[COVID-19] Impact of COVID-19 on labour relation

MAZARS VIETNAM ALERT - SPECIAL ISSUE

As businesses continue to navigate and adapt to the Covid-19 epidemic, many are asking how best to manage their labour force as businesses are inevitably slowing for most. Mazars Vietnam has compiled a list of frequently asked questions relating to labor issues below:

 

1. Has the government suspended issuance of new work permit to foreign employees from the affected epidemic countries?

According to Resolution No. 28/NQ-CP on Regular meeting of the Government in February 2020 dated 10th March 2020, the Government has requested the Ministry of Labor, War Invalids and Social Affairs to suspend the issuance of new work permits to foreign employees from countries and territories affected by Covid-19 epidemic.

Although the Request does not specificy which are subject to such suspension, as per our unofficial discussion with labor management state authorities, in practice there are cases that foreign employees have entered into and are currently residing in Vietnam at the time of applying for work permit and have had documents evidencing their residential status (e.g. entry stamp on passport, confirmation of temporary residence from local authorities), the competent labor management state agencies may still consider granting work permit for such employees.

 

2. Is the employer obliged to pay salary for the employees during their isolation?

2.1.  With regards to employees who are subject to mandatory medical isolation in accordance with the list and decision of competent state agencies:

Under the proposal of Vietnam Social Security in Document No. 422/BHXH-CSXH dated 13th February 2020 to the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Health, employees that are subject to mandatory medical isolation (people suffering from epidemic disease, person suspected of suffering from an epidemic disease, people in blockaded areas, etc.) will all enjoy the sickness regime as per the regulations during the medical isolation period, without taking into consideration of the fact that during or after the period of medical isolation they are infected with Covid-19 or not. Payment shall be based on confirmation of local commune/ward authorities on such isolation.

This is only a proposal from Vietnam Social Security, and yet approved, thus it is subject to confirmation in the coming time. However, in our opinion, payment from Social Insurance Fund for such mandatory medical isolation is reasonable.

 

2.2.  With regards to employees who are subject to voluntary medical isolation for epidemic prevention:

In this case, the employees will not be entitled to social insurance benefit under the sickness regimes. The rights of employees during the isolation period shall be settled according to agreements with the employers, specifically as follows:

  • Agree to apply the form of working from home and/or utilize the employees’ annual leaves in accordance with the labor laws and policies of the employers to enjoy full salary.
  • Agree to suspend working and enjoy the salary for work suspension consented by the two parties in accordance with the regulations of laws.
  • Agree to take unpaid leaves.

 

3. Is the employer allowed to unilaterally reduce working days/hours and/or the employees’ salary?

Theoretically, the reduction of working days/hours and employees’ salary is only permitted upon mutual agreement between the employer and the employee. It is worth noting that the reduced working hours are considered work suspension duration and according to the laws, in case of work suspension due to dangerous epidemic diseases, the salary for work suspension shall be agreed by the two parties but must not be lower than the regional minimum salary stipulated by the Government.

 

4. Is the employer able to unilaterally terminate labor contracts with employees?

Pursuant to the laws, “if, as a result of natural disaster, fire or another force majeure event as prescribed by laws, the employers, though having applied every remedial measure, have to scale down production and cut jobs”, the employers are entitled to unilaterally terminate labor contracts with employees. However, the employers must prove that they have applied necessary remedial measures (such as reaching mutual agreements with the employees on salary reduction or unpaid leave, etc.) but still have no choice other than cutting jobs. In this case, the employers shall still have to follow provisions on advance notice and payment of severance allowance to the eligible employees.

 

5. What are the policies the government is introducing to help businesses during this time?

According to Directive No. 11/CT-TTg dated 04th March 2020 of the Prime Minister, the Government is considering the following supports for businesses affected by Covid-19 epidemic:

  • To extend deadline of tax payment and land lease. The Ministry of Finance has already submitted the draft Decree to extend 05 months for tax payment and land lease.
  • To waive/reduce tax, fee, charges.
  • To halt compulsory insurance contribution up to June or December 2020 and impose no interest on late payment.
  • To adjust deadline for trade union fee contribution.
  • To increase self-relief for Personal Income Tax calculation.
  • To establish Corporate Income Tax policy to support affected enterprises, especially SMEs.
  • To waive and reduce interest, etc.

Source: Mazars Vietnam


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