I. DECREE NO. 135/2020/ND-CP
Change in retirement age of employees as of 01/01/2021
Decree No. 135/2020/ND-CP (“Decree 135”) dated 18/11/2020 of the Government providing the regulations on retirement age under the Labour Code 2019, takes effect as of 01/01/2021.
Under The Labour Code 2019, the retirement age of employees with normal working conditions is adjusted as follows: (i) reaching 62 for male employees in 2028; and (ii) reaching 60 for female ones in 2035. Specifically, Decree 135 further clarifies that: from 01 January 2021, the retirement age of male and female employees shall be 60 years 03 months and 55 years 04 months respectively. Afterward, it shall increase by 03 and 04 months every year until reaching 62 and 60 for male and female employees respectively.
Nonetheless, employees own the right to retire at a lower age than the normal retirement age (but no more than 05 years lower) in the events that: (i) They have had a physically demanding or dangerous job or one in an impoverished area for 15 years or more; or (ii) Their working capacity has been reduced by 61% or more, etc. Besides, employees may retire at a higher age than the normal retirement age (but no more than 05 years higher) if they are skilled workers, and their employers agree to recruit them after they reach the normal retirement age.
We opine that the regulations on retirement age are of crucial importance and can produce significant effects on society and the economy. By increasing the retirement age, the Vietnamese Government aims to tackle population aging, promote socio-economic development of the country, ensure job opportunities for people, secure and boost insurance funds, and guarantee sexual equality. Moreover, the adjusted retirement ages which are gradually increased in an itinerary helps the labor market accustom to such new regulations smoothly. As the retirement age only increases by 03 or 04 months every year, the number of available workers will also increase slowly, thus avoiding redundancy on the job market. This will also prevent social unrest as employees and employers can have enough time to familiarize themselves with this significant amendment.
II. DECREE 145/2020/ND-CP
Clarifications on the regulations on working conditions and employment relations of the Labor Code 2019
Decree No. 145/2020/ND-CP (“Decree 145”) dated 14/12/2020 of the Government providing guidelines on the regulations of working conditions and employment relations under the Labour Code 2019, takes effect as of 01/02/2021.
1. Supplementing more requirements for unilateral termination of employment contracts in special works and lines of business
Accordingly, special works and lines of business such as aircrew, aircraft maintenance technicians, aviation repairmen; flight coordinators; enterprise managers as stipulated in the Law on Enterprises; crewmembers working on Vietnamese vessels operating overseas; etc.
For the above works and lines of business, the notice period for unilateral termination of employment contracts is as follows:
- At least 120 days if the employment contract has an indefinite term or a term of at least 12 months;
- At least a quarter of the term of employment contracts which is less than 12 months.
It is recognized that the above regulation benefits employers in special works and lines of business as they are allowed more time to find replacements when their employees unilaterally terminate the employment contract.
2. More periods are qualified as paid working time
For the sake of employees, Decree 145 qualifies the following periods as paid working time:
- Periods over which trainees and apprentices directly perform or participate in the performance of work; payments shall be as agreed by the parties;
- Periods over which employees who are members of the management board of the internal employee representative organization are employed to perform the duties prescribed Clause 2 Decree Clause 3 Article 176 of the Labor Code 2019;
- Time spent on registration and medical examination for military service if the employees are paid for as prescribed by military service laws; etc.
3. Extension of the rights of female employees
In the spirit of the Labor Code 2019, Decree 145 further provides several new regulations aiming to facilitate the rights of female employees and guaranteeing sexual equality:
- Have preferential recruitment policies for women if they are qualified for works that are suitable for both genders;
- Give priority to signing new employment contracts with female employees when the old ones expire;
- Allow pregnant female employees to have more than 05 times of one-day maternity leave;
- A female employee who is nursing a child aged under 12 months is entitled to a daily break of 60 minutes forbreastfeeding, milking and rest. If an employer has 1,000 female employees or more, a room for milking and breast milk storage is mandatory.
Although the practicability of those regulations largely depends on the enterprise, Decree 145 reflects the great humanity of labor laws that aim at properly and reasonably protecting the legitimate rights which should be owned by female employees.
4. Change in the method used to calculate salary as the basis for paying an employee for unused annualleave days
Accordingly, salary as the basis for paying an employee for unused annual leave days is the salary written in his/her employment contract of the month preceding the month in which the employee resigns or loses his/her job.
This regulation is more advantageous to employees in comparison with Decree 05/2015/ND-CP. Under Decree 05, salary as the basis for paying an employee for unused annual leave days is calculated according to their salary under the employment contract in the six months proceeding the month in which the employee resigns or losses his/her job (if they have worked for more than six months) or in the total term of the employment contract (if they have worked for less than six months).
5. More responsibilities of authorities and employers for providing employees with the best working conditions
Accordingly, Decree 145 supplements a regulation on nursery schools and kindergartens in areas with a large number of employees as follows:
- Provincial people’s committees shall allot lands for construction of nursery schools and kindergartens in areas with a large number of employees; or facilitate, in terms of land and credits, those who invest in the construction of nursery schools and kindergartens for the sake of employees.
- Encourage employers to construct or financially support provincial people’s committees in the construction of nursery schools and kindergartens.
6. Preferential tax policies for enterprises with a large number of female employees
- Enterprises with a large number of female employees shall enjoy preferential tax treatment under tax laws;
- Additional expenses on female workers, guaranteeing sexual equality, the prevention and combating of sexual harassment in the workplace are deductible upon determination of enterprise income tax.
This regulation benefits both employers and employees and serves as a means to increase the practicability of the aforementioned regulations extending and protecting the rights of female employees.
III. DECREE 152/2020/ND-CP
New regulations on foreign workers in Vietnam
Decree No. 152/2020/ND-CP (“Decree 152”) dated 30/12/2020 of the Government providing regulations onrecruitment and management of foreign workers working in Vietnam and Vietnamese employees working for foreign employers in Vietnam, takes effect as of 15/02/2021.
1. New regulation on the extension of work permits of foreign workers which have a remaining validity period of the work permit is at least 05 days but not exceeding 45 days
Application of work permits is a major concern of enterprises employing foreign workers. Enterprises should note that under Decree 152, work permits of foreign workers which have a remaining validity period of the work permit is at least 05 days but not exceeding 45 days shall not be re-issued as stipulated in Decree 11/2016/ND-CP (“Decree 11”) but be extended following the new regulation. Unexpired work permits shall only be re-issued if they are lost or damaged, or if there has been a change in names, nationality, passport number or workplace of the work permit holder. Work permits shall only be extended only once for a term of up to 02 years.
2. Amending the regulation on foreign workers eligible to work in Vietnam
Decree 152 also makes modifications to several definitions of foreign workers’ eligibility to work in Vietnam as follows:
- Regarding foreign workers who are managers, CEOs of enterprises, etc. moving to Vietnam to perform intra-company transfer program they are required to have been employed for at least 12 consecutive months by such enterprise, as opposed to only 12 months as stipulated in Decree 11;
- Regarding foreign skilled workers who do not have a Bachelor’s degree or the equivalent, they are required to have 05 years of experience and hold licenses suitable for their expected positions in Vietnam.
In general, Decree 152 imposes more stringent requirements regarding the expertise and experience of foreign workers who want to enter the Vietnamese labor market. It also allows foreign workers who have experience but do not have adequate qualifications a higher chance to work in Vietnam.
3. Expanding the scope of foreign workers who are not required to apply for work permits
As compared to Decree 11, Decree 152 supplements the following workers who are not required to apply for work permits:
- Owners/members of limited liability companies (in Vietnam) or presidents/members of the board of directors of joint-stock companies (in Vietnam) who contribute at least 03 billion VND to the share/equity capital of each company.
This regulation aims at preventing foreign investors from establishing a limited liability with a small equity capital or buying a small number of shares to be subjected to the exemption of work permits.
- Those responsible for establishing commercial presence.
This regulation is reasonable as the establishment of commercial presence, in reality, takes a huge amount of time due to administrative procedures, renting of land, construction of offices, recruitment of employees, etc.
As per the above analysis, it could be seen that the Government was aware of the shortcomings of the regulations on the issuance procedure of work permits for foreign workers in Vietnam and on Vietnamese employees working for foreign employers. These limitations have been tackled by Decree 152, which helps ensure greater transparency of the laws and allows foreign workers to easily come to work in Vietnam. It also encourages foreign workers to live and work in Vietnam and therefore promotes the socio-economic development of the country in the future.