SOME PROBLEMS OF SEASONAL LABOR CONTRACT REMOVAL PURSUANT TO LABOR CODE 2019
Previously, the Labor Code 2012 classified Labor contracts into 03 categories as Indefinite-term, Definite-term and Seasonal (or work-specific) that have a duration of under 12 months. However, the regulations on unsigned seasonal contracts or labor contracts with a term of less than 12 months for regular jobs that require more than 12 month have caused obstacles in the implementation and inspection, inspection, management and violation handling process as well. Thus, there are still unapparent specifications about “regular job that has a duration of over 12 months”. Besides, the percentage of seasonal labor contracts, in fact, accounts for a very low ratio (only about 16.6%). On the other hand, according to the opinion of the Ministry of Labour, War Invalids and Social Affairs, the provisions of a seasonal labor contract is not consistent with the principle of freedom of agreement between employees and employers. Moreover, the inconsistency with the current reality when many businesses are still finding their ways to circumvent the law to sign chain contracts is a considerable situation.
To remedy those above limitations, the Labor Code 2019 eliminated seasonal labor contracts or labor contracts with a term of less than 12 months for regular jobs that require more than 12 month. Therefore, since the day 01/01/2021, there are only 02 types of contracts regulated in accordance with labor law, which are Indefinite-term and Definite-term. The question is whether that change may result in the impacts on employers and employees in the Vietnam labor market? Throughout this article, DTD shall provide analysis and apparent legal perspectives on this issue.
Pursuant to The Labor Code 2019, for seasonal labor contracts or labor contracts with a term of less than 12 months, what type of contract shall be signed between employers and employees?
Due to the elimination of seasonal labor contracts in The Labor Code 2019, currently, for seasonal labor contracts or labor contracts with a term of less than 12 months, employees shall engage in Definite-term labor contracts with employers. The termination term of contract shall not exceed 36 months since the enforcement day of the contract.
In addition, Clause 2, Article 20 of the Labor Code 2019 stipulates that, after a definite-term labor contract taken into effect, the employer and the employee have the following responsibilities:
a) Within 30 days from the expiration date of the employment contract, both parties shall conclude a new employment contract. Before such a new employment contract is concluded, the parties’ rights, obligations and interests specified in the old employment contract shall remain effective;
b) If a new employment contract is not concluded after the 30-day period, the existing employment contract mentioned in Point b Clause 1 of this Article shall become an employment contract of indefinite term;
In the event that two parties engage into a new definite-term labor contract, the re-signing shall be available once. After that, if the employees still want to take that job, the new labor contract must be in the form of Indefinite-term, except the case stated in Clause 4 Article 22, Clause 1 Article 151, Clause 3 Article 153 and Clause 4 Article 179 of the Labor Code 2019
Effect of elimination of seasonal labor contracts on employers
The elimination of seasonal labor contracts or labor contracts with a term of less than 12 months shall affect many corporations' policies.
Before the enforcement of the Labor Code 2019, signing seasonal labor contracts or labor contracts with a term of less than 12 months could help employers to meet short-term human resources requirements during the period of difficulty in conducting business or in the high season. At the same time, signing seasonal labor contracts also optimizes employers’s finance ability by reducing costs such as social insurance, allowances, subsidies ... Therefore, because of the elimination of seasonal labor contracts , the employer will incur a larger cost for the same product unit.
Besides, in DTD’s point of view, the elimination of seasonal labor contracts in the Labor Code 2019 placed an even greater demand on employer responsibility. In the fact that, during the enforcement of the Labor Code 2012, many employers had evaded employees' obligation to implement social insurance policies by signing various types of short-term seasonal contracts. Meanwhile, in accordance with the law, the employer is only responsible for paying some kinds of compulsory social insurance for the employees in the case of seasonal labor contracts. For example: Employers and employees are responsible for participating in unemployment insurance if they enter into a seasonal labor contract with a term of between more than 03 months and less than 12 months (Point c, Clause 1, Article 43 of the Law on Employment 2013). For that reason, in many cases, employers only sign seasonal labor contracts with a term of less than 03 months to avoid the implementation of unemployment insurance obligations for employees.
Effect of elimination of seasonal labor contracts on employees
Before the enforcement of the Labor Code 2019, when two parties engage in seasonal labor contracts, employees shall possess the following interests:
To be granted unemployment benefits if all conditions are met;
To be granted full maternity, retirement, labor accident, and occupational disease regimes (subject to compulsory social insurance under Clause 1, Article 2 of the Law on Social Insurance 2014)
Still subject to personal income tax on income from salaries and wages;
In case the contracts expire for the first time, the second signing shall be allowed. However, the work entered under the seasonal contract must be temporary or irregular (according to Clause 2, Article 22 of the Labor Code. 2012)
Employees working under seasonal labor contracts are not subject to probation (Clause 2 Article 26 of the Labor Code 2012)
During the performance of a labor contract, any party that requests to modify or supplement the contents of the labor contract shall notify at least 3 working days in advance to the other party of the contents to be modified or supplemented (Clause 1 Article 35 of the Labor Code 2012)
When an employer temporarily assigns an employee to perform a job which is not stated in the labor contract, the employer shall inform the employee at least 3 working days in advance, clearly stating the duration of temporary work and the assigned work which must be suitable to the health and gender of the employee (Clause 2, Article 31 of the Labor Code 2012)
When unilaterally terminating a labor contract, the employer shall notify the employee at least 3 working days, for seasonal or work-specific labor contracts of under 12 months (Point c, Clause 2, Article 38 of the Labor Code 2012)
To be granted private leave and unpaid leave as prescribed.
It can be seen that the benefits that employees working under seasonal labor contracts enjoy are not much different from those working under definite-term contracts. Therefore, compared with employers’, the interests of employees are not affected much during the elimination of the seasonal contracts. As a result, the employees' work is more stable. In addition, in the opinion of DTD, the removal of seasonal labor contracts in the Labor Code 2019 shall be reasonable to protect employees when they have devoted and devoted to the business. Besides, in the current circumstances, those regulations also protect employees from the risk of eliminating human resources in a competitive and volatile labor market.
From the above analysis, DTD believes that the Labor Code 2019 has shown progress in Vietnam's legislative activities. New regulations of the Labor Code 2019 focus on more legally protecting the rights and interests of the parties in labor relations, especially that of employees. At the same time, they all help to limit the legal loopholes of the Labor Code 2012 on labor contracts to further improve the provisions of the labor law, in line with the development trend of the era.
