Circular No. 13/2005/TT-BLDTBXH guides the implementation of policies for employees during the process of converting state-owned enterprises into joint-stock companies pursuant to Government Decree No. 187/2004/NĐ-CP dated November 16, 2004.

CIRCULAR

Guidelines for implementing policies concerning employees under Decree

No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned enterprises to joint-stock companies

Implementing Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government on converting state-owned enterprises to joint-stock companies (hereinafter referred to as Decree No. 187/2004/NĐ-CP); following comments from relevant ministries, sectors, and the Vietnam General Confederation of Labor, the Ministry of Labor, Invalids, and Social Affairs hereby issues guidelines for implementing policies concerning employees as follows:

These guidelines apply to employees working at state-owned enterprises not wholly owned by the State that are undergoing corporatization as stipulated in Article 2 of Decree No. 187/2004/NĐ-CP.

I. GENERAL PROVISIONS

1. Joint-stock companies have the responsibility to assume all obligations towards employees according to Clause 1, Article 8 of Decree No. 187/2004/NĐ-CP, including all contents agreed upon in labor contracts and collective labor agreements (if any) between employers and employees, as well as other obligations prescribed by law.

2. The period for dividing surplus funds from the Reward Fund and Welfare Fund in cash as stipulated in Article 15 and assets invested using the Reward Fund and Welfare Fund as stipulated in Clause 4, Article 10 of Decree No. 187/2004/NĐ-CP is the actual time employees have worked in the enterprise up to the date of the decision to corporatize the enterprise.

3. Employees eligible to purchase preferential shares according to Clause 1, Article 37 of Decree No. 187/2004/NĐ-CP are those whose names appear on the regular list of the enterprise at the time of corporatization, including: employees working under indefinite-term labor contracts, definite-term labor contracts from 12 months to 36 months, including those temporarily suspended from performing their labor contracts and waiting for work assignments according to the director's decision; workers and officials recruited before August 30, 1990 (the effective date of the Law on Labor Contracts) who have not yet signed labor contracts.

4. The period for purchasing preferential shares is the total actual working time (excluding fractional months) at state-owned enterprises; agencies, units in the public sector; units under armed forces up to the date of corporatization, including the time when employees received unemployment benefits, termination benefits, or discharge benefits.

5. The working period for receiving unemployment benefits and termination benefits according to Clause 4, Article 87 of Decree No. 187/2004/NĐ-CP is the total actual working time at state-owned enterprises; agencies, units in the public sector; units under armed forces (excluding the time when employees received unemployment benefits, termination benefits, or discharge benefits).

6. In addition to the actual working time at the enterprise specified in Points 5 and 6 of Section I of this Circular, if there are periods specified in Point d, Clause 3, Article 14 of Decree No. 44/2003/NĐ-CP dated May 9, 2003, they shall also be counted as actual working time at the enterprise, agency, or unit.

7. For periods with fractional months, the following provisions apply:

- Less than one month is not counted.

- From one month to six months is counted as six months of work.

- From six months to twelve months is counted as one year of work.

The date of corporatization is the date of the competent authority's decision for the enterprise to implement corporatization.

9. II. POLICIES FOR EMPLOYEES AT THE TIME OF STATE-OWNED ENTERPRISES CONVERTING TO JOINT-STOCK COMPANIES

When the competent authority makes a decision on the corporatization of the enterprise, the Director of the corporatizing enterprise and the Enterprise Reform and Development Board of the enterprise shall prepare a labor plan (in the corporatization plan) in accordance with Article 40 of Decree No. 187/2004/NĐ-CP and handle employee benefits as follows:

1. Preparing a labor plan:

a) Prepare a list of employees of the corporatizing enterprise at the time of corporatization according to Form No. 1 attached to this Circular, including:

- Employees not subject to signing labor contracts (directors, deputy directors, chief accountants);

- Employees working under indefinite-term labor contracts (including those hired before August 30, 1990 but the enterprise has not yet converted to labor contracts);

- Employees working under definite-term labor contracts from 12 months to 36 months;

- Employees working under seasonal or specific job contracts with a term of less than 12 months.

b) Prepare a list of employees eligible for retirement according to current regulations;

c) Prepare a list of employees whose labor contracts will be terminated, including: expiration of labor contracts; voluntary termination of labor contracts or other reasons as prescribed by law at the time of corporatization;

d) Prepare a list of employees unable to be assigned work at the time of corporatization who will have their labor contracts terminated. This includes the list of redundant employees under Decree No. 41/2002/NĐ-CP dated April 11, 2002 of the Government on policies for redundant employees due to restructuring of state-owned enterprises, which has been amended and supplemented by Decree No. 155/2004/NĐ-CP dated August 10, 2004 of the Government (hereinafter referred to as Decree No. 41/2002/NĐ-CP as amended and supplemented) and Circular No. 19/2004/TT-BLĐTBXH dated November 22, 2004 of the Ministry of Labor, Invalids, and Social Affairs guiding the implementation of certain articles of Decree No. 41/2002/NĐ-CP as amended and supplemented;

đ) Prepare a list of employees who will transfer to work at the joint-stock company, including:

- The number of employees whose labor contracts still have remaining terms;

- The number of employees on leave under three social insurance schemes (illness; maternity; occupational accidents, and occupational diseases) whose labor contracts still have remaining terms;

- The number of employees meeting age and health conditions to undergo vocational training to continue working at the joint-stock company based on the company's needs;

Lists of employees from paragraph a to paragraph đ above are compiled by the enterprise itself and summarized in the labor plan according to Form No. 2 attached to this Circular.

The list of workers from subitem a to subitem d above is established and compiled by the enterprise, and the workforce plan according to Model Form No. 2 attached hereto.

2. Policy for employees:

a) For employees meeting the conditions to retire under the retirement regime stipulated in paragraph b point I Part II of this Circular, the General Director of the shareholding enterprise and the social insurance agency where the enterprise pays social insurance contributions (referred to as the social insurance agency) shall settle all social insurance benefits for the employees in accordance with the provisions of the law.

b) In cases where employment contracts terminate according to paragraph c point 1 Part II, the General Director of the enterprise shall settle severance pay for the employees in accordance with Article 42 of the Labor Code and shall be responsible for completing all procedures for the social insurance agency to settle social insurance benefits for the employees in accordance with the provisions of the law.

c) For employees who cannot be re-employed as provided in paragraph d point 1 Part II, the following measures shall be taken:

c1) For shareholding enterprises with a decision to convert to shareholding from before December 31, 2005:

+ Employees who are surplus and fall within the scope defined in Decree No. 41/2002/NĐ-CP as amended and supplemented shall enjoy policies as prescribed in this Decree and Circular No. 19/2004/TT-BLDTBXH dated November 22, 2004 of the Ministry of Labor, War Invalids and Social Affairs guiding Decree No. 41/2002/NĐ-CP as amended and supplemented.

+ Employees not falling within the scope of Decree No. 41/2002/NĐ-CP as amended and supplemented shall enjoy severance and unemployment benefits as prescribed by labor laws and shall be supported with funds from state revenue from the conversion of state-owned enterprises to shareholding or from the Enterprise Restructuring Support Fund in accordance with the guidance of the Ministry of Finance.

c2) For state-owned enterprises with a decision to convert to shareholding after December 31, 2005, the rights and interests of employees who cannot be re-employed shall be settled in accordance with the provisions of labor laws.

d) For employees who will transfer to work at a joint-stock company as provided in paragraph đ point 1 Part II, the shareholding enterprises shall be responsible for compiling lists and completing procedures for the social insurance agency to continue implementing social insurance regimes and issuing social insurance books (if not yet issued) in accordance with regulations and transferring the list and files of employees managed by the enterprise to the Board of Directors or General Director of the joint-stock company.

đ) Shareholding enterprises shall be responsible for settling debts related to social insurance to the social insurance agency and settling debts with employees before transferring to a joint-stock company or terminating employment contracts.

III. POLICY FOR EMPLOYEES WHEN THE ENTERPRISE HAS BEEN CONVERTED TO A JOINT-STOCK COMPANY

1. The Board of Directors and General Director of the joint-stock company shall be responsible for:

a) Accepting the number of employees specified in paragraph đ point 1 Part II of this Circular and all relevant files of transferred employees.

b) Continuing to implement commitments in labor contracts and collective labor agreements signed previously with employees in accordance with the provisions of the law.

c) Organizing vocational training again for employees in need of retraining to continue working at the joint-stock company.

d) For newly recruited employees by the joint-stock company, the provisions of the law shall apply.

2. Policy for employees losing their jobs:

2.1. Employees losing their jobs within 12 months from the date the joint-stock company was granted a Business Registration Certificate under the Law on Enterprises due to restructuring as provided in paragraph a clause 8 Article 36 of Decree No. 187/2004/NĐ-CP shall be settled as follows:

a) For employees losing their jobs from December 31, 2005 or earlier:

- Employees falling within the scope defined in Decree No. 41/2002/NĐ-CP as amended and supplemented shall enjoy redundancy policies specifically stipulated in this Decree and Circular No. 19/2004/TT-BLDTBXH dated November 22, 2004 of the Ministry of Labor, War Invalids and Social Affairs. Funding for these policies shall be supported by the Redundancy Labor Support Fund.

- Remaining employees losing or leaving their jobs shall enjoy unemployment and severance benefits as prescribed by labor laws. Support funding from state revenue from the conversion of state-owned enterprises is stipulated in Article 35 of Decree No. 187/2004/NĐ-CP.

b) For employees losing their jobs after December 31, 2005:

Within 12 months from the date the joint-stock company was granted a Business Registration Certificate, if organizational restructuring or technological changes lead to employees from state-owned enterprises being laid off or leaving their jobs, including voluntary resignations, employees shall be settled for unemployment benefits as prescribed in Clause 1 Article 17 of the Labor Code; or severance pay as prescribed in Clause 1 Article 42 of the Labor Code.

Funding for severance and unemployment benefits shall be supported from state revenue from the conversion of enterprises or the Enterprise Restructuring Support Fund as stipulated in Article 35 of Decree No. 187/2004/NĐ-CP and Section VI (management and use of revenue from shareholding conversion) of Circular No. 126/2004/TT-BTC dated December 24, 2004 of the Ministry of Finance guiding the implementation of Decree No. 187/2004/NĐ-CP.

2.2. In cases where employees transferred from state-owned companies to joint-stock companies lose their jobs or leave their jobs between the second year and the fifth year from the date the joint-stock company was granted a Business Registration Certificate, employees shall be settled for unemployment benefits as prescribed in Article 17 or severance pay as prescribed in Article 42 of the Labor Code. The joint-stock company shall be responsible for paying 50% of the total severance amount as prescribed by the Labor Code, with the remainder paid from state revenue from the conversion of state-owned enterprises or the Enterprise Restructuring Support Fund as stipulated in Article 35 of Decree No. 187/2004/NĐ-CP. After the above period, the joint-stock company shall be responsible for paying the entire severance or unemployment benefit to the employee, including the time before that when the employee worked in the state sector.

3. Policy for employees requiring retraining to continue working at the joint-stock company:

a) During the period of retraining, the joint-stock company continues to pay wages to workers at a rate agreed upon by both parties but not less than 70% of the wage level recorded in the labor contract already signed. In cases where 70% of the wage level recorded in the labor contract is lower than the general minimum wage of 290,000 VND/month as stipulated in Decree No. 203/2004/NĐ-CP dated December 14, 2004 of the Government on the minimum wage, it shall be paid at that minimum wage level.

b) The joint-stock company continues to contribute to social insurance for workers during the period of vocational training according to the provisions of the law (at the agreed wage level recorded in the training contract).

c) Procedures for the training contract shall be carried out in accordance with the provisions of the law.

d) The source of funding for supporting retraining shall be implemented in accordance with Clause b, Article 35 of Decree No. 187/2004/NĐ-CP of the Government and Point b, Section VI of Circular No. 126/2004/TT-BTC mentioned above.

đ) After the period of retraining, the joint-stock company has the responsibility to arrange employment for workers. Workers who have been retrained and do not work as committed must compensate for training costs and other expenses if any.

IV. IMPLEMENTATION

1. The Director of the enterprise undergoing corporatization and the Enterprise Reform and Development Board are responsible for: developing personnel restructuring plans, determining the number of workers required for production and business needs, identifying the number of workers unable to be employed, the number of workers whose labor contracts will be terminated at the time of the decision to corporatize, submitting them for approval by competent authorities, and implementing policies for workers in accordance with the law.

Within thirty days from the date when all policies for workers have been settled, the Director of the enterprise undergoing corporatization is responsible for reporting the results of converting the state-owned company into a joint-stock company to the competent authorities (Attachment Model 3). The report shall be made in eight copies sent to: the approving authority for the corporatization plan; the Ministry of Labor, Invalids and Social Affairs; the Ministry of Finance; the Provincial Department of Labor, Invalids and Social Affairs, the Trade Union of the province, city directly under the Central Government where the headquarters of the enterprise is located; the industry trade union, the Social Insurance Office where the enterprise contributes to social insurance; one copy retained by the enterprise.

2. The Social Insurance Office where the enterprise contributes to social insurance is responsible for implementing social insurance policies for workers before and after the corporatization of the enterprise in accordance with the regulations of the State.

3. The Provincial Department of Labor, Invalids and Social Affairs, the Enterprise Reform and Development Boards of Ministries, sectors, provinces, cities directly under the Central Government, and State-Owned Corporations are responsible for - coordinating with the provincial, city trade unions, industry trade unions to guide, monitor, and inspect the implementation of the provisions of Decree No. 187/2004/NĐ-CP and related legal documents concerning workers, and compile the situation to report to the Enterprise Reform and Development Steering Committee (Government Office), the Ministry of Labor, Invalids and Social Affairs, and the Ministry of Finance.

4. This Circular takes effect fifteen days after its publication in the Official Gazette and replaces Circular No. 15/2002/TT-BLĐTBXH dated October 23, 2002 of the Ministry of Labor, Invalids and Social Affairs guiding policies for workers when transferring state-owned enterprises into joint-stock companies according to Decree No. 64/2002/NĐ-CP dated June 19, 2002 of the Government on the transfer of state-owned enterprises into joint-stock companies.

Any difficulties encountered during implementation should be reported to the Ministry of Labor, Invalids and Social Affairs for study and resolution./.