Vietnam Ratifies New Labor Code

After going through four drafts and numerous debates over the past three years, Vietnam’s National Assembly officially ratified the country’s new Labor Code (revised) during an official meeting on June 18, 2012. In general, the new Labor Code is seen as heavily favoring employees over employers, and is expected to have a considerable impact on the Vietnamese job market in the coming years.

The new Labor Code is set to take full effect from May 1, 2013. We summarize some of the key changes below:

• Maternity leave entitlement has been increased from four months to six months. Furthermore, if a female employee gives birth to more than one child at one time, she will be entitled to an additional one month for every additional child after the first.
• Workers are forbidden from working more than 50 percent of the official working hours in a day.
• Labor outsourcing has been officially addressed in the new Labor Code for the first time, with substantial requirements and restrictions put in place.
• The maximum term of a work permit for foreign nationals working in Vietnam will be reduced from three years to two years.
• The work permit exception rule for foreign workers who come to Vietnam to work for less than three months has been removed. This now only applies in cases where the foreign worker comes to Vietnam to solve some technical or complicated issue that cannot be solved by Vietnamese experts or foreign experts already in the country.
• In addition to government-stipulated public holidays, foreign nationals working in Vietnam are entitled to one day paid leave during both their traditional new year holiday as well as their national day.

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