Circular No. 21/LDTBXH-TT guiding the implementation of certain Articles of Government Decree No. 198/CP on labor contracts

CIRCULAR

Guidelines for Implementing Certain Articles of Decree No. 198/CP of the Government on Labor Contracts

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Implementing Decree No. 198/CP dated December 31, 1994 of the Government detailing and guiding the implementation of certain articles of the Labor Code regarding labor contracts; following the opinions of the Ministry of Finance, the Vietnam General Confederation of Labor, and some relevant ministries and sectors, the Ministry of Labor, Invalids, and Social Affairs guides the implementation of certain provisions concerning labor contracts.

I. SUBJECTS AND SCOPE NOT APPLICABLE TO LABOR CONTRACTS

The cases not applicable to labor contracts as stipulated in Clause 2, Article 1 of Decree No. 198/CP are further guided as follows:

1. Persons appointed to positions of general director, deputy general director, chief accountant in state-owned enterprises including: General directors, directors, deputy general directors, deputy directors, chief accountants of state-owned corporations, independent state-owned enterprises, or other state-owned enterprises; directors, deputy directors, chief accountants of units under state-owned corporations according to the Law on State-Owned Enterprises dated April 20, 1995;

2. Persons appointed to positions of general director, deputy general director, chief accountant in production and business establishments under Party and mass organizations;

3. Chairpersons and members of the Board of Directors or Management Board of enterprises of all economic components.

II. FORM, CONTENT, TYPES OF LABOR CONTRACTS

1. The form and content of labor contracts as stipulated in Article 2 of Decree No. 198/CP are further guided as follows:

Labor contracts signed in writing must be based on the labor contract form issued by the Ministry of Labor, Invalids, and Social Affairs pursuant to Decision No. 207/LĐTBXH-QĐ dated April 2, 1993 of the Minister of Labor, Invalids, and Social Affairs on the issuance, management, and use of labor contract forms.

Provincial Departments of Labor, Invalids, and Social Affairs have the responsibility to provide labor contract forms promptly to units within their jurisdiction; inspect and handle the issuance of labor contract forms beyond authority or the use of labor contract forms contrary to the provisions of Decision No. 207/LĐTBXH-QĐ mentioned above.

2. Types of labor contracts as stipulated in Article 3 of Decree No. 198/CP are further guided as follows:

a) Regular and stable work lasting one year or more means that such work is carried out continuously from day to day for one year or more.

b) For labor contracts already signed with a term of three months to less than one year for regular and stable work lasting one year or more, the employer must convert such contracts to indefinite-term labor contracts (if the work cannot be determined to have a specific end date) or definite-term labor contracts from one to three years (if the work can be determined to have a specific end date), at the latest three months from the date this Circular takes effect.

III. CONCLUSION, MODIFICATION, SUSPENSION, TERMINATION OF LABOR CONTRACTS

1. Conclusion of labor contracts as stipulated in Article 4 of Decree No. 198/CP are further guided as follows:

A labor contract is concluded between the employer and the employee.

a) If the employer is a business, agency, or organization with legal personality, the person authorized to sign the labor contract is the legal representative according to the law. Legal representatives according to the law include:

- For state-owned enterprises, it is the General Director of state-owned corporations; the Director of independent state-owned enterprises or other state-owned enterprises as stipulated in Clause 2, Article 28 of the Law on State-Owned Enterprises; the Director of independent accounting units directly subordinate to state-owned corporations.

Subordinate units of state-owned corporations may conclude labor contracts according to the hierarchical division specified in the Charter of the corporation or the authorization of the corporation.

- For foreign-invested enterprises, it is the General Director (Director) of the enterprise, except where otherwise provided in the Charter of the enterprise.

- For enterprises and organizations of other economic components, production and business establishments, service providers under Party and mass organizations, it is the General Director (Director) of the enterprise or the head of the organization.

- For state agencies and political-social organizations, it is the head of the agency or organization or according to the hierarchical division of personnel management.

In cases where the authorized person does not directly conclude the labor contract, they may authorize another person in writing, except in cases of hierarchical division of management.

b) If the employer is an individual, the person signing the labor contract is the individual directly using the labor and shall not delegate this authority.

2. Labor contracts signed with retirees, employees working for units or individuals employing fewer than ten workers or performing work with a term of less than three months, in addition to wages, employees also receive other benefits equal to 30% of the wage (labor remuneration) recorded in the labor contract, including:

- Social Insurance = 15%

- Health Insurance = 2%

- Annual Leave = 4%

- Specifically, travel expenses when taking leave, agreed upon by both parties and recorded in the labor contract or collective labor agreement, but not exceeding 9% of the wage (labor remuneration) recorded in the labor contract.

During the performance of the labor contract, if the employer has settled any of these items when paying wages to the employee, such item shall be deducted.

3. An employee unilaterally terminating a labor contract must compensate for vocational training fees (if any) according to Article 9 of Decree No. 198/CP, which is now guided as follows:

Employees trained at the unit or sent for training inside or outside the country with the employer bearing the training costs or the employer being sponsored by foreign organizations, institutions, or individuals for vocational training who unilaterally terminate the labor contract must compensate for training costs in the following cases:

- The employee voluntarily leaves before completing the training course;

- Workers continue to work but do not meet the agreed term in the labor contract or vocational training contract, except in cases of force majeure...

Vocational training fees include expenses for teaching, study materials, classrooms, machinery and equipment, practical materials, accommodation, travel, miscellaneous expenses, wages, scholarships, etc...

The amount of compensation for vocational training fees is calculated by the enterprise, agreed upon by both parties, and clearly stated in the labor contract or vocational training contract.

4. In addition to the cases of severance allowance for workers when terminating labor contracts as stipulated in Clause 1, Article 10 of Decree No. 198/CP, the following additional cases where workers are entitled to severance allowance are specified:

a) Workers who are dismissed according to the provisions of Point c, Clause 1, Article 85 of the Labor Code;

b) Workers who suffer from abuse as defined in Point c, Clause 1, Article 37 of the Labor Code. Abuse is understood as when workers are treated cruelly, their dignity and honor are violated;

c) Workers or their families face genuine difficulties that prevent them from continuing to fulfill the contract as provided in Point d, Clause 1, Article 37 of the Labor Code. Genuine difficulties include the following situations:

- The worker or their family has moved to reside permanently in another province or city, making it difficult to commute for work;

- The worker or their family is permitted to settle abroad;

- The worker must care for a spouse, parent, parent-in-law, or child who is seriously ill for more than three months.

d) Workers who consistently fail to complete tasks as required by the labor contract as stipulated in Point a, Clause 1, Article 38 of the Labor Code. Consistently failing to complete tasks as required by the labor contract includes the following situations:

- For indefinite-term contracts or fixed-term contracts from one to three years, if the worker fails to complete the quantity and quality of work due to their own fault for two consecutive months or more, they will be considered to have consistently failed to complete tasks as required by the labor contract;

- For fixed-term contracts from three months to less than one year, the continuous period of failure to complete tasks is twenty days;

- For fixed-term contracts under three months, the continuous period of failure to complete tasks is ten days.

The quantity and quality of work referred to above are determined based on the labor quota recorded in the collective agreement of the industry or the enterprise's collective agreement.

e) Enterprises, agencies, or organizations ceasing operations as stipulated in Point d, Clause 1, Article 38 of the Labor Code, include the following cases: enterprises, agencies, or organizations being dissolved by competent authorities, declared bankrupt by the court, their operating licenses having expired, business licenses withdrawn with the consent of competent authorities, or units violating laws having their operating licenses revoked by competent authorities.

5. Workers who are state-owned enterprise employees without signed labor contracts, when leaving their jobs without fault, the employer shall be responsible for negotiating with them regarding the severance allowance, which is at least half a month's salary plus any allowances, for each year worked at the unit. At the same time, the employer shall guide them to complete procedures to enjoy social insurance benefits according to the current Social Insurance Regulations.

6. State-owned enterprise employees transitioning to signing labor contracts as stipulated in Article 12 of Decree No. 198/CP, are detailed as follows:

Employees belonging to regular forces (old establishment) working in state-owned enterprises that have not yet signed labor contracts or have signed fixed-term labor contracts of one year or longer or less than one year, the employer must transfer them to sign indefinite-term labor contracts within three months from the date this Circular takes effect.

IV. IMPLEMENTATION

1. This Circular takes effect from the date of issuance.

2. Provincial People's Committees' Departments of Labor, Invalids, and Social Affairs are responsible for assisting provincial and municipal People's Committees in organizing guidance, urging, and inspecting the implementation of this Circular.

3. This Circular shall be disseminated to workers and units employing labor.

Any issues encountered during implementation should be promptly reported to the Ministry of Labor, Invalids, and Social Affairs for research and resolution.