The new Labour Code is scheduled to be enacted in 2018
or 2019. The latest version of the draft law presented for
solicitation of public opinion from April to June 2017
introduces some notable changes proposed by the government.
One of the most important positive changes is the
government's proposal to dramatically increase the maximum
permissible overtime from the existing limit of 200 hours to
400 hours per year. This existing limit has been criticised by
foreign investors as too short compared to other Southeast
Asian countries and as being unrealistic. Many companies in
Vietnam find it difficult to comply with this limit, not only
for their business demands, but also for their workers' demands
to work longer to earn more money. If the company rejects such
demands from its employees, workers can easily move to another
company that does allow them to work longer hours. The proposed
change is good news for both employees and employers, and will
contribute to increasing the number of orders from foreign
companies. Foreign companies are highly conscious of corporate
social responsibility and are unlikely to deal with companies
that violate labour regulations.
Another good move is the simplification of the work permit
procedure. At present, employers must have written consent from
the competent state authority to employ foreign workers, which
is a condition that precedes applying for work permits. Under
the draft law, however, this requirement is abolished except
for certain sectors.
However, one of the proposals detrimental to foreign
investors is the one that proposes to substantially increase
overtime payments. The existing proposal is expected to
severely hamper the government's efforts to boost the
competitiveness of Vietnam's labour market and achieve annual
increases in minimum wage.
Another notable point is that unilateral termination of
labour contracts by the employer remains unchanged and quite
difficult even under the draft law. This issue remains one of
the biggest bottlenecks to attract foreign investors.
It's worth noting that the matters mentioned above are just
proposals at that stage, as there are expected to be further
discussions on the draft.
|Kazuhide Ohya and Mai Thi
Nishimura & Asahi
Room 903A Sun Wah Tower
115 Nguyen Hue, District 1
Ho Chi Minh City, Vietnam
T: +84 28 38214432