Circular No. 21/2003/TT-BLDTBXH dated September 22, 2003 of the Ministry Of Labour, War Invalids And Social Affairs guiding the implementation of a number articles of the Decree No.44/2003/ND-CP dated 09/5/2003 of the Government on labour contract

THE MINISTRY OF LABOUR, WAR INVALIDS AND SOCIAL AFFAIRS

Circular No. 21/2003/TT-BLDTBXH dated September 22, 2003 of the Ministry of Labour, War Invalids And Social Affairs guiding the implementation of a number articles of the Decree No.44/2003/ND-CP dated 09/5/2003 of the Government on labour contract

Implementing the Decree No.44/2003/ND-CP dated May 09, 2003 of the Government detailing and guiding the implementation of a number of Articles of the Labour Code on labour contract (hereinafter called as the Decree No.44/2003/ND-CP), after collecting opinions of the Vietnam General Confederation of Labour and of relative Ministries, Branches, the Ministry of Labour, War Invalids and Social Affairs guides the implementation as follows:

I. FORM, CONTENTS AND TYPES OF LABOUR CONTRACTS

1. Form of labour contracts according to Article 3 of the Decree No.44/2003/ND-CP is stipulated specifically as follows:

a) Labor contracts with indefinite term, labor contracts with definite term from full 12 months to less than 36 months and the labor contract with a term of 3 months to less than 12 months must be signed in writing according to form 1 enclosed herewith. The employers prepare labour contract according to form prescribed on A4 paper size and seal between the pages for use in the unit.

Where a party of signing labor contract being foreigner, the contract’s contents must be in Vietnamese, after the Vietnamese, it may be added foreign language upon mutual agreement. Vietnamese contents shall have legal value.

The written contract may be written with pens of colors (other than the red) or may be typed.

b) Labor contracts with a less than 03 month term or labor contracts to help the family, both parties may engage labour contract by mouth, but such contracts must be ensured the contents as stipulated in clause 1 Article 29 of the Labor Code.

c) Labor contracts of the enterprises in the fields of agriculture, forestry, fishery and salt can be reduced some of the contents to suit the enterprises’ conditions.

d) Besides the labor contracts, both parties may sign liability contracts on assets assigned.

2. The application of types of labor contracts according to Article 4 of the Decree No.44/2003/ND-CP is stipulated specifically as follows:

a) Employers and employees based on the time of jobs to apply one of types of labor contracts stipulated in 1, 2, 3 Article 4 of the Decree No.44/2003/ND-CP;

Particularly for those who have retired, both parties may sign several times types of labor contracts upon season or a specific job with a term of less than 12 months.

b) Labor contracts with definite term which has signed before January 01, 2003 and till that time it is still effective, shall be counted as the first labor contract for the application of the provisions in clause 4 Article 4 of the Decree No.44/2003/ND-CP.

II. CONCLUSION, CHANGE OF CONTENTS OF THE LABOURS CONTRACTS

1. The competent persons to conclude labour contracts with laborers according to Article 5 of the Decree No.44/2003/ND-CP, are stipulated specifically as follows:

- For enterprises operating under the State Enterprise Law, Enterprise Law and Law enterprises with foreign-owned capital in Vietnam as CEO or director of the enterprises;

- For the cooperative being chairman of the cooperative; for union of cooperatives being the Director of Cooperatives Union;

- For agencies, organizations, branches, representative offices (hereinafter referred to as organizations) of internation or foreign countries in Vietnam being the heads of the organizations (branch heads, office Chiefs, representative Chief...).

- For individuals, households being persons who directly use laborers.

Where the competent persons who are not directly conclude labour contracts, may authorize another person in writing, except for cases stipulated in the decentralization of human resource management. Particularly for the employers who are individuals, they are not entitled to authorize.

2. Labor contracts signed with retirees enjoying monthly social insurance and those who work with a less than 03 month term, apart from salaries by job levels, the employees is also paid by the employers the following amounts:

- Social insurance = 15%;

- Health insurance = 2%;

- Annual vacation = 4%;

- Travel expenses when on leave due to mutual agreement not less than 9%.

The above % rate calculated comparison with wages under the labour contract.

3. Procedure to change contents of the labour contracts according to clause 2 Article 8 of the Decree No.44/2003/ND-CP is conducted according to the following order:

- The requiring party set out proposals to change the content and notify the other party in writing.

- Party receiving written request must take the initiative to meet the proposer on agreement of the contents need to be changed, at least within 3 days from the date of receipt of written request;

- Where both parties may reach agreements on the change of the contents of labor contracts, the appendix of labor contract shall be concluded according to Form No. 2 attached herewith.

- Where both parties may not reach agreements on the change of the contents of labor contracts, the labor contract which has been signed shall be continued to implement or the agreement to terminate the labor contract is conducted as stipulated in clause 3 Article 36 of the Labor Code.

III. TERMINATION OF LABOR CONTRACTS, TERMINATION ALLOWANCES AND COMPENSATION FOR TRAINING EXPENSES

1. Prior notice time limit for termination of labor contracts is implemented as follows:

a) In case of termination of labor contracts according to Article 36 of the Labour Code, the parties are not required for prior notice.

b) In case of unilateral termination of labor contracts specified in Article 37 or Article 38 of the Labor Code, the party who is entitled to terminate unilaterally must conduct the written prior notice to the other party. Number of prior notice days of the employees defined in clause 2, clause 3 Article 37; of the employers defined in clause 3 Article 38 of the Labor Code. The number of prior notice days is working days. The case the employees who are disciplined by form of dismissing shall not required conducting the prior notice.

2. The cases being paid termination allowances and not according to clause 1 Article 14 of the Decree No.44/2003/ND-CP are stipulated specifically as follows:

a) The cases which are paid termination allowances:

- The employees terminating the labour contract under Article 36, Article 37, point a, c, d clause 1 Article 38, clause 1 Article 41, point c clause 1 Article 85 of the Labor Code.

- The employees working in the state enterprises and being recruited before having the labor contract regime shall be calculated for termination allowances as those who concluded labor contracts when terminating their jobs.

- The employees being terminated the labor contracts due to the enterprises, agencies, organizations ending their activities as defined in point đ clause 1 Article 38 of the Labor Code are the cases: Enterprises, agencies and organizations decided on the dissolution by the competent authorities, declared bankrupt by the court, operation license has expired, law violation enterprises that were withdrawed the operation license or were revoked the business registration certificate by the competent authorities.

b) The cases which are not paid termination allowances:

- The employees being dismissed according to point a, point b, clause 1 Article 85 of the Labor Code.

- The employees unilaterally terminating the labor contracts but committing violation on the reason for the termination or prior notice time limit specified in Article 37 of Labor Code.

- The employees leaving their jobs to enjoy the monthly pension regime as stipulated in clause 1 and clause 2 of Article 145 of the Labor Code.

- The employees being terminated the labor contracts according to clause 1 Article 17 and Article 31 of the Labor Code enjoyed redundancy payment.

3. The method of calculation and payment of termination allowances shall be implemented as follows:

Formula for calculating the termination allowance in each enterprise:

In which:

- Total time working in the enterprises is the number of years that the employees work in the enterprises rounded under the principle set out in clause 5 Article 14 of the Decree No.44/2003/ND-CP.

- Wage used  as a basis for calculation of termination allowances is the average wage of six preceding months before the termination of labor contracts, including wage at levels, positions and regional, position allowances (if any) specified in Article 15 of the Decree No.114/2002/ND-CP dated December 31, 2002 of the Government.

a) Where the employees perform many labor contracts in an enterprise that when ending each contract had not been paid the termination allowance, then the enterprise pluses working time under the labor contract and gets average wages of 6 preceding months prior to the termination of last labor contract for calculating termination allowances to employees. Where the employees unilaterally terminating the labor contract illegally for a labor contract among many such labor contracts, the employees shall not be calculated termination allowance for the working period of the labor contract terminated illegally, the other remaining contracts are still calculated for termination allowance.

Example 1: Ms. Vu Thi Tam terminates labor contracts at Thang Long company after she performed three labor contracts: Her working time for the first contract is 14 months with average salary of the last 6 months is 500,000 VND per month; for the second one is 18 months with average salary of the last 6 months is 600,000 VND and for the third one is 24 months with average salary of the last 6 months is 800,000 VND per month. The termination allowance of Ms. Tam is calculated as follows:

- Total working time is: 14 months + 18 months + 24 months = 56 months (rounded to 5 years);

- Termination allowance is: 800,000 VND x 5.0 x 1/2 = 2,000,000 VND.

In case Ms.Tam terminates the third labour contract illegally, Ms. Tam shall not be calculated termination allowance for the third one. Thang Long company just plus the working time under the first one and the second one for calculating termination allowance as:

- Total working time is: 14 months + 18 months = 32 months (rounded to 3 years);

- Termination allowance is: 600,000 VND x 3 x 1/2 = 900,000 VND

Thang Long Company pays to Ms.Tam the amount of termination allowance 7 days after the date of terminating the third labour contract.

b) Where the employees working in the state enterprises with both the time of working under the State employee regime and the time of working under labor contract, then plus both the time to calculate termination allowances.

Example 2: Mr. Nguyen Van Toan - mechanics (wage scale A1 group II), working at the company B from April 1991 to February 1994 under the State employee regime and working under the labor contract regimme since March 1994. Until June 2003, Mr Toan terminates his labour contract. Total Mr. Toan’s working time is 147 months (rounded to 12.5 years) with average salaries of the last 6 months is 823,600 VND per month (coefficient 2.84). The amount of termination allowance of Mr. Toan is calculated as follows:

823,600 VND x 12.5 x 1/2 = 5,147,500 VND

c) Where the employees work in various state enterprises due to transfer job before January 01, 1995, the calculation of termination allowances to employees in each enterprise shall be made. Wages of employees before April 01, 1993 are converted according to the Decree No.25/CP, 26/CP at the time of April 01, 1993.

Example 3: Ms. Le Thi Be is basic construction worker (salary scale A6 Group II) with the process of working in three units under the state enterprises: In Company Y according to the State employee regime from October 1988 to December 1990 (22 months rounded to 2 years) with average salaries of the last 6 months converted upon the Decree No.26/CP at the time of April 01, 1993 is 142,000 VND per month (coefficient 1.55 ); in Company Z according to the State employee regime from January 1991 to May 1994 (41 months rounded to 3.5 years) with average salaries of the last 6 months is 186,000 VND per month (coefficient 1.55); in Company X under the labor contract since June 1994 and to  May 31, 2003 terminating labor contracts with an average salary last 6 months is 823,600 VND per month (coefficient 2.84). Time working in Company X is 108 months (rounded to 9 years). Ms. Be’s termination allowance is calculated as follows:

- In Company Y: 142,000 VND x 2.0 x 1/2 = 142,000 VND

- In Company Z: 186,000 VND x 3.5 x 1/2 = 325,500 VND

- In Company X: 823.600 VND x 9 x 1/2 = 3.706.200 VND

Total: 4,173,700 VND.

Company X pays the whole termination allowance to Ms. Be, then makes announcement upon Form 3 attached herewith to Company Y and Company Z for these companies to return the amount that Company X paid.

In case Company Y or Company Z terminated its operations, Company X will be refunded by the State budget under the guidance of the Ministry of Finance.

d) If, after the merger, consolidation, division, separation, transfer of ownership or management rights or rights to use assets of the enterprises which employees terminate labor contracts, the following employer takes responsibility to pay termination allowances to employees, including time working for the preceding employer. Seperately, the state owned enterprises implement the plan of re-arrangement or conversion of ownership (equitization, assignment, sale, business by piece, leasing enterprises) shall apply upon the provisions of the State for these cases.

Example 4: Mr. Bui Van An working in the State owned enterprise A from June 1990. By June 1998 this enterprise was equitized and became a shareholding company and operated under the Enterprise Law. By June 2003 Mr. An terminated the labour contract. Mr An’ s average wage of 6 months prior to the equitization is 300,000 VND/month and 6 months prior to the termination of labor contracts is 800,000 VND per month. Mr. An’s termination allowance is calculated as follows:

- Termination allowance in the State owned enterprise is: 300,000 VND x 8 x 1/2 = 1,200,000 VND.

- Termination allowance in the shareholding company is: 800,000 VND x 5 x 1/2 = 2,000,000 VND.

Total: 3,200,000 VND.

The shareholding company must pay the entire amount of termination allowances to Mr. An. Source to pay termination allowance implemented under Article 27 of the Decree No.64/2002/ND-CP dated June 09, 2002 of the Government on the transformation of the State owned enterprises into shareholding companies.

4. The compensation for training costs under Article 13 of the Decree No.44/2003/ND-CP shall be implemented as follows:

a) The employees are trained domestic or abroad from funds of the employers, including expenses funded by the foreign side to the employers, after graduation, the employers must work for the employers a period agreed by both parties.

b) The employees left their jobs arbitrarily or unilaterally terminate labor contracts, except for the cases stipulated in Article 37 of the Labor Code, as not yet graduated or graduated but not working for the employers for the time as agreed, the employees must compensate the costs of training including the costs for trainers, learning materials, school, equipment, practice materials and other costs to support learners calculated by the employers with the consent of the employees.

The agreements referred to in point a, point b above must be in writing with signatures of employers and employees.

IV. IMPLEMENTATION PROVISIONS

1. This Circular takes effect 15 days after its publication in the Official Gazette; Annulling the following documents: the Decision No.66/LDTBXH-QD dated December 12, 1993 of the Minister of Labour, War Invalids and Social Affairs on issuance and management of labour contracts; the Decision No.207/LDTBXH-QD dated April 02, 1993 of the Minister of Labour, War Invalids and Social Affairs on form of labour contracts; the Circular No.21/LDTBXH-TT dated October 12, 1996 of the Ministry of Labour, War Invalids and Social Affairs guiding the implementation of a number of Articles of the Decree No.198/CP dated December 31, 1994 of the Government on Labour contracts; the Circular No.02/2001/TT-BLDTBXH dated January 09, 2001 of the Ministry of Labour, War Invalids and Social Affairs annulling point 4 Item III of the Circular No.21/BLDTBXH-TT dated October 12, 1996 of the Ministry of Labour, War Invalids and Social Affairs.

2. Not to apply the method to calculate redundancy payment prescribed in this Circular to recalculate the redundancy payment for the cases teminated labor contract before the effective date of this Circular.

3. Every 6 months and annually, units using laborers upon the labor contract must report to the Department of Labor – War Invalids and Social Affairs or the Management Units of local industrial parks where the units locate its headquarters on the situation of signing, using and terminating labor contracts in accordance with the law regulations.

4. Department of Labour – War Invalids and Social Affairs, Management Units of Industrial Zones of the provinces and cities directly under the Central Government are responsible for assistting the People's Committees to guide, urge and inspect the implementation of this Circular.

During the course of implementation, if any difficulties arise, the relative individuals, organizations need to reflect promptly to the Ministry of Labour, War Invalids and Social Affairs for studying to settle./.

 Nguyen Thi Hang
(Signed)

INSTRUCTIONS FOR RECORDING LABOR CONTRACT

1. Recording specifically names of enterprises, agencies and organizations, for example, the Hanoi Housing Construction Company.

2. Recording clearly name of career (if there are many careers, recording the main career), for example: Engineer.

3. Recording clearly type of labour contract, example 1: indefinite term; example 2: 06 months.

4. Recording specifically the main location, for example: No.2 – Dinh Le - Hanoi; and auxiliary location (if any), for example: No.5 – Trang Thi – Ha Noi.

5. Recording the main tasks which laborer must do, for example: Installation, inspection and repair of electrical system; ventilation equipment, refrigeration equipment ... in the enterprise.

6. Recording specifically the number of hours working per day or week, for example: 08 hours/day or 40 hours/week.

7. Recording clearly vehicles undertaken by the employer or employee, for example: transportation shall be undertaken by the employer or by individual.

8. Recording specifically wage according to wage payroll or wage scale which the units apply, for example: wage scale A.1. Mechanic, Electric, Electronics - Informatics; Group III; Level 4/7; coefficient 2.04; salary at the time of signing the labor contract is 428,400 VND/month.

9. Naming type of allowances and coefficients, allowance level at the time of signing the labor contracts, for example, responsible allowance of Deputy Manager; coefficient is 0.3; Allowance level is 63,000 per month.

10. For the employees who are subject to mandatory social insurance payment, monthly % wage rate which both parties must deduct to remit to the social insurance agency shall be recorded, for example: Every month the employer shall deduct 6% from monthly wages of employees and amount of the corresponding cost by 17% of the monthly wages of employees to pay 20% of the monthly wages to the social insurance agencies and 3% of the monthly wages to the health insurance agencies.

For the employees who are not subject to mandatory social insurance payment, the social insurance amount shall be added to the wages for employees to participate in voluntary insurance or self-insured by themselves, for example, social insurance amount has been added to the wages for employees is 17% of monthly salary.

11. Specifically recording the cases that the units send for training, the employees’ obligations and benefits, for example: During the time that the units sent the employees to study, the employees must complete the course on time, the employees shall be paid their full salaries and other benefits as people who go to work, except for hazardous allowances.

12. Recording interests which have not stated in the Labor Code, the collective labor agreement or had but more favorable to the employees, for example, visit, travel, vacation, birthday gift.

13. Recording clearly the level of compensation for each case of violation, for example, after being trained, the employees do not work for employers, they must pay compensation 06 (six) million dong; not work for the full 02 years, they must pay compensation 03 (three) million dong.