10 new regulations regarding labor contracts in effect from January 1, 2021 (Part 1)

New regulations of the 2019 Labor Code regarding labor contracts that workers and employees need to know to protect and maintain their own legitimate rights and benefits.

1. Increasing the identification of labor relations in practice

Additional regulation: Any contract will be considered a labor contract, irrespective of its name, if it fully has all of the three following signs:

1. Work is performed on a basis of agreement or arrangement;
2. Wages or salaries are paid;
3. A party is put under the management, administration and supervision of the other party.

This provision is necessary to address the dodging of legislative regulations, prevent employers from using other names to avoid their obligations pertaining to wages or salaries and their responsibility to get pay proportion of insurance contributions for the benefit of their workers or employees.

2. Contract form

• Labor contracts made by electronic means in data message form are accepted.
• Labor contracts concluded via electronic devices in data message form under laws on electronic transactions have the same value as those concluded in written form.

3. Types of labor contract

From January 1, 2021, labor contracts can take one of the following forms:

• Indefinite-term labor contracts.
• Fixed-term labor contracts under which both contracting parties can determine the contractual duration and expiry date provided that the term is not longer than 36 months from the effective date of the labor contract.

This means that, compared to current regulations of the 2012 Labor Code, seasonal or work-specific labor contracts will no longer exist.

4. Exemption from the probation requirement for any labor contract of which the term is less than 1 month

According to existing regulations, only employees signing seasonal labor contracts are exempted from the probation requirement by default. From 2021, the probation requirement for any labor contract of which the term is less than 1 month will not be applied.

5. Additional regulations on the probationary duration

Additional regulations prescribe that each probation lasts for the maximum duration of 180 days with regard to employees hired to hold corporate administration positions as provided in the Law on Enterprises, or the Law on Management and Use of State Capital Investments in Enterprises.

(To be continued)

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>> 10 New regulations regarding labor contracts in effect from January 1, 2021 (Part 2)