Circular No. 07/2018/TT-BLDTBXH guiding the development of labor utilization plans and implementation policies for employees when corporatizing enterprises as stipulated in Government Decree No. 126/2017/NĐ-CP dated November 16, 2017 on transferring state-owned enterprises and wholly state-owned companies to joint-stock companies with 100% state capital.

CIRCULAR

Guidelines for developing labor utilization plans and implementing policies for employees when converting state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies as stipulated in Government Decree No. 126/2017/NĐ-CP dated November 16, 2017 on transferring state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies

Based on Decree No. 14/2017/ND-CP dated February 17, 2017 of the Government on the functions, tasks, powers, and organizational structure of the Ministry of Labor, Invalids and Social AffairsPursuant to the request of the Director General of the Department of Vocational Education;

Pursuant to Government Decree No. 126/2017/NĐ-CP dated November 16, 2017 on transferring state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies;n state-owned enterprise and cowholly state-owned limited liability companies with 100% state capital to joint-stock companies;

Pursuant to the proposal of the Director of the Directorate of Labor Relations and Wages;

The Minister of Labor, Invalids and Social Affairs issues this Circular guiding the development of labor utilization plans and implementation of policies for employees when converting state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies as stipulated in Government Decree No. 126/2017/NĐ-CP dated November 16, 2017 on transferring state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies (hereinafter referred to as Decree No. 126/2017/NĐ-CP).This Circular guides the development of labor utilization plans; distribution of remaining surplus funds from employee reward funds and welfare funds; subjects, working time for purchasing shares at preferential prices for employees in state-owned enterprises and wholly state-owned limited liability companies with 100% state capital being converted to joint-stock companies (hereinafter referred to as joint-stock conversion enterprises) as stipulated in Government Decree No. 126/2017/NĐ-CP dated November 16, 2017 on transferring state-owned enterprises and wholly state-owned limited liability companies with 100% state capital to joint-stock companies (hereinafter referred to as Decree No. 126/2017/NĐ-CP). 1. Employees currently working in joint-stock conversion enterprises.2. Managers of joint-stock conversion enterprises. 3. Representatives of the enterprise's equity in other enterprises. 4. Inspectors currently working in joint-stock conversion enterprises.

Article 1. Scope of Regulation

5. Representatives of household contractors receiving long-term stable contracts with state-owned wholly limited liability companies in forestry and agriculture according to Government Decree No. 168/2016/NĐ-CP dated December 27, 2016 on forest, garden, and water surface contracts in special-use forest management boards, protective forest management boards, and state-owned wholly limited liability companies in forestry and agriculture (hereinafter referred to as household contractor representatives).

Article 2. Applicability

6. State-owned enterprises and wholly state-owned limited liability companies with 100% state capital as stipulated in Clause 2 and Clause 3 Article 2 of Government Decree No. 126/2017/NĐ-CP.

7. Organizational bodies representing the ownership of joint-stock conversion enterprises.

8. Other agencies, organizations, and individuals related to the implementation of the contents prescribed in this Circular.

Article 3. Development of Labor Utilization Plans

1. Main contents of the labor utilization plan

The labor utilization plan developed in accordance with point a Clause 4 Article 45 of Government Decree No. 126/2017/NĐ-CP must include the following main contents:

a) List and number of employees and representatives of the enterprise's equity in other enterprises at the valuation date;

b) List and number of employees and representatives of the enterprise's equity in other enterprises at the valuation date who will continue to be employed or sent for retraining to continue employment or transferred to work part-time in the company after the conversion to a joint-stock company;

c) List and number of employees and representatives of the enterprise's equity in other enterprises at the valuation date who will retire according to laws on social insurance during the period from the valuation date to the expected approval date of the joint-stock conversion plan as approved in the joint-stock conversion plan;

d) List and number of employees and representatives of the enterprise's equity in other enterprises at the valuation date who will terminate their labor contracts according to labor laws (for employees) or end their term as representatives of the enterprise's equity in other enterprises and terminate their temporarily suspended labor contracts (for representatives of the enterprise's equity in other enterprises) during the period from the valuation date to the expected approval date of the joint-stock conversion plan as approved in the joint-stock conversion plan;

đ) List and number of employees and representatives of the enterprise's equity in other enterprises at the valuation date whom the enterprise has tried all means but cannot arrange employment in the company after the conversion to a joint-stock company and must terminate their labor contracts (for employees) or cease work (for representatives of the enterprise's equity in other enterprises);

e) Measures and financial sources to ensure the implementation of the labor utilization plan.

2. The labor utilization plan must ensure transparency within the enterprise and involve the participation of the representative organization of the collective of employees at the workplace.

3. The process of developing the labor utilization plan shall be carried out in accordance with Appendix 1 attached to this Circular.

4. Approval authority for the labor utilization plan is as follows:

a) The organizational body representing the ownership approves for enterprises stipulated in Clause 2 Article 2 of Government Decree No. 126/1017/NĐ-CP and enterprises stipulated in Clause 3 Article 2 of Government Decree No. 126/2017/NĐ-CP with owner's equity according to accounting books of VND 1,800 billion or more.

e) Measures and financial resources to ensure the implementation of the labor utilization plan.

2. The labor utilization plan must be established in a transparent manner within the enterprise and involve the participation of the representative organization of workers at the workplace.

3. The process for establishing the labor utilization plan shall be carried out in accordance with the provisions set forth in Appendix 1 attached hereto.

4. The authority to approve the labor utilization plan is as follows:

a) The agency representing the owner shall approve for state-owned enterprises specified in Clause 2, Article 2 of Decree No. 126/2017/NĐ-CP and state-owned enterprises specified in Clause 3, Article 2 of Decree No. 126/2017/NĐ-CP with a capital stock according to accounting books of VND 1.8 trillion or more;

b) The Board of Members or the Chairman of the enterprise prescribed in Clause 2, Article 2 of Decree No. 126/2017/ND-CP shall approve for enterprises prescribed in Clause 3, Article 2 of Decree No. 126/2017/ND-CP, except for enterprises with a capital contribution according to accounting books of VND 1,800 billion or more.

5. The labor utilization plan must be approved before the agency representing the owner approves the privatization plan.

Article 4. Distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund

The distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund prescribed in Clause 1, Clause 2, Article 19 of Decree No. 126/2017/ND-CP is stipulated as follows:

1. The object entitled to the distribution of the remaining balance in cash from the Employee Reward Fund is the employee whose name appears on the list of employees of the joint-stock company at the time of determining the enterprise value.

The joint-stock company establishes a list of objects entitled to the distribution of the remaining balance in cash from the Employee Reward Fund according to Form No. 6 attached in Appendix 2 issued together with this Circular.

2. The object entitled to the distribution of the remaining balance in cash from the Welfare Fund is the employee, manager, and supervisor currently working at the joint-stock company whose name appears on the list of employees of the joint-stock company at the time of determining the enterprise value.

The joint-stock company establishes a list of objects entitled to the distribution of the remaining balance in cash from the Welfare Fund according to Form No. 7 attached in Appendix 2 issued together with this Circular.

3. The period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund is determined as follows:

a) The period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund is the total period that the object entitled to the distribution has worked at the joint-stock company since the last recruitment date into the joint-stock company (for employees) or since the date of being transferred and appointed to work at the joint-stock company (for managers and supervisors working at the company) until the date of determining the value of the joint-stock company.

b) The period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund includes the period that the object entitled to the distribution has worked at the enterprise prior to its merger, consolidation with the joint-stock company, or division, separation into the joint-stock company (if applicable).

c) The period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund does not include the period of suspension of the labor contract under Article 32 of the Labor Code, or the period of unpaid leave under Clause 3, Article 116 of the Labor Code of 14 consecutive days or more;

d) The period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund is calculated in months. If the period of work for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund has a fraction of a day, it will be rounded off according to the principle that less than 14 days is not counted, and 14 days or more is rounded up to one month.

Example 1: Determining the period of work of employees for calculating the distribution of the remaining balance in cash from the Employee Reward Fund and Welfare Fund in Appendix 3 issued together with this Circular.

Example 2: Determining the period of work of managers for calculating the distribution of the remaining balance in cash from the Welfare Fund in Appendix 3 issued together with this Circular.

4. The plan for distributing the remaining balance in cash from the Employee Reward Fund and Welfare Fund must ensure transparency within the enterprise and involve the participation of the representative organization of the workforce at the workplace.

5. The time for distributing the remaining balance in cash from the Employee Reward Fund and Welfare Fund is determined by the joint-stock company and must be completed before the joint-stock company transitions to a joint-stock corporation.

Article 5. Subjects and time period for purchasing shares at a preferential price

1. The subjects eligible to purchase shares at a preferential price under Clause 1, Article 42 of Decree No. 126/2017/ND-CP are specified as follows:

a) Employees working under labor contracts with the joint-stock company being equitized at the time of determining the enterprise's value.

b) Employees of the joint-stock company being equitized at the time of determining the enterprise's value who have been assigned to represent the company's capital interest in another company on a full-time basis (excluding employees of the parent company at the time of determining the value of the equitized joint-stock company who have been assigned to represent the parent company's capital interest in a second-tier company in the case of equitizing the parent company of an economic group, state-owned corporation, or parent company within a parent company - subsidiary group) and have not yet benefited from preferential share purchase policies in other companies.

c) Managers of the joint-stock company being equitized at the time of determining the enterprise's value.

d) Employees working under labor contracts and managers of enterprises (including representatives of the parent company's capital interest on a full-time basis) stipulated in Clause 3, Article 2 of Decree No. 126/2017/ND-CP (second-tier companies), who have not yet benefited from preferential share purchase policies in other companies at the time of determining the value of the equitized joint-stock company in the case of equitizing the parent company of an economic group, state-owned corporation, or parent company within a parent company - subsidiary group.

đ) Representatives of household households receiving contracts (if any) of the joint-stock company being equitized at the time of determining the enterprise's value.

The joint-stock company being equitized shall establish a list of subjects eligible to purchase shares at a preferential price according to Form No. 8, No. 9, No. 10, and No. 11 attached as Appendix 2 to this Circular.

2. The actual time worked in the public sector to calculate the purchase of shares at a preferential price under Point b, Clause 1, Article 42 of Decree No. 126/2017/ND-CP for the subjects specified in Points a, b, c, and d, Clause 1 of this Article includes:

a) The actual cumulative time that the subject eligible to purchase shares at a preferential price has worked at the joint-stock company being equitized up to the time of determining the enterprise's value, including time worked at the enterprise before its merger, consolidation with the joint-stock company being equitized, or division, separation into the joint-stock company being equitized (if applicable).

b) The actual cumulative time that the subject eligible to purchase shares at a preferential price has worked at administrative agencies, state-owned public institutions, political organizations, political-social organizations, units under armed forces (including time spent on compulsory military service), enterprises wholly owned by the state or wholly owned by state-owned enterprises investing 100% equity in other enterprises, before joining the joint-stock company being equitized or before joining the enterprise that was merged, consolidated with the joint-stock company being equitized, or divided, separated into the joint-stock company being equitized (if applicable).

3. The actual time worked in the public sector to calculate the purchase of shares at a preferential price as stipulated in Clause 2 of this Article does not include the time during which the labor contract was temporarily suspended according to Article 32 of the Labor Code, or the time off without pay according to Clause 3, Article 116 of the Labor Code for 14 consecutive days or more.

4. The time for calculating the purchase of shares at a preferential price for the subject specified in Point đ, Clause 1 of this Article is the actual cumulative time they have received contracts (under long-term stable contracts) with the joint-stock company being equitized up to the time of determining the enterprise's value.

5. The time for calculating the purchase of shares at a preferential price is calculated in years (full 12 months). If the time for calculating the purchase of shares at a preferential price includes less than six months, it is not counted, but if it is six months or more, it is rounded up to one year.

Example 3: Determining the time for calculating the purchase of shares at a preferential price in Appendix 3 issued together with this Circular.

Article 6. Effectiveness

1. This Circular takes effect from September 15, 2018.

Circular No. 33/2012/TT-BLDTBXH dated December 20, 2012, of the Ministry of Labor, Invalids, and Social Affairs guiding the implementation of policies for workers under Decree No. 59/2011/NĐ-CP dated July 18, 2011, of the Government regarding the conversion of 100% state-owned enterprises into joint-stock companies ceases to be effective from the date this Circular takes effect.

2. Joint-stock companies that have developed plans for using labor, plans for distributing surplus funds from the reward fund and welfare fund of workers from January 1, 2018, to the date this Circular takes effect shall review and adjust these plans (if necessary) based on the provisions of this Circular and submit them to the competent authority for approval or re-approval.

3. Companies stipulated in Clause 2, Article 49 of Decree No. 126/2017/ND-CP shall apply the contents of this Circular to implement policies for workers when equitizing.

During the implementation process, if there are any difficulties, please report to the Ministry of Labor, Invalids, and Social Affairs for supplementary guidance./.