content and duration of protection of business or technology secrets, and benefits and compensation in case of violation by the employees”.

The definition of “Non-Compete Agreement” is inferred by explaining the provisions of law and referred to the articles of legal experts. “Non-Compete Agreement” is a legal contract between an employee and an employer, for a purpose of preventing the worker from competing directly or working for a competitor during the performance of the labor contract or especially after the termination of the labor contract. Thereby, we can infer that only when employers have business or technology secrets, they have the right to make Non-Compete Agreement. Moreover, the legitimate business interests that are protected must be legal, unique, influence the maintenance, stability and development of business activities.

Analyzing the provision “Non-Compete Agreement”, we can conclude that, the employees adjusted by the “Non-Compete Agreement” is the worker who is directly involved in business or technology secrets (such as the senior managers, senior technicians and others are obliged to keep business or technology secrets). The Labor Code 2012 has regulated that the “Non-Compete Agreement” must be on text.

The provision of Non-Compete Agreement is necessary for employers to protect business or technology secrets, but it is difficult for workers to find job after the contract terminates. Therefore, Non-Compete Agreement should balance the interests between employers and employees by setting reasonable limits in time, geographic scope and particular industry or activity.

(i) For restriction on time, the Labor Code 2012 does not specify restriction period or the point of starting restriction period. This is entirely upon the parties. However, Non-Compete Agreement can not be enforced unless it specifies a reasonable restriction period. Referring to the law of some European countries (Germany, France) and Asian countries for example in China, the maximum restriction time is 02 years, to ensure that employees have conditions to find new jobs.

Moreover, it provides opportunities for employers to motivate, improve the technology and business secrets to develop. On the other hand, law in some other countries distinguishes between highly skilled workers (group 1) and unqualified employees (group 2). Spanish law is a typical example, the maximum restriction period is two years for workers in group 1 and six months for group 2.

(ii) Restriction on geographic scope is not regulated in Vietnamese law. Meanwhile, most countries such as France, China and Russia all regulate that the restriction is on the whole country. However, due to differences in society, economic and education conditions, Vietnam can hardly regulate like that. On the other hand, when making the provisions of the restrictions on geographic scope, it is necessary to base on the performance of the company, the method of production, the size of and the type of company.

(iii) For restriction on particular industry or activity, most courts tend to consider the work that employees will work in the new labor contract. Normally, if the new job is similar to the old one, it will not be approved by the court. Under the Labor Code 2012, the content of restrictions on particular industry or activity when employees enter into agreement include: (i) obligation to keep trade information confidential (business secrets, technology secrets) ; (ii) not be able to work for the competitor of former employers or to conduct his own business competing with former employers.

Labor Code in our country does not specify the scope of the restriction on particular industry or activity, it depends entirely on the will of the parties. Non-Compete Agreement can not be applied to all jobs, but only to those who hold business and technology secrets. For every type of work there will be a different range of restrictions. The scope of the restriction is not exceeding the employee‘s professional capacity and ensuring the opportunity of works in the future.

The benefit that employees receive when signed the Non-compete Agreement can be the opportunity for promotion, high salary, and commendation if the Non-Compete Agreement is made while the labor contract is valid. If the Non-Compete Agreement is applied after the labor contract terminates, employees shall receive the compensation. The amount of compensation is upon the agreement of the parties and must be satisfactory with the restriction of job opportunities. There are some cases that employees may not be entitled compensation are to violate the Non-Compete Agreement or die or prison sentence.

According to the Labor Code 2012, in case of violating the non-compete contract, employees have obligation to compensate, but it does not give specific compensation amount as well as the method of compensation. In order to claim compensation, employers must demonstrate these following factors: (1) the violation of the Non-Compete Agreement; (2) actual damage (the lost revenue and profit of the employer); (3) the causal relationship between the infringement and the damage; (4) fault of the employee. The amount of compensation must correspond to the amount of lost revenue or profit. In addition, employees must return the non-owned assets that are exploited and developed to compete with former employers. Moreover, employees must repay the compensation and other benefits paid by former employers if agreed in the agreement.

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