Signing labor contract is the end point of the recruitment process, opening up a period of lasting cooperation between the enterprises and employees and deciding whether or not the labor contract has legal validity.

The Labor Code 2019 has significantly amended and supplemented the conclusion of labor contract. Effective from January 1st, 2021, these are the provisions that the parties need to understand to limit legal risks arising when the new law comes into life.

Identification of the labor contract

Taking advantage of the silence and ambiguity of the Labor Code 2012, many enterprises agree to work with their employees but with a different name (e.g. “collaborator contract”, “service contract”, etc.) to evade or reduce responsibilities of employers to employees according to labor law.

The Labor Code 2019 has overcome this situation by giving a way to identify the labor contract. Specifically, if the content of the agreement contains the basic elements of the labor contract, it is automatically considered as labor contract regardless of the title. In case there is any dispute, this will be an important weapon, especially for employees, to claim benefits.

Abrogation of the seasonal labor contract or the labor contract for specific jobs

The prevailing Labor Code classifies the labor contracts as (1) indefinite-term, (2) definite-term (over 12 months to 36 months) and (3) seasonal or for specific jobs (less than 12 months).

Form January 1st, 2021, with the Labor Code 2019, the seasonal labor contracts or labor contract for specific jobs will be abrogated. Accordingly, the definite-term labor contract will have only “ceiling” no more than 36 months, and no “floor”.

Thus, in the forthcoming time, the enterprises that recruit short-term employees for some months must also sign a definite-term labor contract. This amendment makes the application of labor contract regime simpler, avoids the abuse of seasonal contracts and helps protect the employees’ interests.

Labor contracts can be concluded by electronic method

In order to meet the development of information technology, the Labor Code 2019 supplements the contract form by electronic data besides in writing or verbal agreement (only for jobs less than 01 month except for labor contracts for groups of employees, for employees under 15 years old, for domestic worker) – which are equally valid.

However, it should be noted that the enterprises and employees must comply with regulations on electronic transactions, especially digital signatures, if signed in this form.

Appendix is not allowed to modify the term of the contract

The current labor law allows the parties to sign an appendix to prolong and shorten the term of labor contract once if it does not change the type of labor contract. However, the Labor Code 2019 pursues a tougher approach: absolute head-shake for any amendments to the term of the labor contract by an appendix.

This provision ensures the stability of the contract term, an important factor determining the type of labor contract and thereby assigning the specific rights and obligations of the parties. The enterprises wanting to extend the hiring period should pay specific attention to the abovementioned provisions, before welcoming the significant change of the labor law in less than 02 months.