Legal Update
On 18 June 2012, the National Assembly passed the new Labor Code.
The new Labor Code has settledmany important shortcomings in the current Labor Code such as labor contract,
maternity leaves, wage in probation time, working hours, extra work, extending the traditional Tet holiday,
leaves for foreign workers, duration of foreigner’s work permit, statute of limitation for labor litigation. Besides,
the new Labor Code also added new provisions which have not been prescribed in the current Labor Code, re-
garding re-hiring labors, cases of void labor contract, industry collective labor agreement.
With these changes in the Code, from the viewpoint of the employers, a question should be raised that would the
employers who hire Vietnamese laborers be protected more when the new Labor Code takes effect?
According to the new Labor Code, the female workers will be entitled to have six months for maternity leaves instead
of four months as currently.
This issue attracts the most attention even when only the draft of the new Code was issued to collect comments from
experts and involved bodies.
Following the proposal submitted to National Assembly, the provision of six months for maternity leave is consistent
with UNICEF’s recommendation for encouraging mothers to fully breastfeed their babies in six first months as well as
protecting health for female workers after giving birth. However, this provision also causes disadvantages for employ-
ers in managing and arranging jobs for female workers after maternity time. With enterprises mainly using the female
workforce as the industries of manufacturing leather shoes, garments, agricultural-seafood processing, the shortage in
human resources may be an alarming issue to the managers of enterprises operating in such labor-intensive industries.
The deficiency of workforce may decrease productive capacity, reduce the quantity of production and competitiveness
of enterprises in the market.
As for the enterprises which are hiring female laborers to keep key positions, the personnel arrangement for replacing
such female laborers’ roles may cause many difficulties to enterprises, incur more recruitment and training costs while
the problem in dismissing the replacement staff when the female laborer comes back to work after maternity leave has
not been mentioned. Psychologically, no worker wants to work only for a few months then leave.
Not to mention that from this provision, enterprises may prioritize to recruit male laborers to have stable staff. It may
cause the discrimination (publicly or implicitly) in recruitment and increase the unemployment rate of female laborers.
When the new Labor Code takes effect, the costs of business activities will increase. The new Labor Code prescribes that
the minimum salary and remuneration payable for the laborer in probation time or during the time the laborer is tem-
porarily transferred to another job different from the labor contract, must be increased from 75 to 85% according to the
new Code; increase the wage for laborers who have to work overtime at night with an increase of 20% compared with
provision in current Labor Code.
The increase of salary and remuneration as above seems to put a great financial pressure on enterprises and make em-
ployers hesitate to recruit labor in huge number.
What will the new labour code bring to enterprises?
Six months of maternity leaves for female workers: would it cause a big hole in human resources or dis-
crimination in recruitment?
Increasing business cost?
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