With 145 articles arranged in eight chapters, the draft law expands the scope of compulsory unemployment insurance, sets out flexible regulations on levels of unemployment insurance premium payment, adds more unemployment insurance benefits, and provides additional incentives for Vietnamese workers wishing to work abroad.

Compared to the 2013 Law on Employment, the draft law has three more groups of employees in the state and non-state sectors who would be obliged to participate in unemployment insurance.

Illustrative image (internet)

The first group consists of employees working under labor contracts with a term of one month or longer. The second group encompasses part-time employees whose monthly wage is equal to or higher than the wage used as a base for mandatory social insurance payment, which is at least half of the highest region-based monthly minimum wage announced by the Government. The third group comprises salaried enterprise managers and supervisors, representatives of the state capital and representatives of enterprises’ capital contributions at companies and parent companies, and managers and executives of cooperatives and unions of cooperatives.

Employees working under probationary contracts; persons being on pension, social insurance allowances or monthly allowances; workers eligible for pension benefits but yet to receive pension; and domestic workers would not be required to participate in unemployment insurance.

Regarding the rate of contribution to the Unemployment Insurance Fund, the 2013 Law on Employment stipulates that both employers and employees must pay unemployment insurance premium at the fixed rate of 1 percent of employees’ monthly wage. The draft law no longer sets a fixed rate. It instead stipulates that every month, each employee would pay at most 1 percent of his monthly wage to the Unemployment Insurance Fund and each employer would make contribution to the Fund at the maximum rate of 1 percent of monthly wages of employees currently participating in unemployment insurance. In addition, the State might provide support for payment of unemployment insurance premiums not exceeding 1 percent of the monthly wage fund. The specific rate of contribution to the Unemployment Insurance Fund would be decided by the Government to suit practical situation in each period.

Illustrative image (internet)

Notably, unemployment insurance participants would be entitled to more benefits under the draft law. In addition to unemployment allowance and career counseling and job placement for unemployed workers, the Unemployment Insurance Fund would provide support for employers to organize training and further training to employees to help them improve their qualifications and occupational skills and for employees to participate in training courses and sitting in assessment for grant of national occupational skills certificates. In addition, employers that employ people with disabilities would also receive financial support from the Unemployment Insurance Fund.

In cases of economic crisis or recession, disasters, fires, enemy sabotage or dangerous epidemics, the Government would, based on the Unemployment Insurance Fund’s balance, prescribe the provision of support in the form of cash assistance, support for payment of unemployment insurance, among others.

In order to create opportunities for more Vietnamese workers to go abroad to work as guest workers, the draft law also expands the scope of subjects eligible for borrowing preferential loans for such purpose. They include ethnic minority people; members of poor and near-poor households, households having just escaped poverty and households with an average standard of living; relatives of people with meritorious service to the revolution; workers in ethnic minority and mountainous areas and extremely difficult communes in alluvial areas, coastal areas and islands; people subject to recovery of agricultural land; and youths having fulfilled the military or police service obligation or completed working under volunteer programs, schemes and projects and young intellectuals having accomplished tasks in defense-economic zones.

The draft law is scheduled to be tabled to the National Assembly for discussion in October this year.

The labor law in Vietnam is grounded in the Labor Code, which has undergone several amendments to adapt to the changing socio-economic landscape and international labor standards. The Labor Code outlines the rights, obligations, and responsibilities of employees and employers, covering various domains such as employment contracts, working hours, wages, labor discipline, and dispute resolution.

Employment Contracts in Vietnam
A cornerstone of the labor law in Vietnam is the employment contract, which formalizes the employment relationship between the worker and the employer. The Labor Code mandates that employment contracts be in writing, specifying terms and conditions such as job description, working hours, salary, and workplace policies. It distinguishes between definite and indefinite contracts, offering flexibility while ensuring job security for employees.

Working Hours and Overtime in Labor Contract
Labor law in Vietnam stipulates a standard workweek of 48 hours, typically divided into six working days. However, to accommodate business needs and employee well-being, the law allows for overtime, capped at a certain limit and subject to additional pay. Employers are required to ensure that overtime does not exceed the legal maximum and that employees are compensated fairly, reflecting the importance placed on work-life balance.

Wages and Benefits 
Wages are a critical component of labor law in Vietnam, with the government periodically setting minimum wage standards to protect workers’ living standards. Employers must comply with these standards and ensure timely payment of wages. Additionally, labor law in Vietnam encompasses various social and health insurance benefits, mandating employer and employee contributions to support workers’ welfare.

Labor Discipline and Termination
Labor law in Vietnam provides a clear framework for labor discipline and the termination of employment. Employers are required to establish clear disciplinary procedures and only terminate employment contracts under conditions strictly defined by the law, such as performance issues, misconduct, or business downsizing. This ensures that termination decisions are fair, transparent, and justifiable.

Dispute Resolution
Dispute resolution is an essential aspect of labor law in Vietnam, offering mechanisms for addressing grievances and conflicts in the workplace. The Labor Code encourages mediation and arbitration as the first steps in resolving disputes, with litigation as a last resort. This approach emphasizes dialogue and mutual understanding, aiming to preserve employment relationships whenever possible.

Labor Unions and Collective Bargaining
Labor law in Vietnam recognizes the role of labor unions in protecting workers’ rights and interests. Unions are actively involved in negotiating collective bargaining agreements, which cover working conditions, wages, and benefits. This collaborative process between employers and unions underlines the collective approach to labor relations promoted by Vietnamese labor law.

Occupational Safety and Health
Ensuring a safe and healthy work environment is a fundamental principle of labor law in Vietnam. Employers are obligated to comply with safety regulations, conduct regular risk assessments, and provide training and protective equipment to employees. This reflects the commitment to minimizing workplace hazards and protecting employee well-being.

Compliance and Enforcement
Compliance with labor law in Vietnam is enforced through regular inspections and penalties for violations. Employers must maintain accurate records of employment contracts, wages, and working hours, and are subject to audits by labor authorities. This enforcement mechanism ensures adherence to labor standards and deters non-compliance.

Labor law in Vietnam plays a pivotal role in shaping the employment landscape, balancing the needs of employers and the rights of employees. By adhering to these guidelines, businesses can foster a compliant, ethical, and productive workplace.

As Vietnam continues to integrate into the global economy, the evolution of its labor law will remain crucial in attracting investment and promoting sustainable development. Understanding and implementing the principles of labor law in Vietnam is not just a legal obligation but a strategic advantage in building a resilient and motivated workforce