Circular No. 15/2002/TT-BLDTBXH guiding policies for employees when state-owned enterprises are converted into joint-stock companies pursuant to Decree No. 64/2002/NĐ-CP dated June 19, 2002.

CIRCULAR

Guidelines on policies for employees when state-owned enterprises are converted into joint-stock companies pursuant to Decree No. 64/2002/NĐ-CP

Implementing Decree No. 64/2002/NĐ-CP dated June 19, 2002 of the Government on converting state-owned enterprises into joint-stock companies; After receiving opinions from relevant ministries and sectors and the Vietnam General Confederation of Labor, the Ministry of Labor, Invalids and Social Affairs provides guidelines on policies for employees when state-owned enterprises are converted into joint-stock companies as follows:

1. These guidelines apply to employees working at state-owned enterprises and affiliated units undergoing corporatization according to Decree No. 64/2002/NĐ-CP dated June 19, 2002 of the Government on converting state-owned enterprises into joint-stock companies (hereinafter referred to as Decree No. 64/2002/NĐ-CP).

2. The inheritance of all obligations towards employees under Clause 1, Article 7 of Decree No. 64/2002/NĐ-CP is the full continuation of all contents agreed upon in the labor contracts between employers and employees prior to the conversion into a joint-stock company.

I. GENERAL PROVISIONS:

3. The period calculated for dividing surplus funds from the Reward Fund and Welfare Fund in cash as stipulated in Article 14 and assets used for production and business investment from the Reward Fund and Welfare Fund as stipulated in Clause 4, Article 9 of Decree No. 64/2002/NĐ-CP is the actual time from when the employee started working in the enterprise until the date the enterprise made the decision to corporatize.

4. Employees eligible to purchase preferential shares under Clause 1, Article 27 of Decree No. 64/2002/NĐ-CP are those whose names appear regularly on the enterprise's list at the time of corporatization, including: employees working under indefinite-term labor contracts; employees working under definite-term labor contracts ranging from 1 to 3 years, 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 Labor Contract Ordinance) who have not yet transferred to signing labor contracts. For these individuals, the period counted for purchasing shares at a preferential price is the total actual working time in state-owned enterprises, agencies, units within the state sector, and units under armed forces (receiving salaries from the state budget), including the time when employees received unemployment benefits, termination benefits, discharge benefits, or demobilization benefits.

5. Employees classified as poor and entitled to preferential treatment under Clause 2, Article 27 of Decree No. 64/2002/NĐ-CP are defined as follows:

Poor employees are those with low average income per person in their household, determined by the enterprise director in coordination with the party committee, trade union, and Enterprise Reform and Development Board of the enterprise.

Average income per person in the household is calculated based on various sources of income including salary, bonuses, wage allowances for salaried employees, and primary income from labor of family members working in different economic sectors divided by the number of people in the household (spouse, children, and other dependents).

The number of poor employees in the enterprise is determined in order of income (from lowest to highest) and must be approved by the Workers' and Officials' Congress (delegates or all members) according to the majority principle, more than half of the attendees, and publicly announced throughout the enterprise; at the same time, it must ensure that the value of shares allocated to poor employees does not exceed 20% of the total state shares sold at a preferential price to employees in the enterprise as stipulated in Clause 2, Article 27 of Decree No. 64/2002/NĐ-CP and included in the corporatization plan of the enterprise.

Shares reserved for poor employees under Clause 2, Article 27 of Decree No. 64/2002/NĐ-CP cannot be evenly distributed among all employees in the enterprise.

6. The working period for receiving unemployment benefits and termination benefits under Clause 5, Article 27 of Decree No. 64/2002/NĐ-CP is the total actual working time in state-owned enterprises, agencies, units within the state sector, and units under armed forces receiving salaries from the state budget (excluding the time when employees have already received unemployment benefits, termination benefits, discharge benefits, or demobilization benefits).

The total working period with fractional months is defined as follows:

Less than one month is not counted.

From one month to less than seven months is counted as six months of work.

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

7. The corporatization date is the date of the decision by the competent authority allowing the enterprise to proceed with corporatization.

A. Policies for employees at the time of state-owned enterprises converting into joint-stock companies

When there is a decision by the competent authority regarding the corporatization of state-owned enterprises, the Director of the state-owned enterprise together with the Enterprise Reform and Development Board of the enterprise shall establish a labor plan (in the corporatization plan) and resolve policies for employees, submit to the competent authority for approval in accordance with Point b, Clause 2, Article 30 of Decree No. 64/2002/NĐ-CP, and implement benefits for employees as follows:

II. SPECIFIC PROVISIONS:

1. Establish a labor plan in the following sequence:

a) Prepare

a list of employees whose names appear on the enterprise's list at the time of corporatization according to Form No. 1 attached to this Circular.

b) Prepare a list of employees eligible for retirement under the pension system;

c) Prepare a list of employees whose labor contracts expire at the time of corporatization;

d) Prepare a list of employees unable to be assigned work at the time of corporatization and will terminate their labor contracts. This includes a list of redundant employees under Decree No. 41/2002/NĐ-CP dated April 11, 2002 on policies for redundant labor due to restructuring of state-owned enterprises and Circular No. 11/2002/TT-BLDTBXH dated June 12, 2002 of the Ministry of Labor, Invalids and Social Affairs guiding Decree No. 41/2002/NĐ-CP mentioned above;

d) Prepare a list of workers who cannot be assigned work at the time of corporatization and will have their labor contracts terminated. This includes a list of surplus workers under Decree No. 41/2002/NĐ-CP dated April 11, 2002, on policies for surplus workers due to the restructuring of state-owned enterprises, and Circular No. 11/2002/TT-BLDTBXH dated June 12, 2002, issued by the Ministry of Labor, War Invalids, and Social Affairs guiding the aforementioned Decree No. 41/2002/NĐ-CP. list of workers who cannot be assigned jobs at the time of corporatization shall terminate their labor contracts. This includes the list of surplus workers under Decree No. 41/2002/NĐ-CP dated April 11, 2002 on policies for surplus workers due to restructuring state-owned enterprises and Circular No. 11/2002/TT-BLDTBXH dated June 12, 2002 of the Ministry of Labor, Invalids, and Social Affairs guiding the aforementioned Decree No. 41/2002/NĐ-CP.

d)Prepare a list of workers to be transferred to work at the joint-stock company, including:

The number of workers whose labor contracts are still valid;

The number of workers on leave under three social insurance regimes (illness; maternity; occupational accident, occupational disease) whose labor contracts are still valid;

The number of workers who meet age and health conditions for retraining to continue working at the joint-stock company;

e)The list of workers from paragraph b to paragraph d above shall be prepared by the enterprise and compiled into the workforce plan according to form number 2 attached to this Circular.

2. Policy for employees:

a.For workers falling under the retirement regime as stipulated in paragraph b point 1 section A part II of this Circular, the Enterprise Director and the Social Insurance Office where the enterprise pays social insurance (referred to as the Social Insurance Office) shall settle all social insurance benefits for the workers in accordance with current regulations.

b.In cases where labor contracts expire as stipulated in paragraph c point 1 section A part II, the State-Owned Enterprise Director shall provide severance pay to the workers in accordance with Article 42 of the Labor Code and shall be responsible for completing all procedures for the Social Insurance Office to settle social insurance benefits for the workers in accordance with current regulations.

c.For workers unable to be assigned work as stipulated in paragraph d point 1 section A part II, the following measures shall be taken:

c.1. For state-owned enterprises with decisions to convert to joint-stock companies made before December 31, 2005:

Workers who fall under the category defined in Decree 41/2002/ND-CP dated April 11, 2002 on policies for surplus labor due to restructuring of state-owned enterprises shall enjoy policies as prescribed in this Decree and Circular No. 11/2002/TT-BLDTBXH dated June 12, 2002 of the Ministry of Labor, War Invalids and Social Affairs guiding Decree 41/2002/ND-CP mentioned above;

Workers not falling under the category of Decree 41/2002/ND-CP shall enjoy benefits as prescribed by current labor laws. The Fund for Supporting Restructuring and Joint-Stock Conversion of State-Owned Enterprises shall support funding to resolve unemployment compensation and severance pay according to the regulations of the Ministry of Finance.

c.2. For state-owned enterprises with decisions to convert to joint-stock companies made after December 31, 2005, the rights of workers unable to be assigned work shall be resolved according to current labor laws.

d.For workers transferring to work at the joint-stock company as stipulated in paragraph d point 1 section A part II, enterprises shall be responsible for preparing lists and completing procedures for the Social Insurance Office to continue implementing social insurance regimes and issuing social insurance books (if not yet issued) in accordance with regulations, and transferring the lists and files of workers managed by the enterprise to the Board of Directors or General Director of the joint-stock company.

The enterprise shall be responsible for settling debts related to social insurance with the Social Insurance Office and settling debts with workers before transferring to the joint-stock company or terminating labor contracts.

B. Policies for workers when the enterprise has been converted into a joint-stock company

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

a)Receiving the number of workers as specified in paragraph d point 1 section A part II of this Circular.

b)Continuing to implement commitments in labor contracts and collective labor agreements signed previously with workers in accordance with current laws.

c)Organizing vocational training for workers required to undergo retraining to continue working at the joint-stock company.

d)For newly recruited workers by the joint-stock company, provisions of current labor laws shall apply.

2. Policy for employees losing their jobs:

2.1 Workers losing their jobs within 12 months from the date the joint-stock company receives the business registration certificate according to the Law on Enterprises due to restructuring as stipulated in point a clause 6 Article 27 of Decree No. 64/2002/ND-CP shall be handled as follows:

a.For workers losing their jobs from December 31, 2005 or earlier:

Workers falling under the category defined in Decree No. 41/2002/ND-CP dated April 11, 2002 of the Government on policies for surplus labor due to restructuring of state-owned enterprises shall enjoy specific policies for surplus labor as prescribed in Decree No. 41/CP and Circular No. 11/2002/TT-BLDTBXH dated June 12, 2002 of the Ministry of Labor, War Invalids and Social Affairs. This policy applies to workers transferred from state-owned enterprises to joint-stock companies according to Decree No. 44/CP dated June 29, 1998 if they meet the conditions stipulated in Decree No. 41/2002/ND-CP. Funding for these policies shall be supported by the fund for supporting surplus labor.

Other categories of workers shall enjoy unemployment and severance benefits as prescribed by current labor laws and shall be supported by the fund for supporting restructuring and joint-stock conversion of state-owned enterprises.

b.For workers losing their jobs after December 31, 2005:

Within 12 months from the date the joint-stock company receives the business registration certificate, if due to the need to reorganize production and business operations or change technology leading to workers transferred from state-owned enterprises losing their jobs or resigning voluntarily, then workers losing their jobs shall be compensated for unemployment according to Clause 1 Article 17 of the Labor Code; those resigning voluntarily shall be compensated for severance according to Clause 1 Article 42 of the Labor Code.

Funding for severance and unemployment compensation shall be supported by the fund for supporting restructuring and joint-stock conversion of state-owned enterprises according to the regulations of the Ministry of Finance.

2.2 In cases where workers lose their jobs or resign between the second year and the fifth year from the date the joint-stock company receives the business registration certificate, the joint-stock company shall be responsible for paying 50% of the total severance amount as prescribed by the Labor Code, with the remaining amount to be paid by the fund for supporting restructuring and joint-stock conversion of state-owned enterprises.

From the sixth year onwards, the joint-stock company shall be responsible for paying the full severance and unemployment compensation for workers, including the period prior to that when the workers 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 the level agreed upon by both parties but not less than 70% of the wage stipulated in the labor contract that has been signed. In cases where 70% of the wage stipulated in the labor contract is lower than the general minimum wage set by the Government, it shall be paid at the general minimum wage level.

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

c) Procedures for vocational training contracts shall be carried out in accordance with current regulations.

d) After the period of vocational training, the joint-stock company is responsible for arranging employment for workers.

đ) Vocational training support funding in accordance with the guidance of the Ministry of Finance

III. IMPLEMENTATION:

1. The Director of the state-owned enterprise and the Enterprise Reform and Development Board of the enterprise are responsible for: developing a workforce restructuring plan, determining the maximum number of workers required for production and business needs, identifying the number of workers who cannot be assigned work at the time of the decision to corporatize the enterprise, submitting this to the competent authority for approval, and implementing policies for workers in accordance with the provisions of the law.

Within ten days from the completion of the implementation of policies for workers, the Director of the state-owned enterprise is responsible for reporting to the Department of Labor, Invalids and Social Affairs, the Provincial Trade Union Federation, and the provincial-level city directly under the Central Government where the enterprise's headquarters is located; industry trade unions, social insurance agencies where the enterprise contributes to social insurance about the conversion of the state-owned enterprise into a joint-stock company for coordination and consideration to resolve workers' rights.

2. The social insurance agency 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 provisions of the State.

3. The Department of Labor, Invalids and Social Affairs, the Enterprise Reform and Development Boards of ministries, sectors, provincial-level cities directly under the Central Government, and General Company 91 are responsible for coordinating with provincial-level trade unions, industry trade unions, guiding, monitoring, and inspecting the implementation of the provisions of Decree No. 64/2002/ND-CP and related legal documents concerning workers and compiling 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 from the date Decree No. 64/2002/ND-CP comes into force and replaces Circular No. 11/1998/TT-LĐTBXH dated August 21, 1998, issued by the Ministry of Labor, Invalids and Social Affairs guiding policies for workers when converting state-owned enterprises into joint-stock companies, and Circular No. 03/1999/TT-LĐTBXH dated January 9, 1999, amending poverty standards in Circular No. 11/1998/TT-LĐTBXH.

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

Nguyen Thi Hang

(Signed)