Labor adjustment due to Covid-19 pandemic under Vietnamese laws

    The impact of Covid-19 pandemic is taking a deep toll on our economy, leading to the seriously reducing in revenue of many companies in Vietnam, especially tourism and education industry. As reported by a survey, nearly 39% of Vietnamese companies said they are forced to reduce staff.

    This is really not an easy choice because it has a strong influence on many employees, especially the older ones, who are too old to continue applying for another job. Therefore, in order to make a legally reasonable solution, before making this big decision, the employers should first consider other options according to the current Vietnamese Labor Law such as temporary assigning employee to perform other jobs; negotiating with employee for unpaid leave. Only when there is no other choices should the employers choose to suspending the employees from work or unilaterally terminating the labor contract.

    We will analyze these above options as below:

    1. Temporarily assigning the staff to perform other jobs

    In case the demand for the job is no longer available because of the pandemic, the company may temporarily assign the staff to perform another job which is not stated in the current labor contract.

    Provided that, the company shall notify the staff at least 3 working days in advance and ensure the following conditions:

    • The days of assignment shall not exceed 60 accumulated days within a year, unless otherwise agreed by the staff;
    • For the first 30 working days, the wage for the new job shall be equal to the previous wage. After that, the wage shall be at least 85% of the previous wage but shall not be lower than the regional minimum wage.

    2. Negotiating with the staff for unpaid leave

    Another option to be considered is to negotiate with the staff about unpaid leave. It should be noted that this option can only perform with the consent of the staff.

    3. Suspending the staff from work

    If the business is delayed, the company may suspend the staff from work. Given that, the company shall pay the wage for work suspension. The amount can be negotiated between the company and the staff, but shall not be lower the regional minimum wage.

    4. Unilaterally terminating the labor contract

    In the event that the pandemic directly affects the company and the company has applied many remedies to the extent permissible but still has to reduce production scale, the company may unilateral terminate the labor contract due to this pandemic being a force majeure.

    In this case, the company shall ensure the conditions related to notice period and allowances as detailed below:

    Regarding notice period:

    • For indefinite term labor contract: 45 days in advance;
    • For definite term labor contract (12-36 months): 30 days in advance;
    • For labor contract under 12 months: 3 working days in advance.

    Regarding job severance allowance and job-loss allowance: Only apply to staffs who have worked for 12 months or more, whereby:

    • Severance allowance: The staff shall receive half a month’s wage for each year of work;
    • Job-loss allowance: The staff shall receive a month’s wage for each year of work considering that the total amount shall not be lower than two-month wage.

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