Vietnam – COVID-19 Alert for Employers
Renumeration, Termination, Rights of Employers – What you must know
Guide by GBA Board Member Dr. Oliver Massmann, Attorney at Law, approved also under Vietnamese law, who is contributing his legal advice voluntarily to the GBA since 1999, serving as a GBA Board Member already for 16 years.
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Hanoi, 08.April 2020
As you may know, COVID-19 undoubtedly has impacted enterprises’ business or workforce in some way. The past period has been full of challenges for all employers as we all face the actual influence of this difficult-to-control global pandemic. Clearly, this is a unique and rapidly-developing situation.
In Vietnam, the Prime Minister formally issued Decision 173/Q?-TTg declaring that the corona virus is an epidemic (issued 1 Feb 2020 and effective on same date) and also declared the nation-wide pandemic on 30 Mar 2020. With a focus on remuneration payment to employees during the epidemic season, this advice is provided based on current laws and, where relevant and available, Government ad-hoc policy and guidance.
As ever, Employers are of course free to implement policies that are more favourable than the statutory minimum. Also, this is an area subject to change, potentially very suddenly. We will endeavour to update this as possible.
1. Salary payment for sick employee, regardless of regular sickness or positive result of Covid-19
Once an employee has illness symptoms or is feeling un-well and then stays home, please kindly see the various options as follows, which should be considered on a case-to-case basis.
Sick Leave under Vietnam’s Social Insurance regime (SI)
If an employee is sick and obtains a valid medical certificate evidencing same, the Employer can file this medical certificate with the SI and the SI will pay sick leave entitlements to the employee. Such entitlement is equal to the lower of 75% of the employee’s regular salary or 75% of the SI cap.
With respect to quantity, the SI will pay up to:
(i) 30 days/ year for those who have contributed to the SI fund for less than 15 years
(ii) 40 days/ year for those who have contributed to the SI fund for more than 15 and less than 30 years
In short, assuming Employer has contributed in full as required to the SI scheme (employee and Employer contributions) then such Employer is not required by law to pay salaries for employees on sick leave.
Sick Leave voluntarily offered by Employer, in addition to SI
The above is subject to any other policies and practices that Employer may, in fact, have in place that offer greater additional benefits to employees. Some Employers voluntarily offer extra fully-paid sick leave to employees and, if such an arrangement is in place at your company, employees would be entitled to ‘use up’ any additional ‘paid’ sick leave entitlement before filing statutory SI claims.
Strictly speaking, the SI regime will only provide salary cover for employees with certified sickness. Thus, an employee who is isolated to be assessed as to whether they are sick or not would not be covered by the SI regime as it stands now. In such circumstances, it would be recommended that the Employer seek to reach agreement with the employee to pause work on a reduced salary (see item #2 below).
Relationship with paid annual leave entitlement
Under all circumstances, an affected employee would be entitled to apply to take their accrued paid annual leave entitlement first.
2. Salary payment for those who have to be home because their child’s school is closed
Very upfront, we note that this reason for being home is not considered as sick leave or leave to take care of a sick child under the age of 7, both of which are permitted reasons for absence from work covered under Vietnam’s SI regime (as explain under item #1 above). In addition, as addressed above under item #1, unproven sickness would also fall under this category.
Strictly speaking, unless the employee is able to work from home due to his/her job description and the Employer was to agree with that, absence from work for this reason is considered either absence without permission or leave pursuant and subject to the Employer’s specific leave regime.
As such, the options for salary payment would be the below, in order of priority:
Option 1: the employee applies for paid annual leave until they use up their accrued annual leave entitlement.
Option 2: the employee formally pauses work as a direct result of epidemic and following negotiation and agreement with their employer on reduction of contractual salary during such period (Art. 98.3, Labor Code 2012) (see further at item #3 below).
Option 3: the employee and their employer discuss and reach agreement on unpaid leave (Art. 116.3, Labor Code 2012). Agreement on this in principle, and length of any unpaid leave, is essentially at the discretion of the parties to agree.
3. Options for employment arrangement guided by MOLISA
Pursuant to Official Letter No. 1064 (“OL 1064”) issued by Ministry of Labor, War Invalids and Social Affairs (MOLISA) on 25 March 2020 (we enclose herewith the scanned copy of the original OL 1064 in Vietnamese and the respective English-language translation by Duane Morris Vietnam, for your reference), the Employers are recommended to follow the lawful options below to arrange their employments.
(i) Option 1 – temporary transfer: In case the Employer faces difficulties regarding the material supply and market, causing the redundancy, Employer may temporarily transfer the employee to other work rather than the contractual agreement according to Article 31 of Labor Code. The salary should remain same for the first 30 days of temporary transfer, after that salary for the new position can be 85% of the contractual salary. We further note that if the transfer is longer than 60 days per years, employee’s consent would be required.
(ii) Option 2 – work pause: By this approach, the Employer can maintain employment relationships but negotiate reduced salaries with affected employees (such amount not to be lower than the applicable regional minimum wage) for a specific period, pursuant to Article 98.3 of Labor Code 2012.
(iii) Option 3 – temporary delay of labor contract implementation: In case the work pause period under Option 2 lasts too long which may affect the Employer’s capability on salary payment, Employer and employee may agree to temporarily delay the implementation of the labor contract according to Article 32 of Labor Code. As far as our understanding, this is one kind of un-paid leave scheme where the employment is still maintained but the employee does neither work nor get paid.
(iv) Option 4 – employment termination: In case the enterprise must scale down its production, causing the employment redundancy, the Employer may conduct the labor arrangement according to Article 38 of Labor Code (unilaterally termination by employer) or Article 44 of Labor Code (redundancy retrenchment due to economic reason). Please see our further clarifications for each scenario as below
– With respect to the former (Article 38), we note that careful attention is required in order to utilize this Employer’s right to unilaterally terminate the labor contract as it requires the employer to “take all measures” to overcome the consequences but “fail to maintain the existing operations”, and must follow a prescriptive notice period and payout process, depending on how long the employee has been working and their contract type (i.e., definite or indefinite term). Also important, by going through OL 1064, it seems to us that MOLISA’s guidance is trying to narrow down the employer’s right by law to unilaterally terminate the labor contract. Specifically, OL 1064 is to mainly explain the difficulties in relation to the material supply and market within production industries without referring to employers supplying services. Therefore, in the perfect world, it is highly recommended that the employers under all circumstances, should manage to obtain a mutual termination agreement (MTA) or a resignation letter (RL) from the employees, for the purpose of termination, which will be really helpful to avoid the possibility where the unilateral termination is challenged/ deemed wrongful/illegal at a later stage.
– With respect to the latter (Article 44), the employer would need to prepare a so-called labor usage plan, then consult opinion of trade union and inform the relevant labor authorities on same at least 30 days prior to the implementation of the labor usage plan re retrenchment. Again, though employee’s consent is not required by law, an MTA or an RL should be obtained from the employees under this approach as well.
How to effectively negotiate the reduced salary for work pause period under Option #2:
At present then, there is no real difference in practice between a temporary closure made at the decision of the Employer as a result of epidemic and one ordered by a competent authority. In both cases, the initial starting point is that it would need to continue to pay contractually agreed amounts. However, as noted below, the Employer should consider discussing with employees about receiving a reduced salary, not to be lower than the applicable regional minimum wage (with no work duties to be performed). If the alternative is the (lawful) right to unilaterally terminate employment or redundancy retrenchment under Option #4, this may be an attractive option for affected employees.
In other words, employees may be motivated to agree on the reduction (accept Employer’s proposal) because, if they do not, the Employer would have legal grounds to (1) unilaterally terminate employment (subject to the generally-applicable 30 and 45-day advance notice requirement for definite and indefinite-term labor contracts respectively) or (2) implement the labor usage plan on redundancy as a result of epidemic (subject to the notification with labor authority).
Regional Minimum Wage:
As a separate note, for your information, according to Government Decree 90/2019/ND-CP, almost all of the districts of Ho Chi Minh Cities and Thu Dau Mot City of Binh Duong province fall within Region 1 and the applicable regional minimum wage for 2020 is: (a) VND 4,420,000 per month for un-trained employees; and (b) VND 4,729,400 per month (i.e. an additional 7%) for trained employees. This is approximately US$192 and $205 respectively. The minimum wage of other regions throughout the country would be a bit lower than that of Region 1.
Bottom line, despite the current laws, there might be a strong possibility that further ad-hoc regulation or policy may be issued by the Government that will affect the current status quo at law. We will endeavour to keep you informed of any developments.
Topic 1: Right to disclose an employee’s COVID-19 status to other colleagues
Strictly speaking, this information is deemed by law to be ‘confidential medical information’ of the employee, meaning that an employer is NOT permitted to disclose the fact of an employee’s sickness to others in the absence of the relevant employee’s express consent. An employer could disclose generally that an employee has tested positive for COVID-19 without identifying the specific individual affected.
On the other hand, taking into account the wider public health imperative and the positive obligation of all infected individuals to isolate and identify individual contacts for checks (Art. 3.2.1 of Guidance on medical quarantine in term of Covid-19, under Ministry of Health’s Decision No. 904/Q?-BYT dated 16 March 2020) plus the positive obligation on employers to disclose the positive case (noting that failure to disclose the positive case of disease is strictly prohibited under Article 8.3 of The Law on Prevention and Control of Infectious Diseases) it can reasonably be concluded that, even without express consent, employers must provide other employees and the authorities with identifying information of affected employees that they have knowledge of in order to meet wider obligations.
In other words, this is one area where it seems likely that wider public health concerns and obligations trump individual personal privacy regulations. Having said that, employers are advised to proceed in a way so as to limit, to the extent possible, the scope of privacy breaches. The practical ability to do this will vary from case to case but may includes: (i) making at least a reasonable effort to obtain prior express consent from affected employees; and (ii) disclosing the information to as small a circle of people as reasonably possible in order to address public health obligations; and (iii) ensuring that language used is as neutral as possible and does not stigmatize the individual or overly-dramatize the situation.
On the first point, employers would be well-advised to pro-actively prepare specific consent forms that can be rolled out at short notice in a bid to obtain express consent on an as-needed basis.
Topic 2: Right to require employees to work from home
Theoretically speaking, any change to an employee’s workplace as recorded in their labor contract must comply with the terms of the relevant contract or be subject to express prior consent of the employee concerned. Despite this, in the current situation, we are of the view that employers are able to require employees to work from home regardless of the foregoing, should the employer determine that such change of location is necessary to protect health and/or to comply with orders or requests of competent authorities.
In doing so, the employer would be entitled to expect the employee to continue to discharge regular duties and working hours. Reality does however dictate that this may be difficult in practice for the employer to control and/or the employee to achieve. The employee would have a reasonably expectation of being provided necessary means to discharge duties (such as computer).
We are also of the view that employers could mandate this on the basis of implementing plans under the Law on Prevention and Control of Infectious Diseases. Again, it would be important that the plan be properly prepared and informed to employees.
It remains arguable what rights employees may have to insist on working from home where the employer reasonably considers it unnecessary for public health purposes and in the absence of any positive requirement from authorities to order work-from-home arrangements where possible.
Topic 3: Right to screen employees’ and visitors’ temperatures
The Law on Prevention and Control of Infectious Diseases 2007 generally recognizes enterprises’ rights to prepare and implement plans to prevent and control infectious diseases on a case-to-case basis.
In our view, this would provide a basis for employers to insist on temperature screening for employees and visitors entering the workplace. In fact, this is widely accepted practice by most, if not all, State authorities and State-owned enterprises in Vietnam and many private businesses as well.
It would however always be preferable to have an actual written policy that outlines the reason by reference to the Law on Prevention and Control of Infectious Diseases and procedures to implement including how to act in the case of temperatures considered to be high.
Topic 4: Right to report in case of employee’s abnormal symptoms
In principle, an employee is obliged to comply with their employer’s internal policies on labor safety and hygiene at the workplace. Specifically, one of these obligations is to report any potential risk where dangerous and hazardous factor might appear at workplace (Art. 18, Law on labor safety and hygiene 2015). Concurrently, employers are entitled to be aware of all health-related risks at the workplace and have a responsibility to keep employees and relevant authorities updated on same (Art.23.4, Law on Prevention and Control of Infectious Diseases 2007).
Therefore, it is allowable for employers to report to competent authorities and/or to update its internal management personnel in case an employee has abnormal symptoms, including without limitation to the employee’s temperature which is abnormal.
Topic 5: Right to collect employees’ personal travel information and obligation to declare same to authorities
Vietnamese law is silent on this topic. As a matter of practice, those who have recently visited/ passed through territories considered as pandemic regions (e.g., the US, European countries, China, Iran, etc.) and those suspected of suffering from Corona virus are required by the government to undergo a compulsory 14-day centralized quarantine. In addition, individuals who have been in close contact with someone who has tested positive for COVID-19 (known as ‘F0’ individuals) are also subject to such mandatory centralized isolation/ self-isolation, depending whether they are determined as F1, F2, F3, F4 or F5 individuals respectively.
Following this, it is reasonable to conclude that employers are entitled to seek and be made aware of such information with a view to best protecting all their employees and reporting same to the competent authorities where necessary.
Please do not hesitate to contact Dr. Oliver Massmann under firstname.lastname@example.org if you have any questions or want to know more details on the above. Dr. Oliver Massmann is Board Member of German Business Association (GBA)