Labour Contract and Important Notes
Labour Contract and Important Notes
When a company hires employees, both parties must sign a Labor Contract (as prescribed by law) to establish the employment relationship and outline the rights and obligations of each party. A Labor Agreements must include all mandatory contents as prescribed by law; otherwise, the enterprise may face fines of up to 25 million VND for administrative violations.

What is a Labor Contract?
A Labor Contract is a document that records the negotiations between the employee and the employer regarding salary, working conditions, rights, and responsibilities. Any document containing these three conditions is defined as a Labor Contract.
What is a Labor Contract Appendix?
A Labor Contract Appendix is part of the Labor Agreements and is used to modify or amend the contract’s contents (excluding the payment terms).
What is a Probationary Contract?
A Probationary Contract is an agreement between the employee and the enterprise regarding the scope of work during the probation period, the probation timeline, and the rights and responsibilities of each party during this period.
Relevant Legal Documents
- Labor Code 2019
- Circular 10/2020/TT-BLĐTBXH guiding the Labor Code on the contents of Labor Agreements, collective bargaining councils, and occupations/jobs affecting reproductive and child-rearing functions.
Types of Labor Contracts
- Indefinite-Term Labor Contract: A contract without a specified termination date.
- Definite-Term Labor Contract: A contract with a termination date within a period not exceeding 36 months from the contract’s effective date.
Note: The seasonal contract (Labor Contract with a term of fewer than 12 months) no longer exists. A Labor Agreements with a term of fewer than 12 months is now classified as a Definite-Term Labor Contract.
Mandatory Contents of a Labor Contract
- Employer’s Information: Company name, address (as per the business registration certificate), and name and title of the authorized signatory.
- Employee’s Information: Full name, date of birth, gender, residential address, phone number, email (if any), ID card/passport. For foreign employees, include the Work Permit Number or a certificate proving exemption from a work permit.
- Scope of Work: If the job falls under hazardous or highly hazardous categories (as per Circular 11/2020/TT-BLĐTBXH), the exact job title must be stated to ensure proper employee allowances.
- Working Conditions: If there are multiple workplaces, all locations must be listed.
- Term of the Labor Contract: Specify whether it is indefinite or definite (not exceeding 36 months).
- Salary Information: Include the salary amount, payment method/date, allowances, and salary increment policy.
- Working Hours and Rest Periods: Detail the daily or weekly work schedule, specific working hours, and designated rest days.
- Labor Protection Uniforms (if applicable).
- Social Insurance, Health Insurance, and Unemployment Insurance.
- Technical and Vocational Training (if applicable).
Contents of a Labor Contract Appendix
A Labor Contract Appendix provides detailed amendments or supplementary clauses to the Labor Contract. While there is no specific template or mandatory requirements (except for not altering the contract’s primary terms), the content is primarily tailored by the enterprise.
Terms of a Probationary Contract
A Probationary Contract follows the same structure as a Labor Agreements, but it does not include information about salary increments, insurance, or vocational and technical training.
Important Notes When Signing a Labor Contract
- The probation period may be stipulated in a separate contract or integrated into the official Work Agreements:
- Separate Contract: The employee does not participate in Social Insurance during probation.
- Integrated Contract: The employee participates in Social Insurance during the probation period.
- An employee may sign multiple Labor Agreements with various employers simultaneously. According to Social Insurance regulations:
- Unemployment Insurance is based on the first Work Agreements
- Health Insurance is based on a contract with a higher salary.
In practice, most Social Insurance authorities allow enterprises to register employees for Social Insurance, Health Insurance, and Unemployment Insurance based on a Labor Contract. Social Insurance is not required for a Labor Contract with a term of less than one month; however, the enterprise must include a Social Insurance contribution (21.5%) in the employee’s salary.
Common Types of Contracts in Vietnam
Below is a list of common contract types frequently used in business, investment, labor relations, and personal matters in Vietnam, along with brief descriptions of each:
- 1. Joint Venture Contract – An agreement between two or more parties to establish a joint venture company in Vietnam.
- Share Purchase Agreement – A contract governing the purchase and sale of shares between investors, which may include provisions on transfer restrictions, voting rights, guarantees, and other commitments.
- Sale and Purchase Agreement – A widely used contract in commercial transactions, stipulating the terms for buying and selling goods or services.
- Business Cooperation Contract (BCC) – An agreement between parties to cooperate in business operations without establishing a new legal entity.
- Licensing Agreement – A contract granting one party the right to use intellectual property, trademarks, technology, or franchise rights from the other party.
- Investment Agreement – An agreement between investors and partners defining the terms and conditions of investment in a project or business in Vietnam.
- Labor Contract – A contract that establishes the employment relationship between an employer and an employee, setting forth the rights and obligations of both parties.
- Lease Agreement – A contract for leasing assets such as real estate, machinery, vehicles, equipment, etc., between a lessor and a lessee.
- Distribution Agreement – An agreement between a supplier and a distributor outlining the rights and obligations related to the distribution of products or services.
- Construction Contract – A contract specifying the obligations of contractors in carrying out construction works.
- Prenuptial Agreement – A legal document defining the property rights and obligations of both parties before marriage.
If you have any questions, please do not hesitate to contact An Law Vietnam. Our team of experienced lawyers and consultants provides professional guidance in drafting and improving Labor Contracts, ensuring legal compliance and safeguarding the legitimate interests of our clients.
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