CIRCULAR

Guidelines for implementing policies concerning employees under Decree No. 109/2007/NĐ-CP dated June 26, 2007 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies

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Implementing Decree No. 109/2007/NĐ-CP dated June 26, 2007 of the Government on converting state-owned enterprises with 100% state capital into joint-stock companies (hereinafter referred to as Decree No. 109/2007/NĐ-CP); following opinions from relevant ministries, sectors, and the Vietnam General Confederation of Labor, the Ministry of Labor - Invalids and Social Affairs issues guidelines for implementing policies concerning employees as follows:

I. GENERAL PROVISIONS

1These Circulars shall apply to employees working at state-owned enterprises, affiliated units of state-owned enterprises, and limited liability companies with 100% state capital (hereinafter referred to as state-owned enterprises) undergoing joint-stock conversion in accordance with Decree No. 109/2007/NĐ-CP.

2The period for dividing the surplus of the Reward Fund and Welfare Fund in cash as stipulated in Article 19 of Decree No. 109/2007/NĐ-CP and the value of assets used for production and business investment from the Reward Fund and Welfare Fund as stipulated in Clause 4, Article 14 of Decree No. 109/2007/NĐ-CP is the total number of years (full 12 months) actually worked by employees at the said state-owned enterprise up to the time of determining the enterprise's value.

The fractional month of the total actual working years for calculating the division of the aforementioned funds shall be decided by the enterprise.

3Employees eligible to purchase shares at a preferential price as stipulated in Clause 1, Article 51 of Decree No. 109/2007/NĐ-CP are those whose names appear regularly on the list of the state-owned enterprise at the time of announcing the enterprise's value, including:

a) Management positions not subject to labor contracts;

b) Employees working under indefinite-term labor contracts (including those hired before August 30, 1990, who have not yet signed labor contracts);

c) Employees working under definite-term labor contracts ranging from 12 to 36 months; seasonal or specific task labor contracts with terms ranging from three to less than twelve months;用工 根据特定的季节或工作，期限从不少于三个月到不足十二个月；

d) Employees temporarily suspended from performing their labor contracts according to the law, awaiting work assignment based on the director's decision.

4The period for purchasing shares at a preferential price is the total time (calculated in full years of 12 months, excluding fractional months) that employees have actually worked in the state sector up to the time of announcing the enterprise's value. This period does not include the actual working time already counted for purchasing shares at a preferential price at previously privatized enterprises; the actual working time already counted for retirement benefits; and the actual working time already counted for receiving one-time social insurance benefits.

5The actual working time in the state sector up to the time of announcing the enterprise's value for purchasing shares at a preferential price includes:

a) Time employees have actually worked at state-owned enterprises; administrative agencies, public service units, and military forces funded by the state budget;

b) Time during which employees received salaries from state-owned enterprises or the state budget (training, employment...), and enjoyed social insurance benefits (illness, maternity, occupational accidents, and occupational diseases);

c) Time working under piece-rate or volume-based contracts during which the state-owned enterprise paid salaries and contributed to social insurance for employees in accordance with the law.

6The valuation date is the date when the accounting books are closed and financial statements are prepared to determine the enterprise's value.

7The announcement date of the enterprise's value is the day the competent authority issues the decision to announce the enterprise's value.

II. POLICY RESOLUTIONS FOR EMPLOYEES AT THE TIME OF ANNOUNCING THE ENTERPRISE'S VALUE

When the competent authority issues a decision regarding the announcement of the enterprise's value, the Joint Stock Conversion Steering Committee directs the Working Group to develop a labor utilization plan (in the joint-stock conversion plan), submit it for approval by the competent authority in accordance with Article 54 of Decree No. 109/2007/NĐ-CP, and resolve employee benefits as follows:

1. Develop a labor utilization plan

a) Compile a list of employees of the joint-stock converted enterprise at the time of announcing the enterprise's value using the form attached to this Circular, including:

- Employees not subject to labor contracts (Members of the Board of Directors, Specialized Members of the Supervisory Board, Directors, Deputy Directors, Chief Accountants of state-owned enterprises; Members of the Board of Members, Chairmen, Directors, Deputy Directors, Chief Accountants of limited liability companies with 100% state capital);

- Employees working under indefinite-term labor contracts (including those hired before August 30, 1990, but have not yet signed labor contracts);

- Employees working under definite-term labor contracts ranging from 12 to 36 months; seasonal or specific task labor contracts with terms ranging from three to less than twelve months;

- Employees working under seasonal or specific task labor contracts with terms less than three months.

b) Compile a list of employees eligible for retirement (as stipulated in Decree No. 152/2006/NĐ-CP dated December 22, 2006 of the Government guiding certain provisions of the Law on Compulsory Social Insurance) at the time of announcing the enterprise's value;

c) Compile a list of employees whose labor contracts will terminate, including: expiration of labor contracts; voluntary termination of labor contracts or other reasons as prescribed by law at the time of announcing the enterprise's value;

d) Compile a list of employees unable to be assigned work at the joint-stock company at the time of announcing the enterprise's value;

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

- The number of employees currently performing labor contracts with remaining terms (including those temporarily suspended from performing their labor contracts) who do not fall under the provisions set forth in points b, c, and d, Clause 1, Section II of this Circular;

- The number of employees on leave under social insurance regimes (illness; maternity; work-related accidents, occupational diseases) while their labor contracts still have remaining terms.

The list of employees from point a to point e above shall be compiled by the enterprise undergoing shareholding reform and incorporated into the plan for employee utilization according to Form No. 2 attached to this Circular.

2. Resolution of policies for employees

a) For employees meeting the conditions to enjoy retirement benefits as stipulated in point b, Clause 1, Section II of this Circular, the General Director of the enterprise undergoing shareholding reform and the Social Insurance agency where the enterprise pays social insurance contributions (referred to as the Social Insurance agency) shall resolve social insurance benefits for the employees in accordance with the law.

b) In cases of termination of labor contracts as stipulated in point c, Clause 1, Section II of this Circular, the General Director of the enterprise undergoing shareholding reform shall provide severance pay to the employees in accordance with Article 42 of the Labor Code (funding sourced from the reserve fund for unemployment assistance of state-owned enterprises at 100%, if insufficient, the enterprise may request state support in accordance with the guidelines of the Ministry of Finance), and shall be responsible for completing all necessary procedures for the Social Insurance agency to resolve social insurance benefits for the employees in accordance with the law.

c) For employees unable to be assigned work as stipulated in point d, Clause 1, Section II of this Circular, the following measures shall be taken:  

- Employees falling within the scope of Decree No. 110/2007/NĐ-CP dated June 26, 2007 of the Government on policies for surplus employees due to restructuring of state-owned enterprises shall be resolved in accordance with Decree No. 110/2007/NĐ-CP and Circular No. 18/2007/TT-BLDTBXH dated September 10, 2007 of the Ministry of Labor, Invalids and Social Affairs guiding the implementation of certain provisions of Decree No. 110/2007/NĐ-CP dated June 26, 2007 of the Government on policies for surplus employees due to restructuring of state-owned enterprises.

- Employees not falling within the scope of Decree No. 110/2007/NĐ-CP shall be entitled to unemployment assistance benefits in accordance with the Labor Code (Article 17 of the Labor Code). Funding sourced from the reserve fund for unemployment assistance of state-owned enterprises at 100%, if insufficient, the enterprise may request state support in accordance with the guidelines of the Ministry of Finance.

d) For employees transferring to work at a joint-stock company as stipulated in point e, Clause 1, Section II of this Circular, the enterprise undergoing shareholding reform shall be responsible for compiling a list and processing the necessary procedures for the Social Insurance agency to continue implementing social insurance policies 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) The enterprise undergoing shareholding reform shall be responsible for settling debts related to social insurance contributions to the Social Insurance agency and settling debts owed to employees prior to transitioning to a joint-stock company.

III. RESPONSIBILITIES OF THE SHAREHOLDING REFORM COMMITTEE IMPLEMENTATION

1a) Directing the General Director of the enterprise to coordinate with the Trade Union Committee of the enterprise to distribute the Reward Fund and Welfare Fund to employees in accordance with regulations;

b) Directing the Working Group to develop plans for employee utilization, determine the number of employees required based on production and business needs, identify the number of employees unable to be assigned work, and the number of employees whose labor contracts will be terminated at the time of announcing the enterprise's value, submit these plans for review at the Workers' Congress or the Workers' and Staff Congress of the enterprise, complete them, submit them for approval by the competent authority, and resolve policies for employees in accordance with the law;

c) Within thirty days from the completion of resolving policies for employees, the Shareholding Reform Committee shall report on the implementation of the transition of the 100% state-owned enterprise to a joint-stock company to the competent authorities (Form No. 3 attached to this Circular). Eight copies of the report shall be sent to: the approving authority for the shareholding reform plan; the Ministry of Labor, Invalids and Social Affairs; the Ministry of Finance; the Department of Labor, Invalids and Social Affairs; the Provincial or Municipal Federation of Trade Unions where the enterprise's headquarters is located; the Central Trade Union Industry (if applicable); the Social Insurance agency where the enterprise pays social insurance contributions; and one copy retained at the joint-stock company.

The Social Insurance agency where the enterprise pays social insurance contributions shall be responsible for implementing social insurance policies and regulations in accordance with the law on social insurance and the provisions of this Circular.

2. The Board of Directors and employers of the joint-stock company shall be responsible for:

3a) Accepting the number of employees specified in point e, Clause 1, Section II of this Circular and all relevant files of the transferred employees;

b) Continuing to fulfill commitments made in labor contracts and collective labor agreements previously signed with employees in accordance with the law;

c) Providing severance and unemployment assistance payments to employees transferred from 100% state-owned enterprises when they lose their jobs or terminate their employment at the joint-stock company, including payments for actual working time at the 100% state-owned enterprise before January 1, 1995, and time worked at other state entities but transferred to the 100% state-owned enterprise before that date without having received severance or unemployment assistance payments;

d) Fulfilling all obligations of employers towards newly recruited employees by the joint-stock company.

d) 完成对公司新招聘的劳动者所承担的用人单位的所有义务。

4The Department of Labor, Invalids and Social Affairs, the Enterprise Reform and Development Board of each Ministry, sector, province, centrally governed city, the Enterprise Reform and Development Board of State-owned Economic Groups, and State-Owned Corporations established by the Prime Minister shall be responsible for coordinating with the Provincial and Centrally Governed City Trade Unions and Central Industry Trade Unions to guide, monitor, and inspect the implementation of the provisions of Decree No. 109/2007/ND-CP and related legal documents concerning workers; compile the situation and report to the Enterprise Reform and Development Steering Committee (Government Office), the Ministry of Labor, Invalids and Social Affairs, and the Ministry of Finance.

V. IMPLEMENTATION PROVISIONS

1This Circular takes effect fifteen days from the date of publication in the Official Gazette.

2This Circular replaces Circular No. 13/2005/TT-BLDTBXH dated February 25, 2005, issued by the Ministry of Labor, Invalids and Social Affairs, guiding the implementation of policies for workers under Decree No. 187/2004/ND-CP dated November 16, 2004, of the Government on converting 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./.