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Wednesday, July 24, 2024

Legal framework for labor relations in a pandemic

By Lawyer Tran Van Tri(*)

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As Covid-19 erupts, how the tripartite relation involving employers, employees and the Government can strike a balance between stakeholders’ benefits and legal compliance is a pressing matter. This article offers insights into this issue.

The labor contract is a thread weaving through the balance between employees and employers. While the tie may be fragile, it is supported by the Government, which promises to handle offenses with integrity and fairness.

The current legal framework is rather comprehensive and can manage labor relations, even during the pandemic. Exceptions include some regulations that warrant clarification, so that they can be applied nationwide.


Article 99.3 of the Labor Code and Circular 264/QLLDTL – TL dated July 15, 2021 by the Ministry of Labor, Invalids and Social Affairs state that if employees cannot work due to quarantine or lockdown, the wages paid are based on negotiations but must be equivalent to at least regional minimum wages for 14 days. While it is not clearly stated, the understanding is that from the 15th day onwards,  employers can set wages (even to 0) without being perceived as violating the laws, citing that they have no choice. Article 351.2 of the Civil Code paves the way for such a scenario.

If employers decide to let employees work from home, the contract revision is in line with Article 33 of the Labor Code since the workplace has changed (Article 3.3b of Circular 10/2020/TT-BLDTBXH). To ensure safety, employers should issue regulations and ask employees to sign as an indication of consent. Issues covered should include (a) whether wages are unchanged or adjusted, (b) how to ensure adherence to working time, (c) how costs such as utilities and the Internet are settled, (d) exemption of responsibilities regarding workplace safety and (e) the use of online platforms, including email, for work (to avoid face-to-face interaction).

Arrangements under which workers do their jobs, dine and rest at the same place are a form of negotiations, rather than a requirement. Employees have the right to reject this arrangement and employers must still pay wages as instructed by Article 99.3 of the Labor Code, as well as Circular 1386/BQLKKT-QLLD dated July 13, 2021 by Tay Ninh Economic Zone Management Board.

Compulsory insurance

Article 42.1.8 of Decision 595/QD-BHXH dated April 14, 2017 states that if employees cease work but still earn wages, employees and the agencies will pay social security, medical insurance and unemployment benefits in line with the income received during this period. In particular, employers must carry out the procedure for making the necessary adjustments in line with Article 99.3 of the Labor Code and arrangements after the 14-day period.

If the wage is in line with the labor contract for half a month and Article 99.3 for the other half, are adjustments needed?

When employees fall sick or must undergo testing, payments are in line with Circular 5378/BYT-KHTC dated July 7, 2021 by the Ministry of Health.

Employers must also consider support by the Government in line with Resolution 68/NQ-CP dated July 1, 2021 (with Decision 23/2021/QD-TTg and Circular 1988/BHXH-TST by Vietnam Social Security as the guideline). Under this document, the differences will be added to the fund for handling occupational hazards and workplace accidents for 12 months. Employers are to use the extra money available due to the adjustments to help employees deal with the pandemic, but how this support takes place is unclear. Should it be considered part of the salary or a bonus? Should it be used to purchase masks or sanitizers? Other provisions include a temporary halt to pension fund payments for six months from the date of request (subject to several requirements) and support for enrollment in skill upgrading courses (up to VND1.5 million per employee per month and a period of six months, subject to guidelines).

When labor contracts cannot be carried out

In general, the Labor Code seems to protect employees (Article 93.3 allows employers who need to halt operations to still pay wages). However, employers can apply Articles 36.1.c or Article 42 of the Labor Code to legally terminate labor contracts.

Article 36.1.c has a vague component (“when all measures have been adopted to deal with the problem”) and did not include any additional guidelines until March 25, 2000, when Circular 1064/LDTBXH-QLLDTL states that (a) employers can temporarily reassign employees other jobs, (b) if a protracted halt in operations affects employers’ payment capabilities, they can negotiate with employees to temporarily halt labor contracts in line with Article 30 of the Labor Code and (c) if enterprises must scale down production, labor will be reassigned in line with Article 36.1c or Article 42 of the Labor Code.

The problem is Circular 1064 explains the law, a task that the National Assembly should undertake instead. If enterprises do not comply with this circular, are they considered offenders?

Once Article 36.1c or Article 42 of the Labor Code is applied, regulations on retrenchment payouts must be considered. Resolution 68/NQ-CP and guiding documents offer some provisions: (a) there is a one-off payment of VND1,855,000 per person for a period of 15 days to less than one month; VND3,710,000 per person for a period of more than one month; (b) employees who must cease work in line with Article 99.3 of the Labor Code, must undergo quarantine or lockdown for at least 14 days during the period from May 1, 2021 to December 31, 2021 and  enjoy mandatory social security until just before they cease working will receive a one-off payment of VND1 million; and (c) those who have their labor contracts terminated due to the Government’s request during the period from May 1, 2021 to December 31, 2021, and enjoy mandatory social security but do not qualify for retrenchment payouts are given a one-off payment of VND3,710,000 per person. There are also other forms of support, including for children.

It is hoped that this article will allow employers and employees to choose an optimal solution that strike a balance among different interests.


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