Managing Contracts and Severance in Vietnam

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Issue 28 • December 2016 •Vietnam Briefing
Hiring through
recruiting services
Foreign employers can also use recruiting
services to hire Vietnamese workers through
reputable sources, but this is pursuant to
several qualifications. First of all, only the
following foreign offices may be eligible:
• Foreign diplomatic missions, consular
offices, representative offices of interna-
tional organizations of the United Nation-
al system, intergovernmental organiza-
tions of regions and sub-regions;
• Representative offices of foreign news
agencies and foreign broadcasting and
television organizations;
• International, intergovernmental, and
foreign governmental organizations;
• Permitted foreign non-governmental
organizations; and,
• Foreign non-profit representative offices
of organizations.
These foreign offices are then only allowed
to use recruitment agencies approved by the
following government bodies:
• Ministry of Foreign Affairs (has the ability
to appoint or authorize an organization
to recruit);
• Ministry of Labor, War Invalids and Social
Affairs (can establish employment service
center); and,
• Chairman of a provincial People’s Com-
mittee (can establish employment
service center).
All employers should note probationary periods
and compensation stipulations before utilizing
these contracts, as detailed below.
Drafting probation contracts
Under the prevailing labor code of 2012 and
subsequent circulars, probationary contracts
are subject to a reduced list of information and
documentation requirements. The specifics of
these requirements can be found above in the chart
outlining contract requirements.
Structuring of probation contracts
Probationary periods for a given position are
proportionaltotheeducationrequiredfortheposition
and range from six to 60 days. These contracts are
limited to a one time usage and must be converted
to a standard contract of one year or more if both
parties wish to continue the relationship beyond the
period specified in the probation contract. Existing
probationary contract lengths specified under
Vietnamese employment law include:
• 60 days: probationary periods of up to 60 sixty
days are reserved for positions that require
professional or technical skills that demand a
collegiate education or higher.
• 30 days: probationary periods of up to 30 days
may be applied for jobs that require a profes-
sional skillset and/or technical qualifications,
some of which may require some degree of
education to obtain.
• Six days: for all other types of employment
in Vietnam, including most manual labor and
manufacturing, probation is limited to six days.
The distinction between the 30 and 60 day
probationary periods is subject to clarification at
the circular level and should be monitored closely
when drafting contracts. As a matter of compliance,
pursuant to Circular No. 05/2015/NĐ-CP, companies
will be required tonotify thoseundergoing30 and60
day probationary periods of their results three days
prior to the conclusion of the probation contract.
Compensation
Compensation for probationary employment is
subject to the agreement set out by the parties
involved and must be stipulated in the agreement
negotiated by the employer and employee. While
there is considerable latitude with regard to the
amount of compensation that is to be provided for
probationary employment, employers are obligated
to provide compensation no lower than 85 percent
of the goingwage applied to the position for which
the probation is in preparation.
Professional Services
Dezan Shira&Associates iswell versed in structuring contracts tomeet the needs of
foreign enterprises establishing in Vietnam. For assistance or clarification in these
matters, please contact us