Vietnam passed a new Labor Law in 2019 and will officially take effect on January 1, 2021. The main purposes include improving the flexibility of the labor market, strengthening the protection of workers’ rights and interests, promoting the coordination of labor relations, and improving Vietnam’s compliance with international labor standards . This revision has brought many major changes to the work in Vietnam. The businesses they operate have had an inevitable impact. Let’s take a closer look at the key revisions and their practical impact on businesses.

Changes in labor contracts

Vietnam’s Labor Law has made significant adjustments in terms of contract types. According to Article 22 of the 2012 Labor Law, labor contracts are divided into three categories: non-fixed-term labor contracts, fixed-term labor contracts of 12 to 36 months, and Article 20 of the 2019 new Labor Law cancels seven Or the type of specific work contract, only two contract types: indefinite period and fixed period are retained. This change is intended to simplify the contract system and reduce the supply of short-term contracts.

The new law imposes stricter regulations on the use of fixed-term contracts. According to Article 20, Paragraph 2, of the new law, the employer and the employee can only hire a fixed-term contract for a maximum of two times, after which they must convert to a non-fixed-term contract or terminate the labor relationship. This provision is more stringent than the old law, which allowed multiple renewals of fixed-term contracts. This change will prompt companies to plan the use of fixed-term contracts more carefully and require long-term employment strategies in advance.

The new law introduces a major innovation in the way contracts are performed. Article 14, paragraph 1, of the new law explicitly allows the ordering of labor contracts through electronic means, as long as the electronic contract complies with the provisions of the Electronic Transactions Law. This change opens up new possibilities for remote working and digital human resources management, which is extremely important especially in the context of the current global epidemic.

In addition, the new law also provides detailed provisions on the content of contracts. Article 21 of the new law requires that labor contracts must include job description, work location, basic salary, working hours, rest periods, labor protection, social insurance, etc. This is more detailed than the old law and helps reduce contract requirements.

These changes have had an inevitable impact on corporate employment strategies. First, canceling pandemic contracts may increase the share of businesses handling short-term or temporary work. Enterprises need to redesign their employment plans and may rely more on labor dispatch or outsourcing services to meet temporary employment needs.

Restrictions on the use of fixed-term contracts will push companies to place greater emphasis on long-term talent development and retention. Companies need to consider whether they are willing to establish long-term employment relationships with employees when issuing a second fixed-term contract, which requires companies to make talent assessments and career development plans in advance.

The legalization of electronic contracts provides businesses with greater flexibility, particularly when it comes to recruiting and managing remote workers. However, enterprises need to ensure that their electronic contract systems comply with relevant legal requirements and establish corresponding management systems.

The refinement of contract content requires companies to formulate contracts and review labor contracts more strictly to ensure that the terms are comprehensive and clear, and to eliminate possible legal risks in Palestine.

Generally speaking , the changes in labor contracts in the new Labor Law reflect the Vietnamese government’s efforts to balance capital-labor relations and improve labor market flexibility. Enterprises need to deeply understand these changes, promptly adjust labor strategies and human resource management practices to adapt to the new legal environment, and at the same time make full use of the opportunities brought by the new law to enhance competition.

Modify working hours and overtime regulations

In terms of overtime hours, the new law has made obvious adjustments. Article 106 of the 2012 Labor Law stipulates that overtime work shall not exceed 30 hours per month. However, Article 107 of the new Labor Law in 2019 increased this limit to 40 hours. This change provides businesses with greater flexibility, especially during peak production seasons or critical periods for projects. It is worth noting that the annual overtime limit remains at 200 hours, but under special circumstances and through labor management, this is more flexible than the old law, which only allowed certain industries to extend to 300 hours.

The new law also introduces more flexible ways of organizing working hours. Article 105 of the new law allows employers to implement daily working hours or weekly working hours based on consultation with employees. This means that companies can flexibly arrange working hours based on production needs while ensuring that employees work no more than 12 hours a day and no more than 48 hours a week. For example, an enterprise can implement a four-day work system with 10 hours of work per day, as long as employees are guaranteed to have at least 24 hours of continuous rest time per week.

Article 108 of the new law specifically stipulates the calculation method for overtime wages. Overtime wages on working days shall not be less than 150% of normal wages, overtime wages on rest days shall not be less than 200%, and overtime wages during holidays or paid annual leave shall not be less than 300%. It is basically the same as the old law, but the provisions of the new law are more clear and systematic.

These changes significantly increase the flexibility of business operations. First, the increase in the monthly overtime limit allows companies to better monitor production fluctuations, especially in the case of concentrated orders or project emergencies. However, companies need to pay attention to reasonable arrangements for overtime to avoid employee fatigue and reduced efficiency caused by excessive overtime.

Secondly, flexible work schedules offer businesses more. For example, manufacturing companies can adjust production shifts according to order conditions, and service companies can flexibly arrange employee working hours according to peak passenger flow. This not only improves production efficiency but also better meets customer needs.

This flexibility also brings new challenges. Enterprises need to establish a more complete working time management system to ensure accurate recording of employees’ working hours and overtime. At the same time, communication with employees also needs to be strengthened to ensure that the new working hours are understood and supported by employees.

In addition, companies also need to pay attention to balancing flexibility and employee rights protection. While the new law provides more flexibility, it also emphasizes employees’ right to rest. For example, Article 109 of the new law stipulates that if an employee works continuously for 8 hours or more, he must have a break of at least 30 minutes.

Changes in retirement policy age

Vietnam’s new “Labor Law” has made major adjustments to the retirement age policy, which is an important measure to deal with the aging of the population and changes in the labor market.

In the 2012 Labor Law, Article 187 stipulates that male employees retire at the age of 60 and female employees retire at the age of 55. Article 169 of the new Labor Law in 2019 introduced a plan to gradually increase the retirement age. From January 1, 2021, the retirement age for men will increase by 3 months every year until reaching the age of 62 in 2028; the retirement age for women will increase by 4 months every year until reaching the age of 60 in 2035. The goal of this gradual adjustment is to give society and businesses enough time to adapt to changes.

Specifically, the new law provides for a phased implementation plan. Taking men as an example, the retirement age is 60 years and 3 months in 2021, 60 years and 6 months in 2022, and so on until reaching 62 years old in 2028. The adjustment period for women is longer. The retirement age will be 55 years and 4 months in 2021, 55 years and 8 months in 2022, and so on until reaching 60 years old in 2035. It is worth noting that the new law also provides flexibility for special circumstances. For highly skilled workers or employees in management positions, retirement can be postponed for up to 5 years; for employees engaged in strenuous or hazardous work, retirement can be advanced for up to 5 years.

This policy change has had an inevitable impact on the company’s human resource planning. First, extending the retirement age means companies can retain experienced workers for longer, which is critical for roles that require high skills and extensive experience. In manufacturing and technology-intensive industries, the experience of senior employees is often a valuable asset, and extending the retirement age can help companies maintain technological advantages and production efficiency.

Secondly, the extension of the retirement age has also brought new challenges to enterprises. Companies need to redesign career development paths and noble systems to accommodate employees’ longer careers. This may include adding mid- to senior-level positions, or creating new positions. At the same time, companies also need to pay attention to the health management and work ability maintenance of older employees, and may need to invest more resources in employee health plans and skills training.

In addition, changes in retirement age will also affect the construction of corporate talent echelons. The highlight opportunities of young employees may be affected to a certain extent, and companies need to put forward more plans for talent training and highlight channels to maintain the vitality and innovation capabilities of the organization. This may involve more flexible work arrangements, such as partial retirement plans or mentorship development that allows older workers to gradually reduce their workload while passing on knowledge and experience to younger workers.

For labor-intensive industries such as textiles and shoemaking, the extension of the retirement age may bring greater challenges. These industries often rely on a younger workforce, and companies may need to adjust workflows and job settings to accommodate the needs of older workers.

From a business perspective, the extension of the retirement age may increase the company’s labor costs because older people generally earn higher salaries. Companies need to balance the need to retain experience with the need to control costs, and may need to consider adjusting salary structures or introducing more flexible employee employment methods. This change also provides opportunities for companies to reconfigure their human resource strategies. Businesses can take advantage of this change and build work environments that reinforce prevention and confidence, leveraging the strengths of people of color. For example, project teams with cross-age employees can be counted to promote knowledge transfer and innovation.

Anti-Discrimination and Workplace Protections

Vietnam’s new Labor Law has made significant improvements in anti-discrimination and workplace protection, which reflects the Vietnamese government’s determination to create a fair and safe working environment. First, the new law significantly expands the scope of counter-restrictions. Article 5 of the 2012 Labor Law already prohibits employment based on gender, race, social class, marital status, religion, AIDS status, disability, or participation in trade union activities. Article 8 of the 2019 new Labor Law This scope was further expanded to include new protection categories such as age, nationality, ethnic origin, social origin, family responsibilities and pregnancy risks. This expansion means that companies need to be more stringent in recruitment, sailing, training and daily management to ensure that these factors are not affected and result in restricted behavior.

What is particularly pointed out is that the new law clearly includes sexual harassment within the scope of legal regulations for the first time. Article 8, Paragraph 2 clearly stipulates that sexual harassment in the workplace, including any form of sexual behavior, whether physical, verbal or non-verbal, is considered sexual harassment as long as it violates another person’s wishes. The breadth of this definition provides victims with more comprehensive legal protection.

Article 118 of the new law also specifically requires employers to include provisions to prevent sexual harassment in internal labor rules. This includes prohibiting sexual harassment, stipulating procedures for handling sexual harassment, and penalties for sexual harassment. This requires companies to proactively take prevention and preventive measures to deal with sexual harassment, rather than passively waiting for problems to occur.

To implement these new regulations, companies need to take a series of measures. First, companies need to comprehensively review and revise their recruitment, expectations and day-to-day management systems to ensure there are no constraints of any kind. This may include establishing an anonymous resume screening system and developing a competency-based system. improve standards and conduct regular fairness reviews.

Second, companies need to develop detailed anti-sexual harassment policies. This is not only a legal requirement, but also necessary to establish a safe and friendly work environment. Policies should include a clear definition of sexual harassment, reporting channels, investigation procedures, confidentiality measures, and measures to target sexual harassers. Importantly, these policies should be available in Vietnamese and in a language that all employees can understand.

Third, companies should develop comprehensive training programs. This includes anti-discrimination and anti-sexual harassment training for all employees to help them identify and prevent inappropriate conduct. Training is particularly important for managers, who need to learn how to properly handle sexual harassment complaints and how to create a confrontational work environment.

In addition, companies should also establish an effective complaint mechanism. The mechanism should be easy to use, confidential, and responsive. A dedicated hotline or email address could be set up, or even a dedicated equality and confirmation officer appointed to deal with such issues.

Businesses also need to regularly relax workplace dynamics. Anonymous surveys, focus group discussions, etc. can be used to understand employees’ views on the work environment and to promptly identify and resolve potential prohibition or harassment issues. Corporate leadership should lead by example and follow through on their commitments. Implementing these measures may increase short-term costs and administrative complexity for businesses. However, in the long run, these measures will help companies establish a more harmonious and efficient working environment, improve employee satisfaction and productivity, and enhance the company’s competitiveness and attractiveness in the talent market. In addition, strict compliance with these new regulations can help companies avoid potential legal risks and serious damage.

New developments in trade union and employee organization representation

Vietnam’s new Labor Law introduced significant changes in trade unions and employee representative organizations, triggering an important transformation of Vietnam’s labor relations system. The most striking change in the new law is the introduction of the concept of “worker representative organizations within enterprises.” Paragraph 3 of Article 3 of the 2019 Labor Law stipulates this organization for the first time, describing it as an organization established in accordance with the law at the enterprise level to represent and protect the rights and legitimate interests of workers. This regulation breaks the monopoly of the Vietnam Federation of Trade Unions and provides workers with more choices. According to Article 172 of the new law, in addition to traditional trade union organizations, workers can now choose to establish or join other forms of representative organizations. The importance of this change cannot be ignored, bringing more confidence and flexibility to collective labor relations in Vietnam.

At the same time, the law significantly expanded the scope of collective bargaining. Article 72 provides that collective bargaining can be conducted at the enterprise level, at the level of multiple enterprises or at the industry level. This means that both labor and management can choose a more suitable new actual bargaining system based on their needs, especially collective bargaining at the multi-enterprise level, which provides companies in the same region or industry with the opportunity to deal with factory issues well. The new law also introduces the “extended application of collective labor agreement” mechanism in Article 84, allowing collective bargaining in an industry or region to be applied to enterprises that have not participated in negotiations under certain conditions, which further enhances the influence of collective bargaining. .

These changes have had an inevitable impact on the industrial relations management of enterprises. First, companies need to adapt to the possible emergence of worker representative organizations. This means HR may need to deal with multiple organizations, not just traditional unions. New communication channels and consultation mechanisms need to be established to ensure that effective dialogue is maintained with all representative organizations. This may increase management complexity, but it also provides opportunities for building more pluralistic and democratic industrial relations.

The expansion of the collective scope requires companies to become more proactive in participating in industry-level dialogue. Companies not only need to pay attention to their own industrial relations dialogue, but also need to pay attention to industry trends and participate in broader collective conversations. Invest more resources into labor relations management, including developing professionals with collective bargaining skills.

In addition, the new law strengthens information transparency requirements. Article 71 imposes an obligation on the employer to provide the necessary information to enable collective communication. This means that companies need to establish a more transparent information sharing mechanism, which may involve sensitive information such as financial status and production plans. Although this may bring some challenges to companies, in the long run, enhanced transparency will help build mutual trust and promote harmonious labor and management. relation.

The new law also emphasizes the principle of good faith diplomacy. Article 73 requires both parties to negotiate in good faith and without any interference, intervention or coercion. The regulations lay the foundation for a healthy negotiation culture, but also require corporate police to cultivate new presentation skills and mindsets.

For multinational businesses, these changes may create additional challenges to consider. They need to comply with Vietnam’s new laws and regulations while also maintaining consistency with global factory policies. This may require more flexible localization strategies to adapt to Vietnam’s unique labor relations environment.

These changes also bring opportunities to businesses. By actively participating in the new labor relations model, companies can establish more stable and harmonious labor relations and improve employee satisfaction and loyalty. Convinced representatives of organizations can bring more innovation and help improve working conditions and increase productivity. In addition, participating in broader collective bargaining can help companies better understand industry trends and develop more alternative labor policies.

Adjustments to management policies for expatriate employees

Vietnam’s new “Labor Law” has made major adjustments to the foreign labor employee management policy. These changes are intended to simplify administrative procedures and improve the efficiency of foreign talent introduction. They also bring new considerations to corporate employment strategies. The simplification of the work permit application process is a highlight of the new law. Articles 151 and 152 of the 2019 Labor Law make new provisions on the application and implementation of work permits. Compared with the old law, the new law simplifies the application material requirements and spends a neon time. Specifically, the new law eliminates the requirement for non-criminal record certificates for overseas dispatched employees, and only requires a criminal record statement from the country of original residence. In addition, the neon time has been increased from the original 7 working days to a maximum of 5 working days. These changes have greatly reduced the administrative burden on enterprises and accelerated the introduction of foreign talents.

The new law also introduces the concept of “work permit passport confirmation”. According to Article 154, companies can apply for this confirmation letter for foreigners who meet passport conditions, further simplifying the procedure. The processing time of this confirmation letter is 3 working days a week, which is faster than the application for a formal work permit.

The new law significantly expands the circumstances under which expropriation permits can be obtained. Article 154 details 11 types of expropriation permit situations, which is wider than the scope of the old law. The most eye-catching one is that foreign experts, managers, and technicians who work in Vietnam for no more than 30 days and a total of no more than 90 days per year can obtain a printer work permit. This provides great convenience for short-term projects and technical support. In addition, foreign employees who are transferred within the company can also obtain an Elephant work permit as long as they have worked in affiliated companies outside Vietnam for 12 months. This provides multinational companies with greater flexibility in talent mobility.

The new law also relaxes the requirements for certain special talents. For example, foreign employees who are recognized as experts and technicians are not subject to academic qualification restrictions if they have at least 3 years of relevant work experience and are recognized by relevant departments of the Vietnamese government. This provides more possibilities for companies to introduce talents with special skills.

These changes have had an inevitable impact on the company’s employment strategy. First, relaxed procedures and expanded leave coverage provide businesses with greater flexibility. Businesses can more easily bring in short-term experts or technicians to meet specific project needs or need to solve technical challenges. This is especially beneficial for industries that need to introduce international professional talents, such as IT, consulting, high-end manufacturing, etc.

It is worth noting that these changes may affect companies’ talent localization strategies. As it becomes easier to bring in foreigners, some companies may be tempted to rely more on foreign experts in the short term rather than investing in long-term development of local talent. Companies need to weigh short-term efficiency and long-term sustainability, ensuring appropriate knowledge transfer and local talent development.

Furthermore, the new policy choices provide enterprises with more talent allocation. For example, companies could consider adopting a “job rotation” model, allowing foreign experts to visit Vietnam regularly for short periods of time, rather than on a long-term basis. Not only does this reduce costs, it also allows more employees to benefit from the experience of international experts.

Of course, these changes also bring new challenges. Although the procedures have been simplified, companies need to grasp policy details more accurately to ensure compliance. For example, for short-term work without work permits, companies need to establish strict time tracking mechanisms to ensure that benchmark limits are not exceeded. Companies also need to strike a balance between using foreign employees and cultivating local talent. The Vietnamese government encourages technology transfer and local talent cultivation, and companies should formulate long-term talent development plans to gradually improve the skill levels of local employees.

New provisions on dismissal and labor disciplinary sanctions

Vietnam’s new Labor Law introduces a series of important changes in dismissal and labor discipline. These adjustments are designed to provide enterprises with greater flexibility while also strengthening the protection of workers’ rights and interests. First, the new law significantly expands the circumstances under which an employer can unilaterally terminate a labor contract. Article 36 of the 2019 Labor Law lists a variety of circumstances under which an employer can unilaterally terminate a labor contract, which is significantly expanded compared to the old law in 2012. The additional behaviors include: employees providing suspected information that affects record-keeping decisions, employees being absent from work for 5 days/month or 20 days/year without justifiable reasons, reaching retirement age, etc. These changes provide more legal basis for companies to deal with serious violations or incompetent employees. The special meaning is that Article 36, paragraph 2, of the new law clearly stipulates that employers must notify employees of their dismissal decision in advance, and the notification period depends on the type of contract. It varies from 30 days to 45 days. This regulation not only protects the rights and interests of employees, but also provides enterprises with reasonable operating space.

However, the new law also strengthens penalties for illegal dismissal. Article 41 stipulates that if the court determines that the dismissal is illegal, the employer must not only restore labor relations, but also pay wages, social insurance and medical insurance, as well as compensation equivalent to at least two months’ wages. This provision is intended to prevent companies from underpaying wages and protect employees’ right to work.

In terms of labor disciplinary sanctions, the new law simplifies procedures but also adds some protective measures. Article 122 simplifies the disciplinary procedure and removes the requirement that a trade union representative must be present, as long as the employee is present. This provides businesses with greater flexibility and efficiency. However, the new law also adds protection for special groups. For example, Article 122, paragraph 5, stipulates that labor disciplinary sanctions shall not be imposed on pregnant female workers, female workers on maternity leave, or parents who are raising babies under 12 months old.

The new law still clearly requires enterprises to formulate internal labor rules in Article 118, and stipulates in detail the necessary content of the rules in Article 119, including working hours, rest times, workplace order, labor safety and health, protection of assets and trade secrets, and the handling of violations of labor disciplines, etc. This requires enterprises to be more institutionalized and comprehensively manage labor relations.

These have brought new challenges and opportunities to the personnel management of enterprises. First, companies need to comprehensively develop and update their internal labor rules and disciplinary procedures to ensure compliance with new regulatory requirements. This may require a large investment of time and resources, but in the long run it will help establish a clearer and fairer labor relations management system.

Secondly, although the expanded penalties give companies more flexibility, they also increase potential legal risks. Businesses need to handle dismissal cases more rigorously, ensuring that every step is supported by sufficient evidence and that baseline procedures are strictly adhered to. It may be necessary to strengthen the legal knowledge training of the human resources department, or even consider professional employment law consultants.

Furthermore, although the simplified disciplinary procedures have improved efficiency, they also require companies to pay more attention to the fairness and transparency of the procedures. Reducing employee participation may lead to increased disputes over disciplinary decisions, and companies need to establish more complete internal appeals and employee reconsideration mechanisms to maintain harmony in labor relations.

In addition, protective measures for special groups require companies to be more flexible and humane when dealing with related employee issues. This may require the development of dedicated policies to deal with these special circumstances, such as temporary redeployments or flexible working arrangements.

The new law’s detailed requirements for internal labor rules provide companies with the opportunity to reconfigure and optimize their overall human resources management system. Companies can weaken opportunities, not only ensure compliance, but also improve management efficiency and enhance corporate culture.

Strengthening of protection measures for special groups

Vietnam’s new Labor Law has made significant improvements in the protection of special groups, especially strengthening the protection of female employees and the rights and interests of canceled workers. In terms of protecting the rights and interests of female employees, the new law introduces a series of progressive measures. Article 137 of the 2019 Labor Law clearly stipulates that employers shall not restrict female employees due to pregnancy, childbirth or other reasons. This provision is clearer and more comprehensive than the old law. The new law also extends the maternity leave period in Article 140, from the original 6 months to 6 months and 5 days. This small but important change reflects the importance lawmakers place on maternal and infant health.

It is worth noting that the new law strengthens job protection for pregnant women. Article 137 stipulates that employers shall not arrange for female employees who are more than 7 months pregnant or who are receiving babies under one year old to work overtime, night shifts or business trips. This is better than the old law. In addition, Article 138 requires employers to provide female employees with 60 minutes of paid rest time per day to provide adequate rest. This regulation not only protects the rights and interests of female employees, but is also conducive to the healthy growth of young children.

The new law also significantly strengthens the protection against child labor . Article 143 raises the prohibition on child labor from under 18 years of age to under 18 years of age but over 15 years of age, which means that children under 15 years of age are completely prohibited from employment. The new law still lists in detail in Article 144 the types of work that prohibit illegal child labor , including exposure to toxic substances, working in dangerous or harmful environments, etc. These mainly provide for protection standards for illegal workers.

The new law also introduces some innovative measures. For example, Article 80 stipulates that when discussing issues involving women’s rights and interests, employers must give priority to the opinions of female employee representatives. This provision provides laws for female employees to participate in decision-making. In addition, Article 136 encourages employers to create conditions for female employees to have a short break during childbirth, which reflects respect and care for women’s physiological characteristics.

These changes pose new challenges to corporate human resource management, but also create opportunities. First, enterprises need to comprehensively deploy and update their internal policies to ensure that the modifications fully comply with the new law’s protection requirements for special groups. This may involve scheduling work hours, adjusting workplace facilities (such as adding job rooms), and redesigning the work content of certain positions.

Secondly, companies need to strengthen training for managers to ensure that they fully understand and correctly implement these new regulations. This is not only a requirement for legal compliance, but also an important step in establishing a prevention and control work environment. Businesses may consider holding regular workshops or seminars to discuss how to implement these protective measures in daily management.

In the long term, however, these changes may increase short-term costs for businesses. For example, extending maternity leave may require businesses to adjust staffing or increase the use of casual workers. However, in the long term, these measures can help improve employee satisfaction and loyalty and reduce brain drain, thereby bringing long-term benefits to the company.

Businesses also need to create more flexible working arrangements. For example, consider introducing flextime or remote working options to better meet the needs of female employees and disabled workers. This not only helps comply with the law, but also enhances the company’s attractiveness in the talent market.

In addition, companies should actively communicate and negotiate with employees, especially female employee representatives. This is not only a legal requirement, but also an opportunity to gain valuable feedback and innovative ideas. Companies can set up special committees or working groups to regularly discuss and formulate policies on issues related to the rights and interests of female employees.

Finally, companies should consider these protective measures as part of corporate social responsibility and brand building. By actively publicizing and implementing these measures, companies can enhance their social image, attract more outstanding talents, and even gain competitive advantages in certain industries.

Changes in Labor Dispute Resolution Mechanism

Vietnam’s new Labor Law has made major adjustments to the labor dispute resolution mechanism. These changes are designed to simplify procedures and improve efficiency, while also providing more choices for enterprises and employees. The new law significantly simplifies strike procedures. Articles 200 to 205 of the 2019 Labor Law provide new provisions on the organization and implementation of strikes. The most striking change is the elimination of the distinction between “interest disputes” and “rights disputes.” Under the old law, only “interest disputes” (such as wages, benefits, etc.) can lead to legal strikes, while “rights disputes” (such as contract interpretation, etc.) must be resolved through other channels. The new law removes this distinction, making it possible for broader disputes to lead to strikes. This change increases the likelihood of this happening while also providing greater room for negotiation between labor and management.

The new law also simplifies the procedures for organizing strikes. Article 200 stipulates that a strike must be led by a trade union organization, but no longer requires the consent of at least 50% of the company. The change significantly lowers the threshold for organizing a strike, potentially making it easier for workers to strike. However, the new law also tightens controls on illegal protests. Article 204 clearly states that protests organized before the protest process has been completed will be deemed illegal. This requires companies and trade unions to pay more attention to early communication and protest procedures.

When it comes to conflicts , the new law strengthens the role of mediators . Article 188 stipulates that the mediator can not only conduct mediation in response to requests , but can also proactively intervene in potential conflicts and disputes. This move aims to promote the early resolution of disputes and prevent conflicts. The new law also extends the time limit in Article 190 from 3 working days to 5 working days, providing time for more adequate communication and consultation.

The new law also introduces some innovative measures. For example, Article 176 introduced the concept of “multi-employer bargaining” for the first time, allowing multiple enterprises to jointly engage in collective bargaining with trade unions. This provides new ways to solve industry or regional labor problems. Article 191 also provides that, in certain circumstances, the labor arbitration committee may directly make a binding decision without going through court proceedings. This helps speed up dispute resolution.

These changes have put forward new requirements for enterprises to prevent and handle labor disputes. First, companies need to pay more attention to daily employee communication and relationship management. To promote the reduction of corporate organizational structure, companies should establish a regular employee feedback mechanism to discover and solve potential problems in a timely manner. This may include establishing an employee hotline, submitting regular employee forums, or establishing an internal grievance-handling system.

Enterprises need to strengthen communication and cooperation with labor unions. The new law gives unions greater power, and companies should regard unions as important partners, not antagonists. You can meet regularly with union representatives to discuss employee concerns and work together to develop solutions. This proactive communication method can effectively prevent the accumulation and escalation of conflicts.

Then, companies should establish a professional labor dispute handling team. The team will not only need to be familiar with the new legal provisions, but also have skills in negotiation, protest and crisis management. Enterprises can consider providing professional training for relevant personnel or seeking external expert guidance. In addition, companies can also develop detailed accident plans. The new law emphasizes protest and negotiation, but the risk of containment remains. Companies need to be prepared to deal with possible protests, including how to maintain basic operations, communicate with employees and the media, and how to quickly resume normal production.

Businesses should actively participate in industry dialogue and multi-employer negotiations. By cooperating with peer companies and industry associations, we can jointly solve some common issues, such as wage standards and improvement of working conditions. This kind of collective action can not only enhance negotiation power, but also help establish industry standards and reduce the risk of grassroots enterprises becoming the focus of conflicts.

Adjustments to wages and social insurance policies

Vietnam’s new Labor Law has made major adjustments to wages and social insurance policies. These changes will not only affect the cost structure of enterprises, but will also have an inevitable impact on the entire labor market. First, the minimum wage determination mechanism has undergone significant changes. Article 91 of the 2019 Labor Law stipulates that the minimum wage will be determined by the government after recommendations made by the National Wage Commission based on factors such as socioeconomic conditions, cost of living and employer’s ability to pay. One change means that adjustments to the minimum wage will be more flexible and market-oriented. The new legislation allows for more frequent adjustments to the minimum wage, possibly annually or even biannually. This dynamic adjustment mechanism is designed to better reflect economic changes and labor market needs.

The new law still introduces the concept of “living wage” in Article 93. Although this is only a guiding concept at present, it lays the foundation for possible future policy adjustments. A living wage is usually a minimum wage that is designed to provide workers with a better quality of life. The introduction of this concept shows that the Vietnamese government is considering a more comprehensive labor welfare system.

In terms of social insurance, the new law significantly expands coverage. Article 168 stipulates that from January 1, 2022, foreign employees working in Vietnam must also participate in social insurance. This is a major change because foreigners only need to participate in social insurance to participate in medical insurance. The new regulations require foreign employees to participate in long-term insurance projects such as wages and death benefits. This not only increases the company’s labor costs, but also provides more comprehensive social security for foreign employees.

In addition, the new law also adjusts the retirement age in Article 169. Starting from 2021, the retirement age for men will gradually increase from 60 to 62 years old, and for women from 55 to 60 years old. This change will gradually increase the retirement age in the next 15 years. The increase in the retirement age will not only affect the human resource planning of enterprises, but also increase the sustainability of social insurance funds.

These changes have had many impacts on business costs and management. First, changes in the minimum wage adjustment mechanism require companies to pay closer attention to policy trends and have the ability to quickly adjust and restructure their structures. Enterprises need to establish a more restructured restructuring system, and may need to introduce factors such as variable wages or performance wages to balance cost control and employee incentives.

The expansion of social insurance coverage directly increases the labor costs of enterprises, especially for enterprises that employ a large number of foreign employees. According to the new regulations, companies are required to pay social insurance premiums of 3.5% of their wages for foreign employees. This may lead some companies to re-evaluate their foreign employee compensation, consider increasing the proportion of local employees or adjusting the structure of their compensation strategies.

The increase in retirement age has also brought new challenges and opportunities to enterprises. On the one hand, this means that companies can retain experienced employees for longer; on the other hand, it also requires companies to redesign career development paths, which may require the creation of new positions or roles to accommodate permanent employees. Companies also need to pay more attention to the health management and skill updating of older employees.

In response to these changes, companies need to take a series of measures. First, a dedicated policy monitoring team needs to be established to pay close attention to changes in minimum wage and social insurance policies and adjust internal policies in a timely manner. Secondly, companies should re-evaluate their compensation strategies and consider introducing a more flexible compensation structure, such as converting part of fixed salary to performance-based salary, to better control costs.

In terms of human resource management, companies need to develop more comprehensive employee development plans. This might include designing special roles or projects for older workers to leverage their experience for knowledge transfer. At the same time, we must strengthen the training of young employees and provide them with more eye-catching opportunities to help them.

In addition, companies should also strengthen communication with employees. Changes in wage and social insurance policies may cause concerns among employees, and companies need to transparently explain these changes and their impact and provide feedback and suggestions from employees. This not only helps maintain harmony in labor relations, but may also lead to innovative solutions.

Businesses should view these changes as opportunities to optimize overall operations. For example, some cost increases can be accounted for through opportunities to re-evaluate work processes and improve productivity. At the same time, you can also consider investing in automation technology to reduce dependence on labor.

Finally, the modern implementation of Vietnam’s new Labor Law has caused significant changes in the country’s labor legal system, reflecting Vietnam’s decision-making in adapting to a globalized economy and labor relations. As an expert who has conducted in-depth research on Vietnam’s labor laws, I believe that this revision of the law will have an inevitable impact on enterprises operating in Vietnam, especially foreign-invested enterprises.

The main features of the new law can be achieved in the following aspects: First, it significantly increases the flexibility of labor relations, such as relaxing working time arrangements, simplifying the types of labor contracts, and expanding the circumstances for unilateral termination of labor contracts. The new law strengthens the protection of special groups, especially female employees and laborers. In addition, it introduced more market-oriented mechanisms, such as the adjustment of the minimum wage determination mechanism and the expansion of the scope of collective bargaining. Finally, the new law also strengthens the social security system and expands the coverage of social insurance.

The overall impact of these changes on businesses is manifold. On the one hand, enterprises gain greater operational flexibility and can better respond to market changes and production needs. In addition, companies are also facing higher compliance requirements, especially in terms of employee rights protection, social insurance penalties, labor dispute settlement, etc., and companies need to make more efforts.

For enterprises operating in Vietnam, especially foreign-invested enterprises, it is recommended to adopt the following response strategies:

• Comprehensively develop and update internal policies and procedures to ensure full compliance with the new law.
• Strengthen the capacity building of the human resources management team, especially in labor law compliance and labor dispute resolution.
• Establish a more flexible compensation system and work schedule to balance cost control and employee satisfaction.
• Improve communication and negotiation capabilities with employees and trade unions, and establish harmonious labor relations.
• Pay close attention to the implementation details of the new law and subsequent interpretations of policies, and adjust corporate strategies in a timely manner.
• Consider hiring professional employment law counsel to assist with complex employment law issues.

appendix:

Comparison table of old and new laws and regulations:

• Labor Contract: Articles 13-52 of the New Law vs. Articles 15-53 of the Old Law
• Working hours and rest periods: Articles 105-117 of the new law vs. Articles 104-116 of the old law
• Wages: Articles 90-98 of the new law vs. Articles 90-98 of the old law
• Labor discipline and material liability: Articles 117-130 of the new law vs. Articles 118-131 of the old law
• Social Security: Articles 168-171 of the New Law vs. Articles 186-189 of the Old Law
• Trade Unions and Industrial Relations: Articles 172-194 of the New Law vs. Articles 188-210 of the Old Law

Implementation timetable of key provisions:

• January 1, 2021: The new Labor Law officially takes effect
• Starting from 2021: The retirement age begins to be gradually adjusted
• January 1, 2022: Foreign employees must participate in social insurance
• 2025: Retirement age reaches 61 for men and 56 for women
• 2028: Retirement age for men reaches 62
• 2035: Retirement age for women reaches 60