ENTERPRISES DEALING WITH DIFFICULTIES CAUSED BY COVID-19 IN ACCORDANCE WITH VIETNAMESE LAW IN FORCE
1. Assessment of enterprises’ operation in the context of COVID-19
The outbreak of coronavirus disease (Covid-19) has suddenly started since December 2019 from Wuhan, China, leading to a great surge in cases and deaths. As a result, in the press conference in March 11th 2020, the World Health Organization (WHO) officially declared this pandemic as a global health emergency [1]. The cases, and seriously the death toll, may drastically increase if nations do not have any necessary means to prevent it from spreading out.
Like other nations, Vietnam also suffered from consequences caused by Covid-19. Not only people’s health but also the national economy is affected dramatically, especially in the private sector. According to reports of the General Statistics Office of Vietnam (Tổng cục Thống kê), in the early two months of February 2020, there are approximately 16,200 enterprises ceased to operate in a definite-term, 19,5% higher than the same period in 2019. Moreover, it is expected that aviation, tourism, hospitality, agriculture, and entertainment would be severely weakened by Covid-19. Meanwhile, to reduce risk of Covid-19 outbreak, the Prime Minister Nguyen Xuan Phuc has agreed to suspend for overseas Vietnamese from coronavirus-hit-countries since March 2020 [2]. This statement, as a consequence, make industries face a looming crisis.
2. COVID-19 and legal aspects
2.1. Rights of employers under Labor Code 2012
Despite no specific rules provided, the government has sought to enforce policies for stabilization of the economy. Nevertheless, employers have still found difficulties dealing with rights and benefits of employees. Fortunately, the Labor Code 2012 stipulates relations between employer and employee in context of disease. Specifically, employers shall have the following rights:
First, “temporarily assign an employee to perform a work which is not prescribed in the employment contract in the event of sudden difficulties such as epidemic.” (Article 31.01)
Second, “unilaterally terminate the employment contract in the event of a natural calamity, fire, or force majeure as prescribed by law and the employer has exhausted all possibilities, and is forced to scale down production and reduce the workforce.” (Article 38.01.c)
Third, to pay or not to pay employees if an agreement reached. “The employee may negotiate and agree with his/her employer on taking unpaid leave other than the leave stipulated in Clause 01 and Clause 02 of this Article” (Article 116.03).
2.2. For enterprises
According to Law on Enterprise 2014, enterprise shall restructure or suspend:
Restructuring: Law on Enterprises 2014, from Article 92 to Article 99, provides four types of restructuring an enterprise, including: total division, partial division, corporate amalgamation, and acquisition. Moreover, a limited liability company shall be converted into a joint-stock company. After business registration, the converted company obviously inherits all of the lawful rights and interests, debts, employment contracts, and other obligations of the converting company.
Suspension: According to Article 200 Law on Enterprises 2014, an enterprise shall have right to suspend. The duration of the first suspension must not exceed one year and the enterprise shall conduct the procedure of informing to the competent registration office. After one-year suspension, if the enterprise keeps suspending, it must extend to the competent registration office. The total duration of suspension must not exceed two years.
3. States policies to protect enterprises in present context
First, commercial banks and credit institutions have offered preferential credit programs for business organizations. In addition, the State Bank of Vietnam may consider lowering the interest rates to assist commercial banks and business entities “in the war against COVID-19.”
Second, exempt or reduce taxes and fees or prolong the tax payment time limit for individuals and organizations whose business lines are severely affected by COVID-19. According to Article 49 Law on Tax Administration, taxpayers may request for prolongation of the tax payment time limit if they are not able to pay tax on time due to other exceptional difficulties according to the government’s regulations.
Third, inspection agencies, especially tax and customs, shall restrict inspection projects toward enterprises if finding no evidence related to violation, scrutinizing and simplifying administrative procedures.
List of reference material:
[1] WHO Director-General’s opening remarks at the media briefing on COVID-19.
[2] Visa-free entry suspended for overseas Vietnamese from COVID-19-hit countries.
[3] Labor Code 2012.
[4] Law on Enterprise 2014.
[5] Law on Tax Administration 2019.
[6] Decree No.78/2015/ND-CP on business registration.
