New Decree amending Decree No. 05/2015/ND-CP: Changes to legal provisions around labor contracts, severance allowance, job-loss allowance, disciplinary procedures and many more key labor issues to be effective on 15 December 2018 

On 24 October 2018, the Government issued Decree No. 148/2018/ND-CP ("Decree No. 148") amending certain provisions of Decree No. 05/2015/NDCP - one of the most important pieces of legislation guiding the implementation of the Labor Code. Decree No. 148 will take effect on 15 December 2018. We highlight below the most important changes introduced by Decree No. 148 around the content of labor contracts, calculation of severance allowance and job-loss allowance,retrenchment, labor discipline and other issues with details as below:

1. Simplified requirements for mandatory content of labor contract

Decree No. 148 removes certain unnecessary details of the former Decree's requirements of mandatory provisions in labor contracts, and allows the parties to refer to the employer's internal labor regulations, collective labor agreements, other internal policies or the relevant law. These provisions include:

  • salary review and increase;
  • working time and rest time;
  • labor protection equipment; and
  • social, health and unemployment insurance.
         

2. Changes to working periods for calculation of severance and job-loss allowances

Decree No. 148 clarifies a couple of points in relation to the working period for calculation of severance allowance and job-loss allowance, as below.

  • The following periods are removed from the working period used for calculation of severance allowance and job-loss allowance:
    1. probation period,
    2. period of apprenticeship and job practicing, and
    3. period of temporary detention or custody in relation to a case before a competent state agency, where the agency finds the employee not guilty.
  • The following periods are added to the working period used for calculation of severance allowance and job-loss allowance:
    1. the period during which an employee is off from work for treatment and recovery after labor accidents and occupational diseases, and
    2. the period during which an employee is off from work to perform paid citizen's obligations as required by law. 
         

3. Extended timeline to pay out termination benefits in M&A transactions

Decree No. 148 extends the timeline for the employer to settle termination benefits in terminations due to M&A transactions such as merger, consolidation, split or separation of enterprises or transfer of asset's ownership or use right, to within 30 calendar days from the termination date, instead of seven working days under the current regulations.

4. Detailed guidance on contents of the retrenchment notice to the provincial labor authority

Decree No. 148 provides that a retrenchment notice to the provincial labor authority must include the following information:

  • Name, address of the employer and its legal representative;
  • Total number of employees and the number of retrenched employees;
  • The reason for retrenchment;
  • Termination date; and
  • Specific amount of job-loss allowance to be paid.
        

5. Changes to labor discipline procedure

Importantly, Decree No. 148 abolishes the requirement to provide at least three invitations to the disciplinary hearing, before the employer can proceed at the invitees' absence. Specifically, Decree No. 148 provides that the employer only needs to send one invitation to the disciplinary hearing. Within three working days from the date of receipt, the invitees have to confirm their attendance. If they cannot attend the hearing, they have to provide a legitimate reason for their absence. In the event the invitees do not confirm their attendance, or the reason for their absence is not legitimate, or they confirm their attendance and then do not show up, the employer is allowed to conduct the disciplinary hearing in their absence. However, Decree No. 148 does not clarify what reasons can be considered "legitimate reasons" for the absence, nor clarify how many times the invitees can provide legitimate reasons to reschedule the hearing.

Decree No. 148 also provides that the authorized representative of the employer can sign and issue the labor disciplinary decision on all types of disciplinary measures, instead of only reprimand under the current regulations.

6. Clarification for dismissing employees who are absent from the workplace without a legitimate reason

Decree No. 148 clarifies that the employer does not have to wait until a full month (30 days) from the first day of absence if the employee has been absent for five accrued working days; or until a full year (356 days) from the first day of absence if the employee has been absent for 20 accrued working days, to dismiss the employee. As long as minimum 5 or 20 working days of absence is met respectively, the employer can commence the labor disciplinary procedure.

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