Formatted 24-Onsemi-Labour Market and Regulation in Vietnam.pptx

Labour market and law

1. Overview Vietnam labour Market and Regulations For On Semiconductor Vietnam Company Limited August 2024

2. Minh is an experienced lawyer and is currently Director and Head of Labour Law Practice , Legal Services of KPMG in Vietnam, Hanoi Office. She has over 19 years of professional experience in licensing and business consulting, including 04 years working at a domestic consulting firm before joining KPMG. Minh has participated in many consulting assignments for foreign companies in various fields throughout business-life circle from initial accession to the Vietnamese market to business restructure and/or wind-off. With respect to labour and employment law field, Minh gained deep and practical experience from advising many domestic and international enterprises and organizations on Vietnamese regulations related to human resources, immigration issues, labour restructuring, compensation and benefits as well as other general labour and employment issues. Minh also run KPMG OnDemand - Labour Law Series with interesting topics on many labour matters Presenter Tran Thi Thanh Minh Director, Attorney at law Legal Services

3. Vietnam Labour Market Overview

4. Labour distribution – 52.4 million employed labour , 2023 By sector By area Labour force remains a competitive advantage Vietnam macroeconomic update GOLDEN POPULATION Vietnam benefits from a "golden population structure," where 67.3% of the population is of working age. This presents Vietnam with a distinctive socio-economic development opportunity to leverage its youthful labour force and drive economic growth. Vietnam's growing working population will boost competition for jobs while keeping labour costs low. Its young workforce will contribute greatly to the growth of the economy in many ways, from absorbing technology to creating wealth. The Asian region has witnessed swift and substantial changes in population demographics. Countries with a significant aging population are grappling with demographic transitions, with the working-age population projected to decline by 10% by 2060, particularly in Japan. In contrast, Vietnam enjoys a "golden population," where the working-age segment is expanding more rapidly than the consumer base, resulting in a parallel rise in income per capita—a phenomenon known as the demographic dividend. Source: populationpyramid.net, Ministry of Health, EIU Total population (2023) 100.3 million Working-age population 67.5 million Source: GSO, populationpyramid.net, Ministry of Health, EIU Population pyramid in selected Asian countries (2023)

5. Vietnam Income group average In the 2023 Global Talent Competitiveness Index (GTCI), Vietnam secured the 75th spot among 134 countries, marking a one-rank improvement year-on-year. Vietnam's strongest performance was in the "Grow" pillar (55th), with notable strengths in youth inclusion, delegation of authority, and academic performance. The country's most impressive sub-pillar was Employability (30th), although its ranking was weakened by the Skills matching sub-pillar (66th), reflecting the education-occupation mismatch within the Vietnamese workforce. Source: Global Talent Competitiveness Index GTCI 2023 Country Profile by Pillar Source: EIU Average hourly wage (US$) Labour force remains a competitive advantage Vietnam macroeconomic update Resolution No.54/NQ-CP for 2021-2025 emphasizes the goal of revitalizing and restructuring the economy to enhance productivity, competitiveness, and national economic resilience in the face of Covid-19. This indicates a substantial reduction in the disparity of national competitiveness among the ASEAN-4 countries (Indonesia, Malaysia, Philippines, and Thailand) from 2021 to 2025. As a result, there is a growing need to study and formulate suitable policies to maximize productivity potential. PRODUCTIVITY INDEX Source: Vietnam Government Portal, Economic Resolution No.54/NQ-CP, 2021-2025 Labour productivity is projected to grow annually > 6.5% Vietnam's growing working population will boost competition for jobs while keeping labour costs low. Its young workforce will contribute greatly to the growth of the economy in many ways, from absorbing technology to creating wealth. COMPETITIVE LABOUR COSTS Moreover, Vietnam provides a flexible labour market characterized by low wages, a trainable workforce, business-friendly laws compared to its regional counterparts.

6. Vietnam Labour Law System

7. In-place regulation system favors employees more than employers Resolution of labour disputes through arbitration and court in Vietnam often results in outcomes that are favorable to employees Employers need to be proactive in understanding and complying with labour laws, maintaining clear communication, and fostering positive employee relations to mitigate risks, avoid disputes, and create a productive and legally compliant work environment. Vietnam Labour Law System

8. Labour Regulations (1/ 5 ) General Provisions on Labour Labour Code No. 45/2019/QH14 passed by the National Assembly dated 20 November 2019; Law on Employment No. 38/2013/QH13 passed by the National Assembly dated 16 November 2013; Decree No. 74/2024/ND-CP of the Government dated 30 June 2024 on statutory minimum wages paid to employees working under employment contracts; Decree No. 12/2022/ND-CP of the Government dated 17 January 2022 on penalties for administrative violations against regulations on labour , social insurance, and Vietnamese guest workers; Decree No. 152/2020/ND-CP of the Government dated 30 December 2020, amended and supplemented by Decree No. 70/2023/ND-CP of the Government dated 18 September 2023 on foreign employees working in Vietnam and recruitment and management of Vietnamese employees working for foreign employers in Vietnam; Decree No. 145/2020/ND-CP of the Government dated 14 December 2020, amended and supplemented by Decree No. 10/2024/ND-CP of the Government dated 01 February 2024 and Decree No. 35/2022/ND-CP of the Government dated 28 May 2022 on elaboration of some articles of the Labour Code on working conditions and labour relations; Decree No. 135/2020/ND-CP of the Government dated 18 November 2020 on retirement age; Trade Union Law on Trade Union No. 12/2012/QH13 passed by the National Assembly dated 20 June 2012; Decree No. 191/2013/ND-CP of the Government dated 21 November 2013 on trade union finance; Decision No. 174/QD-TLD of the General Confederation of Labour dated 03 February 2020 on promulgating the Charter of Vietnamese Trade Union; Guidance No. 03/HD-TLD of the General Confederation of Labour dated 20 February 2020 on implementation of the Charter of Vietnamese Trade Union.

9. Labour Regulations ( 2/5 ) Occupational Safety and Health Law on Occupational Safety and Health No. 84/2015/QH13 passed by the National Assembly dated 25 June 2015; Decree No. 88/2020/ND-CP of the Government dated 28 July 2020 on elaborating some articles of the Law on Occupational Safety and Health on compulsory insurance for occupational accidents and occupational diseases; Decree No. 58/2020/ND-CP of the Government dated 27 May 2020 on rates of compulsory insurance contributions to the occupational accident and disease benefit fund; Decree No. 44/2016/ND-CP of the Government dated 15 May 2016 elaborating certain provisions of the Law on Occupational Safety and Health on technical inspection of labour safety and safety training, occupational health and working environment monitoring; Decree No. 39/2016/ND-CP of the Government dated 15 May 2016 detailing the implementation of certain provisions of the Law on Occupational Safety and Health; Circular No. 25/2022/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 30 November 2022 on personal protection equipment in work; Circular No. 29/2021/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 28 December 2021 on work classification standards based on working conditions; Circular No. 28/2021/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 28 December 2021 on elaborating certain provision of the Law on Occupational Safety and Health in terms of benefits for workers suffering from occupational accidents or occupational diseases; Circular No. 11/2020/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 12 November 2020 on list of heavy, hazardous, dangerous occupations (supplemented by Circular No. 19/2023/TT-BLDTBXH dated 29 December 2023); Circular No. 06/2020/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 20 August 2020 on list of occupations bound by strict requirements for occupational safety and health; Circular No. 36/2019/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 30 December 2019 promulgating the list of machinery, equipment, materials and substances subject to strict occupational safety and health requirements;

10. Labour Regulations ( 3 / 5 ) Compulsory Insurance Social Insurance Law No. 58/2014/QH13 passed by the National Assembly on 10 November 2014; Law on Employment No. 38/2013/QH13 passed by the National Assembly on 16 November 2013; Law on Health Insurance No. 25/2008/QH12 passed by the National Assembly on 14 November 2008, amended and supplemented by Law No. 46/2014/QH13 passed by the National Assembly on 13 June 2014; Decree No. 146/2018/ND-CP of the Government dated 17 October 2018 elaborating and providing guidance on measures to implement certain provisions of law on health insurance; Decree No. 143/2018/ND-CP of the Government dated 15 October 2018 elaborating on law on social insurance and law on occupational safety and health regarding compulsory social insurance for employees who are foreign nationals working in Vietnam; Decree No. 166/2016/ND-CP of the Government dated 24 December 2016 elaborating on electronic transactions in social, health and unemployment insurance; Decree No. 115/2015/ND-CP of the Government dated 11 November 2015 on guidance on the law on social insurance regarding compulsory social insurance; Decree No. 28/2015/ND-CP of the Government dated 12 March 2015 on guidance on measures to implement a number of provisions on unemployment insurance of the Law On Employment.

11. Labour Regulations ( 4 / 5 ) Compulsory Insurance (cont.) Circular No. 59/2015/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 29 December 2015, amended and supplemented by Decree No. 06/2017/TT-BLDTBXH dated 07 July 2021, elaborating and guiding the implementation of some articles of the Law on Social Insurance on compulsory social insurance; Circular 28/2015/TT-BLDTBXH of the Minister of Labour , Invalids and Social Affairs dated 31 July 2015 on guidelines for article 52 of the law on employment and Decree No. 28/2015/ND-CP dated 12 March 2015 of the Government on guidelines for the Law On Employment regarding unemployment insurance; Decision 166/QD-BHXH of Vietnam Social Security dated 31 January 2019 on procedures for processing of applications for social insurance benefits, and payment of social insurance and unemployment insurance benefits; Decision 595/QD-BHXH of Vietnam Social Security dated 14 April 2017, as amended and supplemented by a number of decisions of Vietnam Social Security, on procedures for collection of social insurance contributions and premiums of health insurance, unemployment insurance, occupational accident and occupational disease insurance; management of social insurance books and health insurance cards;

12. Labour Regulations ( 5/5 ) Personal Income Tax Law on Personal Income Tax No. 04/2007/QH12 passed by the National Assembly dated 21 November 2007 (amended and supplemented by Law No.  26/2012/QH13 passed by the National Assembly dated 22 November 2012 and Law No. 71/2014/QH13 passed by the National Assembly dated 26 November 2014); Law on Tax Administration No. 38/2019/QH14 passed by the National Assembly dated 13 June 2019; Decree No. 125/2020/ND-CP of the Government dated 19 October 2020 on administrative penalties for tax and invoice-related violations (amended and supplemented by Decree No. 102/2021/ND-CP of the Government dated 16 November 2021); Decree No. 65/2013/ND-CP of the Government dated 27 June 2013 on detailing a number of articles of the Law on Personal Income Tax and law amending and supplementing a number of articles of the Law o n Personal Income Tax (amended and supplemented by Decree No. 91/2014/ND-CP of the Government dated 01 October 2014 and Decree No. 12/2015/ND-CP of the Government dated 11 March 2024); Circular No. 111/2013/TT-BTC by Minister of Finance dated 15 August 2013 on the implementation of the Law on Personal Income Tax, the Law on the amendments to the Law on Personal Income Tax, and the government's Decree No.  65/2013/ND-CP  elaborating a number of articles of the Law on Personal Income Tax and the Law on the amendments to the Law on Personal Income Tax (amended and supplemented by Circular No. 119/2014/TT-BTC dated 25 August 2014; Circular No. 151/2014/TT-BTC dated 10 October 2014; Circular No.92/2015/TT-BTC dated 15 June 2015 of the Minister of Finance) ; Decision No. 954/2020/UBTVQH14 of Standing Committee of the National Assembly dated 2 June 2020 on changes to personal income tax exemptions.

13. Main Obligations of Employer

14. Employment Set-up Phase Employer’s Specific Obligations (1/20) General Obligations The employer shall NOT Require employees to pay recruitment fees Keep the employee’s original identity documents, diplomas and certificates Request the employee to make a deposit in cash or property as security for his/her performance of the employment contract Standard Recruitment and Labour Use Management Process (1/2)

15. Employer’s Specific Obligations (2/20) Employment Set-up Phase Recruitment of foreign employees Work Permit/ Work Permit Exemption Contract Term The maximum validity period of a Work Permit/ Work Permit Exemption is two (02) years and can be extended only once for a maximum of two (02) years. The contract term must NOT exceed the work permit term. Employers and foreign employees can sign multiple definite-term employment contracts . Applying for Work Permit/ Work Permit Exemption or Sending Notification on Work Permit Exemption Employer’s obligations Signing employment contract with the employee (for foreign employees entering Vietnam to perform labour contract) After the foreign employee is granted with Work Permit and before the date on which the foreign employee is expected to work Prior to the date the foreign employee is expected to start working Standard Recruitment and Labour Use Management Process (2/2)

16. Employer’s Specific Obligations (3/20) Employment Set-up Phase Probation Probation period 06 working days – 60 days for normal employees Up to 180 days for executive positions Option 1 Option 2 Termination of probation: Either party may terminate without advance notice or compensation An employment contract including a probationary period A separate probation agreement Continue implementing the signed employment contract Sign an employment contract

17. Employer’s Specific Obligations (4/20) Employment Set-up Phase Conclusion of Employment Contract Types of employment contracts Compulsory Contents of Employment Contract The Employer may sign with an Employee: Indefinite-term employment contract : the term and termination date not determined; or Definite-term employment contract : maximum term of up to 36 months, no limitation on minimum term. In case the first employment contract is definite-term, the Employer may enter into a maximum of one (01) additional definite-term employment contract with the Employee. Upon expiration of the additional employment contract, if the employee continues to work, the Employer must sign an indefinite-term employment contract with the Employee. 1. Name and address of the Employer, name and position of the authorized person of the Employer to enter into the employment contract 2. Full name, date of birth, gender, place of residence, ID card/citizen card/passport of the employee 3. Job description and place of work 4.Term of employment contract 5. Job- or position-based salary, form of salary payment, due date for payment of salary, allowances and other additional payments 6. Promotion and salary increase regime 7. Working and resting hours 8. Personal protective equipment for the employee 9. Social insurance, health insurance and unemployment insurance 10. Training, fostering, and improving vocational qualifications and skills

18. Employer’s Specific Obligations (5/20) Employment Operation Phase Salary (1/2) Employer must not pay employee lower than the statutory minimum wages Statutory Minimum Wages Region Statutory minimum wages per month  (VND/month) Statutory minimum wages per hour (VND/hour) Region I 4 ,96 , 000 23,8 00 Overtime salary Time of Overtime Minimum Rate of Normal Salary Working days 150% Weekly days off 200% Public holidays/ Paid leave 300% Public holidays overlapping with weekly days off 300% Compensatory days off (when public holidays overlaps with weekly days off) 200% Night salary Case of Night Salary Night Salary Normal Night Salary Additional amount of at least 30% of the salary on a normal working day Overtime Night Salary Additional 20% of the salary on a normal working day/ a weekly day-off/ a public holiday (Besides normal working day salary and normal night salary)

19. Employer’s Specific Obligations (6/20) Employment Operation Phase Salary (2/2) Salary Deduction Cases in which employer can deduct employee’s salary Duty to Inform Deduction Amount When employee is obliged to compensate for the damage to the employer’s tools, equipment and assets in accordance with Article 129 of Labour Code. The employee has the right to be aware of the reasons for the salary deduction. Any monthly deduction shall not exceed 30% of the monthly salary actually paid to employee after breakdown for payment of compulsory social insurance, health insurance, unemployment insurance and personal income tax

20. Employer’s Specific Obligations (7/20) Employment Operation Phase Working hours, Rest Periods (1/3) Working hours Type of working hours Regular working hours on daily basis Regular working hours on weekly basis Maximum working hours Maximum working hours of 08 hours per day and 48 hours per week Maximum working hours of 10 hours per day and 48 hours per week Obligation of the Employer The Employer must notify employees about the regulation of regular working hours on daily basis or on weekly basis

21. Employer’s Specific Obligations (8/20) Employment Operation Phase Working hours, Rest Periods (2/3) Overtime Monthly Overtime Limit Annual Overtime Limit Maximum of 200 hours; or Maximum of 300 hours in the following job/circumstances: Production and processing of export products being electrical and electronic components; In order to resolve work requiring highly qualified technicians which the labour market is unable to fully and promptly supply; In order to resolve urgent work which cannot be delayed due to it being of a seasonal nature and the timing of supply of raw materials and products, or in the case of resolving work/jobs arising due to unforeseeable objective factors due to the consequences of weather, natural disaster, fire, enemy attack, power shortage, lack of raw materials, or technical problems with a production line; Direct production and business work at enterprises having normal working hours of no more than 44 hours a week. Maximum of 40 hours Daily Overtime Limit ≤ 50% of regular working hours, but total working hours shall not exceed 12 hours/day Consent from employee Normally, employer needs to obtain consent from the employee for working overtime.

22. Employer’s Specific Obligations (9/20) Employment Operation Phase Working hours, Rest Periods (3/3) Rest periods Weekly breaks At least 24 consecutive hours/ week or at least 04 days off per month . Public holidays At least 24 consecutive hours/ week or at least 04 days off per month . Annual leave Any employee who has been working for an employer for 12 months is entitled to fully-paid annual leave as follows: 12 working days for employees who work in normal working conditions; 14 working days for employees that are minors, the disabled, employees who do heavy, toxic or dangerous works; 16 working days for employees who do highly heavy, toxic or dangerous works. An employee who has been working for an employer for less than 12 months will have a number of paid leave days proportional to the number of working months. The annual leave of an employee shall increase by 01 day for every 05 years of employment with the Employer.

23. Employer’s Specific Obligations (10/20) Employment Operation Phase 2.6. Compulsory Insurances General obligations of the Employer Employer’s Obligations Social Insurance (SI) Health Insurance (HI) Unemployment Insurance (UI) Occupational Accidents and Diseases Insurance Register compulsory insurances on behalf of the employees Make compulsory insurances contribution Publish information on the employees’ participation of compulsory insurances Provide employees with Social Insurance book, Health Insurance card; coordinate with social insurance agencies in paying social insurance allowances to employees

24. Employer’s Specific Obligations (11/20) Employment Operation Phase Compulsory Insurances Type of insurance Applicable to local employees Applicable to foreign employee Employer Employee Employer Foreign employee Social Insurance (SI) 17% 8% 17% 8% Health Insurance (HI) 3% 1.5% 3% 1.5% Occupational Accidents and Diseases Insurance (OADI) 0.5% - 0.5 % - Unemployment Insurance (UI) 1 % 1 % - - TOTAL 21.5% 10.5% 20.5% 9 .5% Salary cap for calculation SI, HI, OADI UI Maximum of 20 times base salary Maximum of 20-months of regional minimum wage Where an employee is NOT subject to compulsory SI, HI or UI, the Employer shall, in addition to and at the same time with salary payment , pay the employee an amount equal to the compulsory SI, HI or UI premiums payable by the Employer in accordance with regulations of law on SI, HI and UI.

25. Employer’s Specific Obligations (12/20) Employment Operation Phase Occupational Safety and Hygiene (1/2) Periodic Health Examination Annually for normal employee Bi-annually for employees engaging in (particularly) heavy, hazardous or dangerous occupations; elderly employees Machinery, equipment and material subject to strict requirements on occupational safety Declaring to the DOLISA within 30 days before or after putting into use machinery, equipment, and material with strict requirements on occupational safety. Maintaining technical records of machinery, equipment and material with strict requirements on occupational safety Having the machinery, equipment and material subject to strict requirements on occupational safety inspected before being put into use and periodically inspected during their use Monitoring the working environment Organizing working environment monitoring to assess harmful factors at least once a year Publicly notifying workers at places where working environment is monitored and where dangerous factors are inspected, evaluated, and managed (immediately after having the results of working environment monitoring and the results of inspection, assessment, and management of dangerous factors in the workplace) Occupational Safety and Hygiene

26. Employer’s Specific Obligations (13/20) Employment Operation Phase Occupational Safety and Hygiene (2/2) Employees Subject to Occupational Safety and Hygiene Training Organizing occupational safety and hygiene training for the following groups of employees: Group 1: Heads of units, production and business establishments and affiliated departments, divisions and branches; In charge of production, sales and technical departments; workshop foreman or equivalent; The head's deputy who is assigned to be in charge of occupational safety and hygiene. Group 2: Persons in charge of occupational safety and hygiene works Group 3: Workers doing jobs with strict requirements on occupational safety and hygiene Group 4: Employees who do not belong to Group 1, 3, 5 and 6, including apprentices, trainees, and probationers working for the employer. Group 5: Medical workers. Group 6: Occupational safety and hygiene officers Occupational Safety and Hygiene

27. Employer’s Specific Obligations (14/20) Employment Operation Phase Internal Labour Regulations and Other Policies No. Documents Mandatory Optional 1. Internal labour regulation X 2. Salary scale, salary table X 3. Employee management book X 4. Grassroots democracy regulations at the workplace X 5. Occupational safety and hygiene regulations and procedures X 6. Incident handling and emergency response plans at the workplace X 7. Collective labor agreements X 8. Regulations on rewards X 9. Regulations on evaluating the level of work completion X

28. Employer’s Specific Obligations (15/20) Employment Operation Phase Personal Data Protection (1/2) Section 2 of Chapter II of Law on Cyberinformation Security 2015 Decree No. 13/2023/ND-CP on Personal Data Protection Personal Data Protection (1/2) Employer’s Role in Handling Employee’s Personal Data (Article 2.9, 2.10 and 2.11 of Decree 13/2023/ND-CP) Controller Processor Controller cum Processor If Employer decides purposes and means of processing personal data If employer processes data on behalf of the Controller via a contract with the Controller If employer decides purposes and means as well as directly processes personal data

29. Employer’s Specific Obligations (16/20) Employment Operation Phase Personal Data Protection (2/2) Employer’s Obligations As Data Controller | Data Controller & Processor Obtain consent for personal data processing activities Notify on personal data processing Fulfill data subject requests (provision, correction, deletion or destruction of personal data) Notify the Department of Cybersecurity and Hi-tech Crime Prevention – Ministry of Public Security (A05) on the violation of personal data protection within 72 hours Verify children's age before processing personal data Prepare, record, submit and update the application dossier for impact assessment of personal data processing/ transferring personal data offshore to A05 Designate the department and personnel in-charge of protecting personal data if handling sensitive personal data Implement organizational and technical measures to ensure personal data safety Record and store personal data processing syslog As Data Processor Fulfill data subject requests (provision, correction (with written consent of the Data Controller), deletion or destruction of personal data) Notify the Data Controller on the violation of personal data protection Verify children's age before processing personal data Prepare, record, submit and update the application dossier for impact assessment of personal data processing/ transferring personal data offshore to A05 Designate the department and personnel in-charge of protecting personal data if handling sensitive personal data Implement appropriate measures to ensure personal data safety As Third Party Fulfill data subject requests (provision, correction (with written consent of the Data Controller), deletion or destruction of personal data) Verify children's age before processing personal data Prepare, record, submit and update the application dossier for impact assessment of transferring personal data offshore to A05 Designate the department and personnel in-charge of protecting personal data if handling sensitive personal data

30. Employer’s Specific Obligations (17/20) Employment Operation Phase Employee Representative Organization (ERO) Content Obligations Payment of trade union fees: Employer shall pay trade union fee of 2% of the wage fund used as the basis for payment of social insurance for employees to the provincial Labour Federation or the local directly superior level trade union, regardless of whether such employer has grassroots trade union or not . Enter into a written agreement with the ERO management board upon unilaterally terminating the employment contract with, reassigning or dismissing for disciplinary reasons an employee who is a management board member Consult the ERO’s opinion regarding dialogue at workplace, collective bargaining, development of pay scale, payroll, regulations on salary payment, rewards, internal labour regulations, and other issues relevant to rights and interests of employees that are ERO’s members Notable obligations of Employers with ERO (Trade Union)

31. Employer’s Specific Obligations (18/20) Employment Termination Phase Termination of labour contract According to Article 34 of the 2019 Labor Code, there are 13 cases of termination of labor contracts, which can be divided into the following groups: EXPIRED LABOUR CONTRACT/ WORK PERMIT MUTUAL AGREEMENT LEGAL REASON DISCIPLINARY PROCEDURE OF DISMISSAL UNILATERAL TERMINATION CHANGES IN STRUCTURE, TECHNOLOGY OR ECONOMIC REASONS; CHANGES IN THE BUSINESS WORK COMPLETION ACCORDING TO THE LABOUR CONTRACT PROBATION FAILURE OR CANCELLATION OF PROBATION AGREEMENT

32. Employer’s Specific Obligations (19/20) Employment Termination Phase Settlements Severance allowance (SA): Employees who have worked on a regular basis for a period of at least 12 months Half a month's salary for each year of employment Exception: ( i ) the employee is eligible for pension; (ii) the employee whose employment contract is terminated due to absence without a legitimate reason for 05 consecutive working days or more Applicable in the following termination cases: Expiry of employment contract; Completion of work according to employment contract; Both parties agree to terminate the employment contract; The employee is sentenced to a jail term, or is sentenced to the death penalty, or is prohibited from performing the job prescribed in the employment contract; The employee is deceased; declared by the Court to have lost civil act capacity, to be missing or to have died; Employers terminate their operations or are notified by the specialized business registration agency of the Provincial People's Committee that they do not have a legal representative or authorized person to act with the rights and obligations of the legal representative; The Employer or the employee unilaterally terminates the employment contract. Redundancy allowance (RA): Employees who have worked on a regular basis for a period of at least 12 months 01 month’s salary for each year of employment, but not less than 02 month’s salary. Applicable in the following termination cases: Structural or technological changes or for economic reasons; or Division or separation, consolidation or merger; sale, lease out or conversion of enterprise type; or transfer of the ownership or use right of the assets of the enterprise or co-operative The time the employees have fully participated in unemployment insurances shall not be accounted for the total work time for enjoying SA/RA.

33. Employer’s Specific Obligations (20/20) Employment Termination Phase Notification Obligations Upon Termination Phase For most cases, advance notice must be served in case of employment termination as follows: 45 days for indefinite-term employment contracts; 30 days for definite-term employment contracts with the term of 12 – 36 months; 3 working days for a definite-term employment contract of under 12 months, and in case the employee has been sick for a long time. For Executive Positions: 120 days for indefinite-term employment contracts, and definite-term employment contracts of 12 months or more; At least one-forth of contract term for a definite-term contract of under 12 months

34. Common legal issues

35. Legal issue No. 01 Common legal issues Issue Shall the employer pay the employee the severance allowance? Regulations Article 168.3 of the Labour Code For employee ineligible to participate in compulsory social insurance, health insurance and job loss insurance, the employer must pay such employees at the same time as periodic payment of wages, a sum of money equivalent to the amount of the contribution of the employer to compulsory social insurance, health insurance and job loss insurance for such employee in accordance with the law on social insurance, health insurance and job loss insurance. Application Since the foreign employee is not under the scope of unemployment insurance, the employer is required to pay the foreign employee at the same time as periodic payment of salary, a sum of money equivalent to the amount of the contribution of the employer to unemployment insurance for the foreign employee in accordance with the laws on unemployment insurance from time to time. Conclusion Employer is required to pay the foreign employee at the same time as periodic payment of salary, a sum of money equivalent to the amount of the contribution of the employer to unemployment insurance. If the employer has complied with this requirement, it shall not be required to pay the employee severance allowance upon employment termination. The Vietnam labour contract between the employer and the foreign employee is terminated Background

36. Legal issue No. 02 Common legal issues Issue What should the employer do to ensure the ability to claim compensation of training cost from the employee unilaterally terminating the labour contract not in accordance with the law? Regulations Article 40 of the Labour Code The employee who illegally unilaterally terminates his/her employment contract shall: Not receive the severance allowance. Pay the employer a compensation that is worth his/her half a month’s salary plus (+) an amount equal to his/her salary for the remaining notice period from the termination date. The employee shall reimburse the employer with the training costs ( the “Compensation”). Application In order to ensure the ability to claim the Compensation, the employee should: Enter a vocational training contract with the employee; Among others, specifically include the training costs and responsibility for reimbursement thereof in the vocational training contract. Note: Training costs include those specified in valid documents on payments for trainers, training materials, training locations, equipment, practice materials, other supportive expenses for the learner, the salary, social insurance, health insurance and unemployment insurance premiums paid for the learner during the training period. In case the employee receives the training overseas, the training costs also include the travelling and living expenses during the training period Conclusion By meticulously structuring the vocational training contract with the employee, including the training costs, the employer may have more solid ground to claim the compensation amount in case the employee illegally unilaterally terminate the labour contract. The employer attempts to claim compensation of training cost from the employee unilaterally terminating the labour contract not in accordance with the law. Background

37. Legal issue No. 03 Common legal issues Issue Will there be any risk imposed on the employer, when including such provision to automatically renew the labour contract with a specific term? Regulations Article 20 of the Labour Code on type of labour contract. Types of employment contracts: Indefinite-term employment contract Fixed-term employment contract (maximum 36 months) When the fixed-term employment contract expires: Within 30 days, the two parties must sign a new contract, and during the period before a new contract is signed, the rights and obligations shall be implemented according to the signed contract. If after 30 days a new contract has not been signed, the old contract shall become an indefinite-term employment contract. If a new fixed-term contract is signed, it can only be signed for 1 more time, after which an indefinite-term contract must be signed, except for certain special cases. Application If the employer and employee sign a new contract with a fixed term, it can only be signed once more. After that, if the employee continues to work for the employer, the parties must sign an indefinite-term labour contract. Therefore, the signing of a new fixed-term labour contract can only be added once. The clause that automatically signs a labour contract with a fixed term of 03 years will likely be declared invalid by the court after the first renewal of the labour contract. Conclusion The clause that automatically signs a labour contract with a fixed term of 03 years will likely be declared invalid by the court after the first renewal of the labour contract. The employer plans to draft a labour contract, in which the employer includes a provision to automatically renew the labour contract with a term of 3 years. Background

38. Legal issue No. 04 Common legal issues Issue In the scenario where employee does not go to work for 05 days consecutively, should the employer: unilaterally terminate the contract?; or apply disciplinary measure of dismissal? Regulations Article 125.4 Labour Code An employer may dismiss an employee for disciplinary reasons when  the employee fails to go to work for a total period of 05 days in 30 days, or for a total period of 20 days in 365 days from the first day he/she fails to go to work without acceptable excuses. Article 36.1(e) of the Labour Code An employer shall have the right to unilaterally terminate an employment contract when the employee is not present at work without acceptable excuses for at least 05 consecutive working days. Application In theory, the employer may choose to apply either measures. Conclusion In practice, it is recommended that the employer conduct unilateral termination instead of dismissal as the procedure is much simpler. The employer wants to deal with an employee who fails to go to work for 05 days consecutively without any proper reasons. Background

39. Legal issue No. 05 Common legal issues Issue Settlement of financial obligations, monetary interests (including, but not limited to, outstanding salary, SHUI, severance allowance, annual leave payment and others pending benefits) for the employee(s) in accordance with applicable regulations Rules Article 48.2 of the Labour Code Payment of the employees’ salaries, social insurance, health insurance, unemployment insurance, severance allowance and other benefits under the collective bargaining agreement and employment contracts shall be given priority to conduct. Article 46.1 of the Labour Code In case an employment contract is terminated upon dissolution, the employer is responsible for paying severance allowance to the employee who has worked on a regular basis for a period of at least 12 months. Each year of work will be worth half a month’s salary, except for the cases in which the employee is entitled to receive retirement pension as prescribed by social insurance laws, and the cases specified in Point e Clause 1 Article 36 of this Labor Code. Article 113.3 of the Labour Code An employee who, due to employment termination or job loss, has not taken or not entirely taken up his/her annual leave shall be paid in compensation for the untaken leave days. Application The employee(s) may be entitled to receive the followings: Salaries and allowances until the last working day Salary for annual leave not taken Severance allowance (if any) Other benefits as agreed between the employer and the employee or specified in the employer’s internal policies. The employer dissolves and needs to terminate employment contracts with employees Background Conclusion The employer shall fully pay the above-mentioned amounts to the employee. Besides, in case the employer wants to seek a mutual agreement on termination of labour contract with the employee (instead of termination due to dissolution), the employer may offer the employee a good faith compensation amount in exchange for his/her agreement to terminate the employment.

40. Legal issue No. 06 Common legal issues Issue In such case, how can the employer unilaterally terminate the labour contract legally? Conclusion The most important document as a basis for the employer to unilaterally terminate the labour contract due to the employee's regular failure to complete the work is the Assessment Rules which have been issued in accordance with law and disseminated to the employee, along with documents showing that the employer has conducted the employee’s performance evaluation in accordance with such Assessment Rules. In particular, the employer needs to: Formulate the Assessment Rules which clearly specifies the termination case after consulting the trade union, and disseminating it to the employee before application; Conduct the assessment of the employee’s performance according to the criteria and procedures stated in the Assessment Rules and fully archiving documents of such assessment; and Collect as much other evidence as possible to prove that the employee regularly fails to complete the work (e.g., warning letter, statements of direct supervisor, etc.) Rules Article 36.1(a) of the Labour Code An employer has the right to unilaterally terminate a labour contract in case “the employee regularly failed to perform the work in accordance with the labour contract as determined in accordance with the criteria for assessing the level of completion of work as set out in the rules of the employer. Rules on assessment of the level of completion of work shall be issued by an employer but only after consulting the opinion of the organization representing the employees at the grassroots level in the case of enterprises which have such an organization”. The employer wants to terminate labour contract with an employee regularly failing to perform the work in accordance with the labour contract Background Application The Company needs to issue “Rules on assessment of the level of completion of work” or “Performance Management Policy (“PMP”)” (“ Assessment Rules ”) after consulting the grassroots trade union, to serve as the basis for unilateral termination