This content is from: Local Insights

Vietnam: Overtime work in Vietnam

Nguyen Thi Thanh Huong

Cheaper labour and long-working hours are advantages for developing countries wishing to attract foreign investment. Vietnam is one Asian country which has these advantages. According to Labor Code 2012, a normal working day is eight hours-long, which amounts to 48 hours a week. The current minimum wage for low-skilled employees in private companies ranges from VND2,400,000 to VND 3,500,000 ($109 – $159).

Nevertheless, private enterprises, including foreign-invested companies, are concerned with the regulations on overtime work, specifically the cap on total overtime working hours. At present, an employer may agree with its employees to work overtime provided that, among other things, the number of overtime hours does not exceed 50% of the normal working hours in one day, does not exceed 30 hours in one month, and the total overtime hours is not over 200 hours in one year. Three hundred hours per year are allowed in certain circumstances only including for those enterprises which engage in manufacturing or processing of export products being garments, leather, shoes, and those processing agricultural, forestry or aquatic products. Failure to comply with legal regulations could result in administrative sanctions and possible suspension of business operations.

In practice, many enterprises need their employees to work overtime beyond the statutory limitation and the employees, to increase their income, voluntarily agree to work beyond such limitations. Consequently, there are enterprises that have no choice but to accept the legal risk and expose themselves to legal sanctions.

The good news is that an amended Labor Code is expected to be submitted to the National Assembly in the first half of 2017. The enterprise community voiced their concerns surrounding overtime, and proposed the government remove, or at least increase the allowable overtime hours, based on the argument that any overtime should be mutually agreed between employers and employees. Although the contents of the draft has not been publicly disclosed yet, it seems the enterprises' proposal could be under consideration. Foreign investors who are hesitating where to invest in Asia may need to consider this new move from the new government of Vietnam which is pondering how to attract more investors in the country, together with Vietnam's other strengths, before making a final decision.

Nguyen Thi Thanh Huong

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