Decree No. 198-CP provides detailed regulations and guidance on implementing certain provisions of the Labor Code concerning labor contracts.

DECREE

198-CP OF THE GOVERNMENT PROVIDING FOR DETAILS AND GUIDELINES FOR IMPLEMENTATION OF CERTAIN ARTICLES OF THE LABOR CODE REGARDING LABOR CONTRACTS

THE GOVERNMENT

Pursuant to the Government Organization Law dated September 30, 1992;

Based on the Labor Code dated June 23, 1994;

At the proposal of the Minister of Labor, Invalids and Social Affairs;

DECREE:

Chapter 1:

OBJECTS AND SCOPE OF APPLICATION OF LABOR CONTRACTS

Article 1.

1- The following organizations and individuals must enter into labor contracts when using labor:

a) State-owned enterprises, private enterprises, joint-stock companies, limited liability companies; cooperatives (with workers who are not members of the cooperative), households and individuals hiring workers;

b) Administrative agencies, public service units, people's mass organizations, other political and social organizations employing workers who are not state civil servants or officials;

c) Economic organizations under the People's Army and People's Public Security forces employing workers who are not officers, non-commissioned officers, or soldiers;

d) Foreign-invested enterprises according to the Law on Foreign Investment in Vietnam; enterprises in export processing zones, industrial parks; individuals, organizations, agencies from foreign countries or international organizations stationed in Vietnam;

e) Vietnamese enterprises, organizations, and individuals operating within the territory of Vietnam employing foreign workers, except where international treaties to which the Socialist Republic of Vietnam is a party provide otherwise;

g) Organizations and individuals employing retired workers, domestic helpers, state civil servants, and officials performing tasks not prohibited by the Civil Servant Regulations.

2- Cases not subject to labor contracts as provided for in Article 4 of the Labor Code are specified as follows:

a) Civil servants working in state administrative and public service agencies;

b) Individuals appointed by the State to positions of general manager, deputy general manager, chief accountant in state-owned enterprises;

c) Full-time National Assembly deputies, People's Council deputies at all levels; individuals holding positions in legislative, executive, and judicial bodies elected or appointed by the National Assembly or People's Councils at various levels for a term of office;

d) Officers, non-commissioned officers, and soldiers in the People's Army and People's Public Security forces;

e) Individuals working in certain professions or areas under the Ministry of Defense and the Ministry of Public Security, as guided by these ministries after consultation with the Ministry of Labor - Invalids and Social Affairs;

g) Members of people's mass organizations, other political and social organizations, cooperative members, including full-time party cadres, trade union cadres, youth cadres in enterprises.

Chapter 2:

FORM, CONTENT, TYPES OF EMPLOYMENT CONTRACTS

Article 2. Forms, contents, and execution of labor contracts as stipulated in Articles 28 and 29 of the Labor Code are specified as follows:

- Labor contracts signed in writing must be based on the standard labor contract form issued and uniformly managed by the Ministry of Labor - Invalids and Social Affairs.

- Labor contracts signed in writing or concluded orally must ensure the content prescribed in Article 29 of the Labor Code.

In cases where oral labor contracts are concluded, if a third party witness is required, it shall be agreed upon by both parties.

Article 3. Types of labor contracts, as provided for in Article 27 of the Labor Code, include:

1- An indefinite-term labor contract is a contract that does not specify a termination date in advance in the labor contract.

Indefinite-term labor contracts are applicable to jobs with a regular and stable nature lasting one year or more.

2- A fixed-term labor contract from one to three years is a contract specifying a duration of one, two, or three years in advance in the labor contract; this type of contract applies to jobs with a predetermined end date.

3- A seasonal or job-specific labor contract with a duration of less than one year is applicable to temporary jobs completed within several days, several months, or less than one year, or to temporarily replace workers serving military service, performing other civic duties as prescribed by law, taking maternity leave, or workers temporarily detained or imprisoned, or other situations where the labor contract is temporarily suspended as agreed by both parties.

Chapter 3:

CONCLUSION, AMENDMENT, SUSPENSION, AND TERMINATION OF LABOR CONTRACTS

Article 4. Conclusion of labor contracts as stipulated in Articles 30 and 120 of the Labor Code is specified as follows:

1- A labor contract may be concluded directly between the worker and the employer or may be signed between the employer and a legally authorized representative of a group of workers. If concluded by a legally authorized representative, it must be accompanied by a list of names, ages, permanent addresses, occupations, and signatures of each worker. Such a contract has the same effect as if signed individually and can only be applied in the following cases: When the employer needs workers to complete a specific job, seasonal work ending within one year, or a job with a predetermined completion time of one to three years.

2- Workers may conclude multiple labor contracts with multiple employers if they have the capacity to fulfill multiple contracts. For labor contracts signed with retirees, units, or individuals employing fewer than ten workers, or for jobs with a duration of less than three months, the benefits of the worker are combined into their salary (wages).

3- For industries and jobs accepting children under 15 years old as workers as provided for in Article 120 of the Labor Code, the conclusion of labor contracts must have the written consent of the parents or guardians of such individuals to be valid.

Article 5. Employers and workers agree on trial periods as stipulated in Article 32 of the Labor Code, specified as follows:

1- The probation period cannot exceed 60 days for jobs requiring university-level or higher professional qualifications.

2- The probation period cannot exceed 30 days for jobs requiring intermediate-level qualifications, technical workers, or business staff.

3- The probation period cannot exceed six days for other types of workers.

4- Upon expiration of the probation period as stipulated in Clauses 1, 2, and 3 above, the employer shall notify the employee of the result of the probation if they meet the requirements; if the employee continues to work without being notified, they shall be deemed to have been officially employed, and both parties must enter into a labor contract.

Article 6. The effectiveness and amendment of the content of the labor contract under Article 33 of the Labor Code are regulated as follows:

1- A written labor contract becomes effective from the date of signing or from the date agreed upon by both parties; an oral labor contract becomes effective from the date the employee starts working.

2- During the performance of the labor contract, if one party requests to amend the content of the contract and the other party does not agree, the already concluded labor contract shall continue to be performed, or both parties may terminate the labor contract according to Articles 37 and 38 of the Labor Code.

Article 7. Temporary transfer of employees to work in different occupations contrary to their original occupation under Article 34 of the Labor Code is regulated as follows:

1- When the employer encounters sudden difficulties in work, production, or business due to mitigating the consequences of natural disasters, fires; applying measures to prevent and mitigate occupational accidents, occupational diseases, power outages, water supply disruptions, or due to production and business needs, the employer has the right to temporarily transfer employees to work in different occupations contrary to their original occupation, but this cannot exceed 60 days (cumulative) in a year. During this period, if the employee does not comply with the employer's decision, they will not be entitled to wages for non-work periods as stipulated in Clause 2, Article 62 of the Labor Code and may be subject to disciplinary action as provided for in Article 84 of the Labor Code.

2- In cases where the employer temporarily transfers employees to work in different occupations contrary to their original occupation for more than 60 days (cumulative) in a year, the consent of the employee is required; if the employee does not agree and they must stop working, they will be entitled to wages as stipulated in Clause 1, Article 62 of the Labor Code.

Article 8. Suspension of the performance of the labor contract under Article 35 of the Labor Code is regulated as follows:

1- Cases of suspending the performance of the labor contract by mutual agreement include:

a) The employee requests to study within or outside the country.

b) The employee requests to work for organizations, agencies, or individuals within or outside the country on a time-limited basis.

c) The employee is transferred to become a full-time staff member in the councils of state-owned enterprises.

d) The employee requests unpaid leave to handle personal matters.

2- Upon expiration of the suspension period of the labor contract as stipulated in point a, c, Clause 1 of Article 35 of the Labor Code, the employee must be present at the workplace; the employer is responsible for arranging work for the employee, and if the employee arrives at the unit to work as prescribed but must wait for work, they will be entitled to wages as stipulated in Clause 1, Article 62 of the Labor Code.

If the employee fails to report to the workplace within seven days after the expiration of the suspension period of the labor contract without a valid reason, they will be handled according to point c, Clause 1, Article 85 of the Labor Code.

3- Employees who are detained or arrested upon expiration of the suspension period of the labor contract shall be dealt with as follows:

a) Detention or arrest directly related to the labor relationship:

- When the detention or arrest period expires or when the court concludes that the employee was wrongfully detained, the employer must rehire them to their previous position, pay all wages and other benefits during the period of detention or arrest according to Decree No. 197-CP dated December 31, 1994 of the Government detailing and guiding the implementation of certain provisions of the Labor Code regarding wages.

- In cases where the detainee is found guilty but the court exempts them from prosecution or imprisonment or does not prohibit them from engaging in their previous job, the employer will arrange for them to return to their previous job or assign new work based on the nature of the offense.

b) In cases where detention or arrest is not directly related to the labor relationship, upon expiration of the detention or arrest period, the employer will arrange for the employee to return to their previous job or assign new work.

Article 9. An employee unilaterally terminating a labor contract must compensate for vocational training costs as stipulated in Clause 3, Article 41 of the Labor Code.

Article 10. Severance pay upon termination of the labor contract under Article 42 of the Labor Code:

1- An employee is entitled to severance pay upon termination of the labor contract as stipulated in Articles 36, 37, 38, or Clause 1, Article 41 of the Labor Code, the employer shall be responsible for paying severance pay for the time the employee worked for the enterprise, agency, organization, or individual.

In cases where the labor relationship is terminated as stipulated in Clause 1, Article 17, Clause 2, Article 41, points a and b, Clause 1, Article 85, and Article 145 of the Labor Code, the employee will not be entitled to severance pay.

2- Sources of funds for severance pay:

a) For enterprises, it is accounted for in production costs or circulation fees.

b) For agencies, organizations, or individuals that are not enterprises, they must provide their own funding sources.

3- Time worked to calculate severance pay:

a) The time worked to calculate severance pay is the total time worked under concluded labor contracts, including oral contracts where the employee actually worked for the employer.

b) Former state employees who continue to work at the same unit are entitled to severance pay calculated based on the total time worked at that unit.

c) In case the employee had worked for other units under the state sector before working for the enterprise, agency, or organization, these units shall be responsible for paying severance pay during the time the employee worked at their unit. This amount will be transferred according to the notification from the unit where the employee is currently working to have the former unit pay the employee. If the former unit has been dissolved or is genuinely financially difficult, the state budget shall cover the severance pay.

d) In addition to the aforementioned period, the following periods shall also be counted as working time for the employer:

- The probationary or internship period at the enterprise, agency, or organization (if applicable);

- The period during which the enterprise, agency, or organization enhances the employee's vocational skills or sends the employee for vocational training;

- The period during which the employee takes leave under social insurance regulations, or rest periods as prescribed by the Labor Code;

- The waiting period after the temporary suspension of the labor contract expires or when the employee must stop work with salary;

- The period during which the employee undergoes vocational training or apprenticeship at the enterprise;

- The period of temporary suspension of the labor contract as stipulated in Article 35 of the Labor Code, which shall be agreed upon by both parties;

- The period during which the employee is subject to disciplinary dismissal or unilateral termination of the labor contract;

- The period during which the employee's work is temporarily suspended as provided for in Article 92 of the Labor Code.

4- The combined basic wage and allowances (if any) for calculating severance pay shall be determined in accordance with Decree No. 197-CP dated December 31, 1994, issued by the Government detailing and guiding the implementation of certain provisions of the Labor Code regarding wages.

5- Working time for partial months shall be calculated as follows:

- From 1 month up to less than 7 months, it is calculated as 6 months of work;

- From 7 months to 12 months, it is calculated as 1 year of work.

6- Employees shall receive severance pay at the level specified in Clause 1, Article 42 of the Labor Code, paid directly, in one lump sum, at the workplace, and within the deadline stipulated in Article 43 of the Labor Code.

Article 11. Responsibilities of each party when terminating the labor contract according to Article 43 of the Labor Code.

The settlement period for amounts related to the rights of each party shall be carried out in accordance with the provisions of Article 43 of the Labor Code.

For special cases: payment of severance pay for employees who have worked in multiple enterprises is regulated in Point c, Clause 3, Article 10 of this Decree; if the enterprise ceases operations or either party encounters natural disasters or fire and must settle severance pay, compensation, and other debts, the settlement process shall not exceed 30 days from the date of termination of the labor contract.

Chapter 4:

IMPLEMENTING PROVISIONS

Article 12. Labor contracts concluded before the Labor Code took effect, if their contents are inconsistent with the Labor Code, must be amended and supplemented; provisions that are more favorable to the employee than those stipulated in the Labor Code shall continue to be enforced. Amendments and supplements to labor contracts must be completed no later than six months from the date this Decree takes effect; if beyond this period, then labor contracts concluded before January 1, 1995, shall automatically comply with the provisions of the Labor Code and this Decree.

Workers and officials belonging to regular forces in state-owned enterprises shall enter into indefinite-term labor contracts.

Article 13. This Decree takes effect from January 1, 1995, and revokes Decree No. 165-HĐBT dated May 12, 1992, issued by the Council of Ministers detailing the implementation of the Labor Contract Ordinance and other government documents on labor contracts.

Article 14. The Minister, Heads of Ministries equivalent to Ministries, Heads of agencies under the Government, Chairmen of People's Committees of provinces and centrally governed cities are responsible for implementing this Decree.