INSIGHT

The COVID-19 pandemic – what employers in Vietnam need to know

Vietnam

In brief 8 min read

The Covid-19 pandemic is not only a health crisis in the global community, but has caused widespread economic disruption to all companies and governments around the world. In common with the governments in other countries, the Government of Vietnam has issued various restrictions and regulations to limit the outbreak of Covid-19 and to support enterprises in these challenging times. To assist employers in Vietnam in responding to the unfolding pandemic, we have summarised the key relevant restrictions and legal issues, as well as giving some practical tips.

Employers' obligations regarding workforce well-being and morale

Vietnamese labour law requires employers to safeguard the safety and health of staff. Accordingly, employers have general obligations to inspect and evaluate dangerous and harmful factors in workplaces, and to provide measures for excluding such factors, and adequate information about this, to employees. As such, conducting labour safety risk assessments and having appropriate response measures to the Covid-19 outbreak are not only important elements of business continuity plans, but are also legal obligations on enterprises to ensure the health and well-being of the workforce.

However, while Vietnamese employment regulations impose the above general obligations on employers, they do not set out any specific requirements in terms of protection of the health and well-being of their workforce. As a result, such measures will be mainly driven by guidance the authorities issue from time to time in response to a specific pandemic, as well as employers' own policies, decisions and judgment. Therefore, we set out below some measures to assist enterprises in complying with the above general obligations and authorities' guidance at the date of publication of this Insight:

  • Minimising the risk of transmission of Covid-19 in the workplace:
    • conduct regular cleaning of premises and equipment
    • conduct regular health screening of employees and visitors;
    • provide adequate hygiene facilities (eg masks, soaps, antiseptics) and instructions on good hygiene practices;
    • restrict gatherings of employees (eg by using technology-based solutions to facilitate meetings and conferences, instead of participating in physical meetings/events) and travelling only where strictly necessary;
    • implement work-from-home arrangements (if possible); and
    • request that clients/counterparties visiting the employees' workplace comply with the regulations and recommendations of the Ministry of Health (MOH) on prevention and control of Covid-19 outbreak, and any regulations imposed by the office building management regarding access to the premises;
  • Ensuring employees are provided with adequate information in relation to prevention and control of Covid-19 in the workplace:
    • provide contact details of the individual(s) in charge of prevention and control of the Covid-19 outbreak in the relevant workplace;
    • establish a channel/hub (eg via the company's intranet), which includes regular updates, guidance, and other resources related to the outbreak, to ensure employees are fully informed regarding the development of the pandemic; and
    • providing training on personal hygiene and requesting employees to follow the MOH's health advice;
  • Planning for isolation of employees:
    • establish a committee to prevent and control Covid-19 in the workplace;
    • put in place self-isolation or quarantine protocols;
    • keep employees' contact details updated;
    • prepare temporary quarantine rooms for employees who show relevant symptoms during working hours (such as coughing, shortness of breath or fever);
    • have a contingency plan when a worker tests positive for Covid-19, to mitigate the risks to the health of other employees and the risk of transmission in the workplace; and
    • inform the nearest health agency of confirmed or suspected cases; and
  • Protecting personal data of employees:
    • health information, and other personal information of employees, collected for reasons relating to the Covid-19 outbreak should not be publicly disclosed, except where required to do so by a competent authority.

Work permit and travel restrictions

If you employ foreign staff or are considering overseas business travel, it is important that you keep up to date with the latest policies on work permits, travel and quarantine, and plan carefully. Below are some recent measures of the Vietnamese Government that you should take into account in your work arrangements for foreign employees/personnel.

Temporary suspension of issuance of work permits to foreigners

In response to the significant increase in new confirmed cases of Covid-19 disease in many countries around the world and its unpredictable evolvement and impact, under resolutions passed on 10 March 2020, the Government of Vietnam requested the Ministry of Labour, Invalids and Social Affairs (MOLISA) to temporarily suspend the issuance of new work permits to foreigners who come from COVID-19 outbreak areas.

Before the issuance of these resolutions, based on MOLISA's guidance and instructions, various provincial labour authorities had already suspended the issuance of new work permits to foreigners coming from China and Korea. However, with the above instructions from the Government, the suspension is now being applied to foreigners coming from most countries.

Therefore, in light of this (together with the below-mentioned temporary suspension of entry into Vietnam), a proposed replacement or assignment of foreign staff working in Vietnam, or any workforce restructuring that requires obtaining new work permits for foreign staff, may not be effected or may be subject to significant delay. If you have any such plan, you should discuss and confirm it with your local labour authority before seeking to implement it.

Travel restrictions and quarantine requirement

In addition to the temporary suspension of granting work permits to control the increase of new imported Covid-19 cases, the Vietnam Government, similarly to governments in other countries, has imposed travel restrictions and quarantine requirements, which are also applicable to foreigners.

Specifically, as of 22 March 2020, except for limited exempted cases (such as diplomatic officers), the entry of all foreigners (including people with a Vietnamese visa exemption certificate) is temporarily prohibited. Furthermore, as of 21 March 2020, a 14-day centralised quarantine is applicable to all entrants to Vietnam, including foreigners.

Alternative working arrangements and restructuring

Companies facing unexpected financial difficulties from the Covid-19 pandemic, such as a reduction in production/operation (eg due to shortage of materials supplied or export volume reduction), may wish to explore the available legal options for alternative working arrangements for their workforce. Set out below are some key arrangements and their applicable requirements under Vietnamese law.

For those matters where the legal basis is unclear, as mentioned below, we recommend employers should first seek to discuss and reach agreement on the way forward with employees, rather than looking to impose arrangements unilaterally. With the current challenging situation, together with encouragement from the Vietnam Government that employees should provide support to and share difficulties with employers, we do not expect that seeking employees' consent to a proposed alternative working arrangement would be as great a challenge for employers as it would be ordinarily.

If the parties reach an agreement on an alternative working arrangement (eg a reduction in salary or an employee taking leave without pay), this should be documented (eg by way of letter signed by both parties). These will form supporting documents needed for completion of compulsory insurance-contribution-related procedures.

No. Working arrangements / restructuring Legal requirements
1. Requesting employees to take annual leave
  • Employers may not force employees to take annual leave1.
  • Employees' agreement would be required.
2. Requesting employees to take unpaid leave
  • Employers may not force employees to take unpaid leave.
  • Employees' agreement would be required.
3. Reducing working time and salary
  • Technically, employers may not unilaterally reduce working time and salary.
  • Employees' agreement would be required.
4. Temporary suspension of performance of the current labour contract
  • Employers may not unilaterally suspend performance of the labour contract.
  • Employees' agreement would be required.
  • Suspension terms are subject to agreement between the parties.
5. Temporarily assigning employees to do other work(s) different from that set out under the current labour contract
  • This option is available to employers, upon satisfying conditions and requirements set out by law.
  • Applicable requirements:
    • The assignment shall not exceed 60 working days in a year, unless the employee otherwise consents.
    • At least three working days advance notice is required.
    • If the new salary is less than the previous salary, the previous salary remains effective for 30 working days.
    • The new salary must equal at least 85% of the previous salary, and not be less than the regional minimum salary.
6. Suspension of operations and reduction of employees' salary
  • An employer may decide to suspend its operations, and must suspend its operations following order of the competent authorities when they deem it necessary2.
  • Employers are required to pay a suspension salary to employees.
  • Salary during the work suspension period is as agreed between the employer and employee, but must not be less than the regional minimum salary.
7. Termination of employment
  • We believe this should be the last option, to consider in severe situations if other measures and options are not effective (as enterprises also need to prepare and be ready for operations after the pandemic cessation).
  • Available termination options:
    • discussing and reaching agreement with employees for mutual separation;
    • unilaterally terminating employment contracts with employees3 and
    • implementing a retrenchment if the employer decides to conduct an organisational and workforce restructuring in response to the impact of the pandemic (eg dissolution of a division).
  • To terminate the employment relationship with employees, and depending on the chosen termination option, an employer would need to comply with the applicable termination process (eg serving a termination notice to employees); and fulfil all financial obligations (eg severance allowance/retrenchment allowance as applicable, outstanding salary and benefits) to the terminated employees.

Employment-related support from the Government

To provide further support to enterprises at this time, the Vietnamese authorities have issued various policies, such as permitting the deferment of the payment of taxes and certain types of compulsory insurance for employees, and applying preferential interest rates.

In terms of deferment of payment of compulsory insurances, under Official Letter No.860/BHXH-BT of the Vietnam Social Insurance dated 17 March 2020, enterprises may defer the contribution of compulsory social insurance to the retirement and survivorship funds up to end of June 2020 or December 2020 (if the Covid-19 pandemic still exists after June 2020).

The above deferment scheme applies to an enterprise:

  • having 50% or more of its total workforce being suspended from employment, due to suspension of production; or
  • suffering a loss of over 50% of the total value of assets (excluding land use right value).

What's next?

Please note that, due to the complexity of the Covid-19 outbreak, the Vietnam Government's responses may evolve and change rapidly. As a result, the above information, especially the sections on work permit and travel restrictions and the Government's support, while accurate at the time of publication of this Insight, are likely to change over time. Therefore, you should always seek up-to-date advice before acting, and we encourage you to contact us if you have any questions about your specific circumstances.

Footnotes

  1. It is unclear whether an employer can now set out a schedule for its employees to take annual leave during the Covid-19 pandemic where it did not apply such a schedule previously. Our view is that it may not, except where the schedule and parameters for the employees to take annual leave have been provided in its internal labour rules or other applicable policies.

  2. At law, the competent authorities may suspend business activities at epidemic/pandemic areas, including those affected by type A respiratory diseases such as Covid-19. At the date of this Insight, the authorities of some Covid-19-affected areas have suspended business operations of certain entertainment services or non-essential services such as karaoke clubs, beer clubs, bars and beauty and hair salons.

  3. Under the Labour Code and its implementing regulations, an epidemic is considered a force majeure event where an employer may unilaterally terminate employment contracts with its employees after taking necessary measures to remedy the problem but having to narrow production/reduce the number of employees.