Managing Invalid Labor Contracts

Managing Invalid Labor Contracts

Summarize

Key Terms

  • Invalid Labor Contracts: Contracts that do not meet legal standards. They can be either completely or partially invalid.

Definitions

  • Completely Invalid Contracts: Contracts that breach the law entirely, involve unauthorized signatories, or relate to illegal job roles.
  • Partially Invalid Contracts: Contracts where some terms are illegal but the rest are valid.

Employer and Employee Obligations

  1. For Completely Invalid Contracts
  • New Agreement: Immediately draft and sign a new contract that complies with legal requirements.
  • Employee Rights:
    • Legal Compliance: Ensure rights and obligations meet legal or collective agreement standards.
    • Work Duration: Recognize the period worked under the invalid contract for benefits and severance.
  • If a New Contract Isn’t Signed:
    • Terminate the Contract: End the invalid contract.
    • Provide Benefits: Calculate and provide severance and other termination benefits based on the actual work period.
  1. For Partially Invalid Contracts
  • Amendments:
    • Correct Issues: Fix the illegal parts of the contract to meet legal and collective agreement standards.
    • Adjust Wages: If wages are below legal standards, renegotiate and make up the difference.
  • Employee Rights During Amendments:
    • Compliance: Ensure rights and obligations during the amendment period align with the legal requirements or collective agreement.
  • If Amendments Fail:
    • Terminate the Contract: End the partially invalid contract.
    • Provide Benefits: Calculate and provide benefits based on the duration worked under the invalid contract.
  1. Legal Authority
    • Court Role: The People’s Court has the authority to declare labor contracts invalid.
    • Legal Process: Follow the Civil Procedure Code for handling disputes related to invalid contracts.

Understanding Invalid Labor Contracts

An invalid labor contract fails to meet legal requirements and lacks binding value for both the employer and employee from its inception. Key conditions for a valid labor contract include:

  • Parties involved
  • Principles of contract conclusion
  • Form of the labor contract
  • Content of the labor contract

The 2019 Labor Code does not define an invalid labor contract explicitly. However, it generally refers to a contract that does not meet legal standards.

Cases of Invalid Labor Contracts

According to Article 49 of the 2019 Labor Code, there are two main types:

  1. Completely Invalid Labor Contracts:
    • The contract’s entire content violates the law.
    • The person signing the contract lacks authority or violates principles such as voluntariness, equality, goodwill, cooperation, and honesty.
    • The job specified in the contract is prohibited by law.
  2. Partially Invalid Labor Contracts:
    • The contract contains illegal parts but does not affect the rest of the contract.

Handling Invalid Labor Contracts

Partially Invalid Labor Contracts

For partially invalid contracts (Article 9 of Decree 145/2020/ND-CP):

  • The employer and employee must amend the invalid sections to comply with the collective labor agreement and legal requirements.
  • During the period from work commencement until the contract amendment, resolve rights, obligations, and interests based on the collective labor agreement or the law if no agreement exists.
  • If the contract’s wage is below legal or agreement requirements, renegotiate the wage. The employer must reimburse the employee for the difference based on the actual work period under the invalid contract.
  • If amendments cannot be agreed upon, terminate the contract and resolve termination benefits.

Completely Invalid Labor Contracts

Due to Improper Authority or Contract Conclusion Principles (Article 10 of Decree 145/2020/ND-CP)
  • Sign a new labor contract following legal regulations.
  • Handle rights, obligations, and interests from the start of work under the invalid contract until a new contract based on the invalid contract’s content or according to paragraph 2 of Article 9 of Decree 145/2020/ND-CP.
  • If no new contract is signed, terminate the invalid contract and handle rights and termination benefits accordingly.
Due to Content Violation or Prohibited Jobs (Article 11 of Decree 145/2020/ND-CP)
  • Enter into a new labor contract that complies with legal requirements.
  • Handle rights, obligations, and interests from the beginning of work under the invalid contract until a new contract as per Section 2 of Article 10 of Decree 145/2020/ND-CP.
  • If a new contract is not signed, terminate the contract. The employer must pay the employee an agreed amount, but not less than one month’s regional minimum wage for each year of work, as prescribed by the Government at the time of the decision declaring the contract invalid.

Authority to Declare Labor Contracts Invalid

The People’s Court has the authority to declare labor contracts invalid. Handling invalid labor contracts falls under the court’s jurisdiction according to the Civil Procedure Code.

NetViet provides comprehensive HR solutions for businesses expanding in the Vietnamese market. Our services include PEO, EOR, payroll, and IT helpdesk outsourcing. NetViet delivers expert, seamless, and compliant HR solutions.

Legal disclaimer: The information provided is for general informational purposes only and does not constitute legal advice. For specific legal advice regarding compliance in Vietnam, please consult with NetViet or seek direct legal counsel.

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