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In April 2017, the Government released the draft decree to set forth a social insurance regime for foreigners in Vietnam. Under this draft, commencing from 1 January 2018, Vietnamese enterprises would be required to pay mandatory social insurance premiums for its foreign employees (excluding those on internal assignment to Vietnam).
Under this decree, the employer is required to contribute 18% of the foreign employee's monthly salary into the social insurance fund, while employees need to contribute 8%. The proposed regime has sparked some concern within the business community, considering the high rate of contribution which would escalate their costs of hiring expatriates.
A draft of the new Labour Code has been released and, if passed, would replace the existing Labour Code 2012.
Key changes in the draft (compared to the existing Labour Code) include (i) allowing termination without cause for definite term and seasonal / specific job contracts, (ii) automatic renewal or conversion of labour contracts in the event the employee continues working beyond the term in his / her existing contract, and (iii) redefining "salary" to include "bonuses", which aims to circumvent the current practice of employers decreasing their mandatory insurance premiums and severance obligations by declaring salaries as monthly "bonuses" instead of base salaries.
On 15 April 2017, Decree No. 22/2017/ND-CP guiding commercial mediation came into effect. The Decree marked the first specialised legislative instrument for commercial mediation. Prior to the Decree, the procedures for mediation and their treatment were governed by general instruments such as the Civil Code and the Commercial Law.
Under this Decree, disputants are able to refer a dispute to mediation pursuant to the rules of a mediation centre (e.g., VIAC's Rules of Conciliation) or the procedures proposed by a mediator. If the dispute cannot be settled by mediation, it may be referred to the court for final resolution. An agreed mediation outcome can be submitted to the courts for recognition and enforcement.
Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Rajah & Tann LCT Lawyers
Ho Chi Minh City Office
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HCMC, Vietnam
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Hanoi, Vietnam
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