Circular No. 07/2018/TT-BLDTBXH dated August 01, 2018 of the Ministry of Labor, War Invalids and Social Affairs on formulating employee utilization plan and implementing employee policies in the context of equitization prescribed in the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 on conversion from state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies

THE MINISTRY OF LABOR, WAR INVALIDS AND SOCIAL AFFAIRS

Circular No. 07/2018/TT-BLDTBXH dated August 01, 2018 of the Ministry of Labor, War Invalids and Social Affairs on formulating employee utilization plan and implementing employee policies in the context of equitization prescribed in the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 on conversion from state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies

Pursuant to the Government’s Decree No. 14/2017/ND-CP dated February 17, 2017 defining functions, tasks, entitlements and organizational structure of the Ministry of Labor, War Invalids and Social Affairs;

Pursuant to the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 on conversion from state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies;

At the request of the Director of Department of Labor Relation and Wage;

The Minister of Labor, War Invalids and Social Affairs hereby adopts a Circular on guidelines for formulating employee utilization plan and implementing employee policies in the context of equitization prescribed in the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 on conversion from state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies.

Article 1. Scope of adjustment

This Circular provide guidelines for formulating employee utilization plan; distribution of the remaining of unused reward fund and welfare fund; persons eligible to purchase discounted shares and seniority as the basis for purchase of discounted shares paid to employees of state-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises into joint-stock companies (hereinafter referred to as “the equitized enterprise”) as prescribed in the Government’s Decree No. 126/2017/ND-CP dated November 16, 2017 (hereinafter referred to as “the Decree No. 126/2017/ND-CP).

Article 2. Subject of application

1. Employees working for equitized enterprises.

2. Managers of equitized enterprises.

3. Full-time representatives of the equitized enterprises’ capital in other enterprises (hereinafter referred to as “full-time representatives of the equitized enterprises’ capital”).

4. Controllers working for equitized enterprises.

5. Employees representing household businesses to receive fix funding under a long-term agreement on receiving fix funding with agricultural or forestry single-member limited liability companies as prescribed in the Government’s Decree No. 168/2016/ND-CP dated December 27, 2016 (hereinafter referred to as “employees representing household businesses to receive fix funding).

6. State-owned enterprises and single-member limited liability companies with 100% of charter capital invested by state-owned enterprises prescribed in Clauses 2 and 3 Article 2 of the Decree No. 126/2017/ND-CP.

7. Representative authorities of equitized enterprises.

8. Other organizations and individuals related to the performance of the tasks specified in this Circular.

Article 3. Formulation of employee utilization plan

1. Contents of an employee utilization plan

The employee utilization plan formulated as prescribed in Point a Clause 4 Article 45 of the Decree No. 126/2017/ND-CP shall contain at least:

a) A list and number of employees and full-time representatives of the equitized enterprises’ capital on the date of enterprise valuation;

b) A list and number of employees and full-time representatives of the equitized enterprises’ capital on the date of enterprise valuation who are accepted to continue their work, are sent to take re-training courses before continuing their work or change to work under non-full-time employment contracts in an enterprise after it is converted into a joint-stock company.

c) A list and number of employees and full-time representatives of the equitized enterprises’ capital on the date of enterprise valuation who will retire in accordance with regulations of law on insurance from the date of enterprise valuation to the expected date of approval for the equitization method according to the approved equitization plan.

d) A list and number of employees and full-time representatives of the equitized enterprises’ capital on the date of enterprise valuation who will terminate employment contracts in accordance with regulations of the Labor Code (with respect to employees) or are no longer allowed to represent capital of enterprises after the prescribed time limit for the representation and will terminate employment contracts that are being suspended in order to represent enterprises’ capital in other enterprises (with respect to full-time representatives of the equitized enterprises’ capital) from the date of enterprise valuation to the expected date of approval for the equitization method according to the approved equitization plan;

dd) A list and number of employees and full-time representatives of the equitized enterprises’ capital on the date of enterprise valuation whom the enterprise has failed in all attempts to assign proper duties in the enterprise after it is converted to a joint-stock company, resulting in termination of employment contracts (with respect to employees) or termination of employment (with respect to full-time representatives of the equitized enterprises’ capital);

e) Solutions and budget for implementing the employee utilization plan.

2. The employee utilization plan must be formulated in a public and transparent manner in the enterprise and participated by the organization providing representation for employees working in the enterprise.

3. Procedures for formulating an employee utilization plan are provided in the Appendix 1 hereof.

4. Power to approve the employee utilization plan:

a) The representative authority shall approve the plan of the enterprise specified in Clause 2 Article 2 of the Decree No. 126/1017/ND-CP and enterprise specified in Clause 3 Article 2 of the Decree No. 126/1017/ND-CP having equity of at least VND 1,800 billion stated in accounting records;

b) The Board of Members or Chairperson of the enterprise specified in Clause 2 Article 2 of the Decree No. 126/1017/ND-CP shall approve the plan of the enterprise specified in Clause 3 Article 2 of the Decree No. 126/1017/ND-CP, except the enterprise having equity of at least VND 1,800 billion stated in accounting records.

5. The employee utilization plan must be approved before the representative authority approves the equitization method.

Article 4. Distribution of the remaining of unused reward fund and welfare fund

The remaining of unused reward fund and welfare fund specified in Clauses 1 and 2 Article 19 of the Decree No. 126/2017/ND-CP shall be distributed as follows:

1. Persons who are entitled to distributions of the remaining of the unused reward fund are employees appearing on the list of the equitized enterprise’s employees on the date of enterprise valuation.

The equitized enterprise shall compile a list of persons who are entitled to distributions of the remaining of the unused reward fund by adopting the Form No. 6 in the Appendix 2 hereof.

2. Persons who are entitled to distributions of the remaining of the unused reward fund are employees, managers and controllers who are working in the enterprise and appear on the list of the equitized enterprise’s employees on the date of enterprise valuation.

The equitized enterprise shall compile a list of persons who are entitled to distributions of the remaining of the unused reward fund or welfare fund by adopting the Form No. 7 in the Appendix 2 hereof.

3. The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund shall be determined as follows:

a) The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is the total length of time that a person eligible for distributions has worked for an equitized enterprise from the date of final recruitment into the equitized enterprise (with respect to the employee) or from the date on which such person is appointed to work in the equitized enterprise (with respect to the manager or controller who is working in the enterprise) to the date of equitized enterprise valuation.

b) The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund includes the length of time that a person eligible for distributions has worked in an enterprise before it is merged with or consolidated into an equitized enterprise or fully divided or partially divided into an equitized enterprise.

c) The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund excludes the length of time that an employment contract has been suspended as prescribed in Article 32 of the Labor Code and unpaid leave has been taken as prescribed in Clause 3 Article 116 of the Labor Code for at least 14 consecutive days;

d) The seniority as the basis for distribution of the remaining of unused reward fund and welfare fund shall be expressed as months. If a partial month has fewer than 14 days shall be rounded down to 0; a partial month that has 14 days or more shall be rounded up to 01 month.

Example 1: The employee’s seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is determined according to Appendix 3 hereof.

Example 2: The manager’s seniority as the basis for distribution of the remaining of unused reward fund and welfare fund is determined according to Appendix 3 hereof.

4. The remaining of unused reward fund and welfare fund must be distributed in an open and transparent manner in the enterprise and participated by the organization providing representation for employees working in the enterprise.

5. The date on which the remaining of the unused reward fund or welfare fund is distributed shall be decided by the equitized enterprise and the distribution must be implemented before the date on which the equitized enterprise is converted into a joint-stock company.

Article 5. Persons eligible to purchase discounted shares and seniority as the basis for purchase of discounted shares

1. Persons eligible to purchase discounted shares as prescribed in Clause 1 Article 42 of the Decree No. 126/2017/ND-CP include:

a) Employees working under employment contracts for equitized enterprises on the date of enterprise valuation.

b) Employees working for equitized enterprises on the date of enterprise valuation and appointed to be full-time representatives of the equitized enterprises’ capital (except the employees working for parent companies on the date of equitized enterprise valuation and appointed to be full-time representatives of the parent companies’ capital in level II enterprises in the case of equitization of parent companies of state-owned economic groups, parent companies of state corporations or parent companies in groups of parent companies and subsidiaries) that have not been eligible to purchase discounted shares from other enterprises.

c) Managers of equitized enterprises on the date of equitized enterprise valuation.

d) Employees working under employment contracts and managers (including full-time representatives of the parent companies capital) of enterprises specified in Clause 3 Article 2 of the Decree No.126/2017/ND-CP (level II enterprises) that have not been eligible to purchase discounted shares from other enterprises on the date of equitized enterprise valuation in the case of equitization of parent companies of state-owned economic groups, parent companies of state corporations or parent companies in groups of parent companies and subsidiaries.

dd) Representatives of household businesses to receive fix funding (if any) of equitized enterprises on the date of equitized enterprise valuation.

The equitized enterprise shall compile a list of persons who are eligible to purchase discounted shares by adopting the Forms No. 8, 9, 10 and 11 in the Appendix 2 hereof.

2. The actual seniority in the public sector as the basis for purchase of discounted shares prescribed in Point b Clause 1 Article 42 of the Decree No. 126/2017/ND-CP applied to the persons specified in Points a, b, c and d Clause 1 of this Article includes:

a) The actual length of time that a person eligible to purchase discounted shares has worked in an equitized enterprise, accrued by the time of enterprise valuation, including the length of time that such person has worked in the enterprise before it is merged with or consolidated into an equitized enterprise or fully divided or partially divided into an equitized enterprise (if any).

b) The actual length of time that a person eligible to purchase discounted shares has worked, accrued in a state administrative institution, state-owned service provider, political organization, socio-political organization or armed force unit (including the length of time that the employee has done a military service), wholly state-owned enterprise or another enterprise 100% of charter capital of which is held by a wholly-stated owned enterprise before transferring to an enterprise that has been merged with or consolidated into an equitized enterprise or fully divided or partially divided into an equitized enterprise (if any).

3. The actual seniority in the public sector as the basis for purchase of discounted shares prescribed in Clause 2 of this Article excludes the length of time that an employment contract has been suspended as prescribed in Article 32 of the Labor Code and unpaid leave has been taken as prescribed in Clause 3 Article 116 of the Labor Code for at least 14 consecutive days.

4. The length of time as the basis for purchase of discounted shares regarding the person specified in Point dd Clause 1 of this Article is the actual length of time of receiving fix funding under a long-term agreement on receiving fix funding with an equitized enterprise, accrued by the time of equitized enterprise valuation.

5. The length of time as the basis for purchase of discounted shares is expressed as years (full year). If a partial year has fewer than 06 months shall be rounded down to 0; a partial year that has 06 months or more shall be rounded up to 01year.

Example 3: The length of time as the basis for purchase of discounted shares is determined according to the Appendix 3 hereof.

Article 6. Effect

1. This Circular takes effect on September 15, 2018.

The Circular No. 33/2012/TT-BLDTBXH dated December 20, 2012 of the Minister of Labor, War Invalids and Social Affairs shall cease to have effect from the effective date of this Circular.

2. Any equitized enterprise that has formulated an employee utilization plan and plan for distribution of the remaining of unused reward fund and welfare fund as of January 01, 2018 before the effective date of this Circular shall, according to regulations of this Circular, review and adjust the plan (if any) and submit the adjusted plan to a competent authority for approval or re-approval.

3. The enterprises specified in Clause 2 Article 49 of the Decree No. 126/2017/ND-CP are allowed to apply this Circular to implement employee policies upon equitization.

Any difficulties arising in the course of implementation of this Circular should be reported to the Ministry of Labor, War Invalids and Social Affairs for guidance./.

For the Minister

The Deputy Minister

Doan Mau Diep

APPENDIX

(Issued with the Circular No. 07/2018/TT-BLDTBXH dated August 01, 2018 of the Ministry of Labor, War Invalids and Social Affairs)

APPENDIX 1

PROCEDURES FOR FORMULATING EMPLOYEE UTILIZATION PLAN

After obtaining the decision on approval for the enterprise equitization plan, the Steering Committee for equitization shall direct the assisting team and cooperate with equitized enterprises and internal Trade Union Executive Committee to formulate an employee utilization plan in accordance with the following procedures:

1. Step 1: Review and compile a list and number of employees and full-time representatives of equitized enterprises’ capital on the date of equitized enterprise valuation according to the Form No. 01 Appendix 2 hereof, including:

a) Employees working under employment contracts;

b) Employees currently having to leave their work through no fault of their own or temporarily suspended from work or currently sent to join courses, improve occupational skills or take re-training courses;

c) Employees currently on leave receiving social insurance, occupational accident or occupational disease benefits in accordance with regulations of laws on social insurance and occupational safety and hygiene;

d) Employees currently taking unpaid leave without consent from the head of their host establishment;

dd) Employees currently subject to a suspension of employment contracts;

e) Full-time representatives of equitized enterprises capital.

2. Step 2: According to the number of employees of the enterprise and business and production plan in the next 3-5 years, the equitized enterprise shall classify all employees on the date of enterprise valuation and compile the following lists:

a) List of employees and representatives of equitized enterprises’ capital on the date of enterprise valuation who are accepted to continue their work or have to be sent to take re-training courses before continuing their work or change to work under non-full-time employment contracts in an enterprise after it is converted into a joint-stock company as prescribed in Point b Clause 1 Article 3 of this Circular, made using the Form No. 2 in the Appendix 2 hereof.

b) List of employees and full-time representatives of equitized enterprises’ capital who will retire as prescribed in Point c Clause 1 Article 3 of this Circular, made using the Form No. 3 in the Appendix 2 hereof;

c) List of employees and full-time representatives of equitized enterprises’ capital who will terminate employment contracts in accordance with regulations of the Labor Code or are no longer allowed to represent capital of enterprises after the prescribed time limit for the representation and will terminate employment contracts that are being suspended in order to represent enterprises’ capital in other enterprises as prescribed in Point d Clause 1 Article 3 of this Circular, made using the Form No. 4 in the Appendix 2 hereof;

d) List of employees and full-time representatives of equitized enterprises’ capital to whom the enterprise has failed in all attempts to assign proper duties in the enterprise, resulting in termination of employment contracts (with respect to employees) or termination of employment as prescribed in Point dd Clause 1 Article 3 of this Circular, made using the Form No. 5 in the Appendix 2 hereof.

3. Step 3: On the basis of the list of employees and full-time representatives of equitized enterprises’ capital to whom the enterprise has failed in all attempts to assign proper duties in the enterprise, resulting in termination of employment contracts or termination of employment (according to Form No. 5 in the Appendix 2), the equitized enterprise shall review and classify employees by the date on which such employees are accepted through the final recruitment procedure  into the enterprise: employees accepted through the final recruitment procedure into the equitized enterprise before April 21, 1998; employees accepted through the final recruitment procedure into the equitized enterprise from April 21, 1998 onwards.

4. Step 4: According to regulations on policies tailored for redundant employees upon re-organization of state-owned single-member limited liability companies, the equitized enterprise shall classify and review the seniority; set the specific time at which employment contracts are terminated; determine benefits and aggregate expected funding for providing benefits for employees and full-time representatives of equitized enterprises’ capital, including:

- Funding for sending employees and representatives of equitized enterprises’ capital to take re-training courses before continuing their work (according to the list in Section II, Form No. 2 of the Appendix II);

- Funding for paying benefits to employees and full-time representatives of equitized enterprises’ capital who will terminate employment contracts in accordance with regulations of the Labor Code or are no longer allowed to represent capital of enterprises after the prescribed time limit for the representation and will terminate employment contracts that are being suspended in order to represent enterprises’ capital in other enterprises (according to the list in the Form No. 4 of the Appendix 2 hereof);

- Funding for paying benefits to employees and full-time representatives of equitized enterprises’ capital to whom the enterprise has failed in all attempts to assign proper duties in the enterprise, resulting in termination of employment contracts (with respect to redundant employees) or termination of employment (according to the list in Form No. 5 of the Appendix 2).

Employment contracts shall be terminated and benefits shall be paid to redundant employees after obtaining the competent authority’s decision on approval for the equitization method in accordance with regulations on policy tailored for redundant employees.

5. Step 5: Implement the employee utilization plan in an open and transparent manner and seek opinions of organizations providing representation for employees and employees at extraordinary employee conferences.

6. Step 6: Compile a final list of employees on the date of enterprise valuation; consolidate and complete the employee utilization plan and submit it to the competent authority for approval.