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Workforce Flexibility and Government Incentives in times of Covid-19 - Vietnam

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Under Vietnamese law, employers are able to decide whether employees should temporarily leave work due to the spread of an epidemic (i.e. Covid-19). During such leave, the salary will be paid subject to each type of leave as well as the employer’s decision during their leave period.

Under Vietnamese law, several regulations provide an employer with the possibility of flexible workforce planning:

Annual Leave:

The employer has the right to fix the timetable for annual leave after consulting the employee and must notify the employee in advance about the timetable. In case the employer has not yet decided the timetable for annual leave in the current year, e.g.2020, they can discuss with the employee to take their annual leave in the Covid-19 period - Full salary is paid during this leave.

Home Based Work:

Under agreement between the employer and the employee - Full salary is paid during this leave

Suspension of work:

To be applied in case of dangerous epidemic - Salary as agreed by the employer and employee, but must not be lower than the regional minimum wage stipulated by the Government.

Unpaid Leave:

Under agreement between the employer and the employee - Not applicable

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

No, there is no special procedure involved in as taking the above leave. This is just an agreement between employer and employee which does not need to be initiated with Trade Union. However, the Trade Union can discuss, communicate and negotiate on labor and employment issues in the company, such as participating in negotiation and supervising the implementation of collective labor agreement, salary scales and tables, labor norms, salary and bonus payment regulations, internal labor regulations and democracy regulations of the employer.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

Yes

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

Regarding suspension of social insurance payment, the Ministry of Labor, Invalids and Social Affairs (MOLISA) has issued Official Letter No. 797/BLDTBXH-BHXH, dated 17 March 2020, on guideline regulations allowing organizations which are seriously damaged by Covid-19 outbreak to suspend the payment to the retirement and survivorship allowance fund without being charged interest until June or December 2020 (depending on the practical situation of the disease outbreak).

Please also note that according to the Official Letter No. 860/BHXH-BT of the Social Insurance Agency, this suspension of social insurance payments is only applicable for enterprises which specialize in transport services, tourism, accommodation, restaurants and other industries facing serious difficulties caused by the Covid-19 epidemic. Such serious difficulties directly lead to the failure to give work to at least 50% of the total number of employees working before the business suspension or suffer damages of greater than 50% of total assets' value (excluding land value).

Regarding bank support: The State Bank of Vietnam (“SBV”) issued Circular No. 01/2020/TT-NHNN, dated 12 Mar 2020, directing the credit institutions, the foreign bank branches to restructure the repayment periods, waive and reduce interest and fees, and maintain the debt classification to support those enterprise affected by Covid-19 epidemic. Moreover, SBV has instructed commercial banks not to raise interest rates because of the Covid-19 outbreak.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

Regarding suspension of social insurance payment:

Where a business has suffered damage due to Covid-19, enterprises are encouraged to submit an application dossier for suspension of social insurance payments. Under Vietnamese law, this application dossier includes the following documents:

  • Letter of request for such suspension.
  • Evidentiary documents (list of employees before and at suspension period, list of employees who have to temporarily leave or report on the inventory of assets).
  • The approval procedure is expected to take approximately 10 working days from the date of filing the full set of application documents.

Regarding bank support:

Internal regulations providing specific guidance on debt rescheduling and the suspension or reduction of interest rates will be issued by credit institutions and foreign bank branches. The State Bank of Vietnam just provides general principles and regulations for the credit institutions and foreign bank branches’ implementation. The detailed procedures and applications dossiers will be issued by each credit institution or foreign bank branch due to differences in (i) classification of client groups; (ii) lending procedures; (iii) credit procedures; (iv) interest rates; and (v) scale among institutions.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 27 March 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.