I. DECREE NO. 135/2020/ND-CP
Change in retirement age of employees as of 01/01/2021
Decree No. 135/2020/ND-CP (“Decree 135”) dated 18/11/2020 of the Government providing the regulations on retirement age under the Labour Code 2019, takes effect as of 01/01/2021.
Under The Labour Code 2019, the retirement age of employees with normal working conditions is adjusted as follows: (i) reaching 62 for male employees in 2028; and (ii) reaching 60 for female ones in 2035. Specifically, Decree 135 further clarifies that: from 01 January 2021, the retirement age of male and female employees shall be 60 years 03 months and 55 years 04 months respectively. Afterward, it shall increase by 03 and 04 months every year until reaching 62 and 60 for male and female employees respectively.
Nonetheless, employees own the right to retire at a lower age than the normal retirement age (but no more than 05 years lower) in the events that: (i) They have had a physically demanding or dangerous job or one in an impoverished area for 15 years or more; or (ii) Their working capacity has been reduced by 61% or more, etc. Besides, employees may retire at a higher age than the normal retirement age (but no more than 05 years higher) if they are skilled workers, and their employers agree to recruit them after they reach the normal retirement age.
We opine that the regulations on retirement age are of crucial importance and can produce significant effects on society and the economy. By increasing the retirement age, the Vietnamese Government aims to tackle population aging, promote socio-economic development of the country, ensure job opportunities for people, secure and boost insurance funds, and guarantee sexual equality. Moreover, the adjusted retirement ages which are gradually increased in an itinerary helps the labor market accustom to such new regulations smoothly. As the retirement age only increases by 03 or 04 months every year, the number of available workers will also increase slowly, thus avoiding redundancy on the job market. This will also prevent social unrest as employees and employers can have enough time to familiarize themselves with this significant amendment.
II. DECREE 145/2020/ND-CP
Clarifications on the regulations on working conditions and employment relations of the Labor Code 2019
Decree No. 145/2020/ND-CP (“Decree 145”) dated 14/12/2020 of the Government providing guidelines on the regulations of working conditions and employment relations under the Labour Code 2019, takes effect as of 01/02/2021.
1. Supplementing more requirements for unilateral termination of employment contracts in special works and lines of business
Accordingly, special works and lines of business such as aircrew, aircraft maintenance technicians, aviation repairmen; flight coordinators; enterprise managers as stipulated in the Law on Enterprises; crewmembers working on Vietnamese vessels operating overseas; etc.
For the above works and lines of business, the notice period for unilateral termination of employment contracts is as follows:
- At least 120 days if the employment contract has an indefinite term or a term of at least 12 months;
- At least a quarter of the term of employment contracts which is less than 12 months.
It is recognized that the above regulation benefits employers in special works and lines of business as they are allowed more time to find replacements when their employees unilaterally terminate the employment contract.
2. More periods are qualified as paid working time
For the sake of employees, Decree 145 qualifies the following periods as paid working time:
- Periods over which trainees and apprentices directly perform or participate in the performance of work; payments shall be as agreed by the parties;
- Periods over which employees who are members of the management board of the internal employee representative organization are employed to perform the duties prescribed Clause 2 Decree Clause 3 Article 176 of the Labor Code 2019;
- Time spent on registration and medical examination for military service if the employees are paid for as prescribed by military service laws; etc.
3. Extension of the rights of female employees
In the spirit of the Labor Code 2019, Decree 145 further provides several new regulations aiming to facilitate the rights of female employees and guaranteeing sexual equality:
- Have preferential recruitment policies for women if they are qualified for works that are suitable for both genders;
- Give priority to signing new employment contracts with female employees when the old ones expire;
- Allow pregnant female employees to have more than 05 times of one-day maternity leave;
- A female employee who is nursing a child aged under 12 months is entitled to a daily break of 60 minutes forbreastfeeding, milking and rest. If an employer has 1,000 female employees or more, a room for milking and breast milk storage is mandatory.
Although the practicability of those regulations largely depends on the enterprise, Decree 145 reflects the great humanity of labor laws that aim at properly and reasonably protecting the legitimate rights which should be owned by female employees.
4. Change in the method used to calculate salary as the basis for paying an employee for unused annualleave days
Accordingly, salary as the basis for paying an employee for unused annual leave days is the salary written in his/her employment contract of the month preceding the month in which the employee resigns or loses his/her job.
This regulation is more advantageous to employees in comparison with Decree 05/2015/ND-CP. Under Decree 05, salary as the basis for paying an employee for unused annual leave days is calculated according to their salary under the employment contract in the six months proceeding the month in which the employee resigns or losses his/her job (if they have worked for more than six months) or in the total term of the employment contract (if they have worked for less than six months).
5. More responsibilities of authorities and employers for providing employees with the best working conditions
Accordingly, Decree 145 supplements a regulation on nursery schools and kindergartens in areas with a large number of employees as follows:
- Provincial people’s committees shall allot lands for construction of nursery schools and kindergartens in areas with a large number of employees; or facilitate, in terms of land and credits, those who invest in the construction of nursery schools and kindergartens for the sake of employees.
- Encourage employers to construct or financially support provincial people’s committees in the construction of nursery schools and kindergartens.
6. Preferential tax policies for enterprises with a large number of female employees
- Enterprises with a large number of female employees shall enjoy preferential tax treatment under tax laws;
- Additional expenses on female workers, guaranteeing sexual equality, the prevention and combating of sexual harassment in the workplace are deductible upon determination of enterprise income tax.
This regulation benefits both employers and employees and serves as a means to increase the practicability of the aforementioned regulations extending and protecting the rights of female employees.
III. DECREE 152/2020/ND-CP
New regulations on foreign workers in Vietnam
Decree No. 152/2020/ND-CP (“Decree 152”) dated 30/12/2020 of the Government providing regulations onrecruitment and management of foreign workers working in Vietnam and Vietnamese employees working for foreign employers in Vietnam, takes effect as of 15/02/2021.
1. New regulation on the extension of work permits of foreign workers which have a remaining validity period of the work permit is at least 05 days but not exceeding 45 days
Application of work permits is a major concern of enterprises employing foreign workers. Enterprises should note that under Decree 152, work permits of foreign workers which have a remaining validity period of the work permit is at least 05 days but not exceeding 45 days shall not be re-issued as stipulated in Decree 11/2016/ND-CP (“Decree 11”) but be extended following the new regulation. Unexpired work permits shall only be re-issued if they are lost or damaged, or if there has been a change in names, nationality, passport number or workplace of the work permit holder. Work permits shall only be extended only once for a term of up to 02 years.
2. Amending the regulation on foreign workers eligible to work in Vietnam
Decree 152 also makes modifications to several definitions of foreign workers’ eligibility to work in Vietnam as follows:
- Regarding foreign workers who are managers, CEOs of enterprises, etc. moving to Vietnam to perform intra-company transfer program they are required to have been employed for at least 12 consecutive months by such enterprise, as opposed to only 12 months as stipulated in Decree 11;
- Regarding foreign skilled workers who do not have a Bachelor’s degree or the equivalent, they are required to have 05 years of experience and hold licenses suitable for their expected positions in Vietnam.
In general, Decree 152 imposes more stringent requirements regarding the expertise and experience of foreign workers who want to enter the Vietnamese labor market. It also allows foreign workers who have experience but do not have adequate qualifications a higher chance to work in Vietnam.
3. Expanding the scope of foreign workers who are not required to apply for work permits
As compared to Decree 11, Decree 152 supplements the following workers who are not required to apply for work permits:
- Owners/members of limited liability companies (in Vietnam) or presidents/members of the board of directors of joint-stock companies (in Vietnam) who contribute at least 03 billion VND to the share/equity capital of each company.
This regulation aims at preventing foreign investors from establishing a limited liability with a small equity capital or buying a small number of shares to be subjected to the exemption of work permits.
- Those responsible for establishing commercial presence.
This regulation is reasonable as the establishment of commercial presence, in reality, takes a huge amount of time due to administrative procedures, renting of land, construction of offices, recruitment of employees, etc.
As per the above analysis, it could be seen that the Government was aware of the shortcomings of the regulations on the issuance procedure of work permits for foreign workers in Vietnam and on Vietnamese employees working for foreign employers. These limitations have been tackled by Decree 152, which helps ensure greater transparency of the laws and allows foreign workers to easily come to work in Vietnam. It also encourages foreign workers to live and work in Vietnam and therefore promotes the socio-economic development of the country in the future.
IV. DECREE NO. 155/2020/ND-CP
Synchronize and uniformize regulations related to conditions on public offering and standards on stock listing of public companies
Decree No. 155/2020/ND-CP (“Decree 155”) dated 31 December 2020 of the Government providing guidance on the implementation of the Law on Securities, takes effect as of 01 January 2021.
In the spirit of inheritance the fundamental provisions from Decree No. 58/2012/ND-CP dated 20 July 2021 detailing and guiding the implementation of several articles of the Law on Securities (“Decree 58”), Decree No. 60/2015/ND-CP of Government dated 26 June 2015 amending some articles of Decree No. 58 (“Decree 60”) and Circular No. 162/2015/TT-BTC of Ministry of Finance dated 26 October 2015 guiding on public offering, stock swap, issuance of additional stocks, repurchase of stocks, sale of treasury stocks and tender offer (“Circular 162”), below are the notable amendments of Decree 155:
Regarding regulations on public offering by shareholders of public companies, in general, Decree 155 retains the provisions on the offering of shares of “major shareholders” in public companies unchanged as prescribed in Decree 58, except for the amendment to the subject of the offering from “major shareholder” to “shareholder” to ensure the compliance with the Law on Securities 2019. These provisions serve the purpose of facilitating shareholders of large-scale enterprises to sell shares via a public offering and helping state-invested enterprises to divest their investments in other enterprises.
In addition, Decree 155 also stipulates that shares offered to investors must be the enterprise’s shares satisfying the conditions set out in the Law on Securities 2019. In case a shareholder registering for the offering is an organization,plan for the offering of shares shall be approved by competent bodies of the registering organization in accordance withthe provisions of the applicable Law on Enterprise and the charter of the registering shareholders.
Furthermore, Decree 155 has supplemented a provision on share issuance of a limited liability company (LLC) undergoing a conversion process into a joint-stock company. Such supplementation is fundamental to ensure the compliance with the new provisions under the Law on Enterprises 2020. In general, the conditions and dossiers of apublic offering for conversion of a LLC into a joint-stock company are similar to the initial public offering under the Law on Securities 2019.Overall, Decree 155 has specified several regulations on the types, conditions, dossiers regarding the procedures of apublic offering, the conditions of stock listing; and together with Decree No. 153/2020 dated 31 December 2020 of theGovernment regulating offering, trading of corporate bonds in form of private placement in the domestic market and offering of corporate bonds to the international market, Decree 155 will help to ensure the implementation of the laws in the section of securities to be synchronous and consistent in the time to come.
V. DECREE NO. 01/2021/ND-CP
The process of entrepreneurship in Vietnam curtailed from 08 procedures within 16 days to only 03 procedures within 06 days
Decree No. 01/2021/ND-CP (“Decree 01”) dated 03 January 2021 providing regulations on enterprise registration, takes effect as of 04 January 2021.
In comparison to the previous provisions, Decree 01 supplements one more case in which an enterprise is not entitled to register, make a notice on changes in enterprise registration information where an enterprise is in the legal status of “Not operate at registered address”. Along with such case, two more cases in which the License on establishment of branches, representative offices shall be revoked has been supplemented, being: (i) The application for registration of branches, representative offices contain fraudulent information and (ii) According to a Court’s decision or request of competent authority as prescribed by the law. The supplementation of the above cases greatly assists competent authorities in verifying the actual operation status of enterprises and thereby finalizing the regulations on handling ofadministrative violations in the field of enterprise registration, especially the thorough handling of acts of inaccurate and fraudulent declaration, and the “escaped, missing” enterprise to aggravate deterrence and contribute in creating a pleasant, scatheless investment environment.
Decree 01 also stipulates one new business community entitled to register enterprise at business registration authorities, including securities companies, securities investment fund management companies, securities investment companies, branches of foreign securities companies, and branches of foreign fund management companies in Vietnam, in order to comply with the changes of the Law on Securities 2019.
In particular, with the aim of facilitating enterprises in market entry, solutions of cutting off administrative procedures institutionalized by the Government in Decree 01 are the new points that have received the most attention from the Vietnamese business community. Accordingly, from the date of 04 January 2021, the following 04 procedures are integrated into 01 sole procedure and implemented in an interconnected manner: (i) Registration of establishment ofenterprises, branches, representative offices; (ii) Declaration of employment status; (iii) Issuance of codes of social insurance participants; (iv) Application for use of enterprises’ invoices. In detail, enterprises shall solely have to prepare 01 set of dossier, fill in 01 form, carry out procedures at 01 authority, which is the business registration office, and receive 01 unique result. State agencies shall share such information internally instead of requesting enterprise to declare at many places as before. The entire process of exchanging information among administrative state agencies shall be carried out via the Internet. After implementing these reforms, the process of entrepreneurship in Vietnam has been curtailed from 08 procedures within 16 days to only 03 procedures within 06 days.From the abovementioned amendments and supplementations, Decree 01 shows its contribution in specifying the reforms, innovations of the Law on Enterprises 2020, along with tackling the shortcomings and handling the obstaclesin the previous time. Decree 01 once again proves the strong determination of the Government in promoting start-ups, making innovation, arousing and activating all sources for the country’s development through regulations which have a great and direct impact on the entire business community in Vietnam.
VI. DECREE NO. 31/2021/ND-CP
Announcement on 84 business lines being restricted for market access for foreign investors
Decree No. 31/2021/ND-CP (“Decree 31”) dated 26 March 2021 of the Government on detailing and guiding the implementation of several articles of Law on Investment, takes effect from 26 March 2021.
Once Decree 31 was promulgated, the highlighted new point that received the most attention was the announcement of the Government on the List of business lines with prohibited and restricted market access for foreign investors (FI) attached to Appendix I of such Decree, specifies the regulations in clause 2 of Article 9 of the Law on Investment 2020. The List provides in particular 25 business lines to which FI has not yet had market access along with 59 conditional market access for FI. Accordingly, under the principle of choose–leave of the Law on Investment, in case FI choose to invest in business lines other than such 84 business lines, FI shall be entitled to the same market access provided to domestic investors. In addition, Decree 31 also provides that the conditions for market access for FI in business lines under provisions of Appendix I shall be scrutinized, assembled, and published on the National Investment Portal by The Ministry of Planning and Investment after presiding over, cooperating with other Ministries and ministerial agencies.Thereby, it could be observed that, for ensuring feasibility and transparency in the process of implementing the Law on Investment 2020, Decree 31 has specified several articles on business lines in which FI is restricted to market access under the principle of choose-leave or the enforceable, transparent process of carrying out investment projects for the purpose of further strengthening, improving the mechanism of protection, encouraging investment in accordance with integration commitments of Vietnam, attracting the flow of shifting investment capital, while ensuring selective and quality investment attraction. This Decree is expected to bring consistency in applying the investment business lines as well as the investment incentives and guarantees; and the transparency in the process of issuing investment registration certificates, monitoring and assessing investment.
VII. DECREE NO. 35/2021/ND-CP
Project in the field of electric grid, power plant must have the minimum scale of VND1,500 billion
Decree No. 35/2021/ND-CP (“Decree 35”) dated 29 March 2021 of the Government providing guidance on the Law on Public – Private Partnership (PPP) Investment, takes effect as of 29 March 2021.
Accordingly, Decree 35 provides guidances on 13 contents of the Law of PPP, including: project sector and size; establishment, organization, operation of the Assessment Board; the process of PPP project; procedures for preparation of investor-proposed PPP projects; general process on the selection of investors; handling of investor selection situations; methods and standards for evaluation of bidding documents; instruction on sample contract formulation for each group of contract; arising content related to the transitions.
In particular, some sectors of investment, scales of PPP projects are prescribed as follows:
- At least VND1,500 billion for the projects in the sector of transportation.
- At least VND1,500 billion for the projects in the sectors of electric grid, power plant, etc.
- At least VND200 billion for the projects in the sectors of water resources and irrigation; clean water supply, water drainage and wastewater treatment; waste management and disposal.
- At least VND100 billion for the projects in the sector of healthcare.
- At least VND100 billion for the projects in the sector of education – training.
- At least 200 billion VND for the projects in the sector of information technology infrastructure.
It could be observed that the promulgation of Decree 35 will contribute to the completion of the policy in attracting investment under PPP in accordance with the conditions of Vietnam and gradually approaching international customs to create a favorable and pleasant environment to attract investors who have actual financial capacity and experience in project management and implementation. In addition, Decree 35 helps the legal framework to be consolidated in a consistent, synchronous and transparent manner for the purpose of affirming the commitment of the Vietnamese Government in encouraging the private sector to invest in infrastructure development and contributing to the promotion of investment restructuring.
