New Labor Law: How Can Businesses Avoid Being Fined?

Faced with the requirements of international and regional integration, especially after Vietnam joined the World Trade Organization (WTO), many provisions of the old Labor Code need to be amended, supplemented, and newly issued to meet the requirements of socio-economic development in the new situation, in accordance with the labor laws of ASEAN countries and international practices. In this article, businesses should avoid things below to not be fined.

1. Using labor without signing a labor contract

In order to avoid paying insurance and to easily "fire" employees when necessary, many businesses often choose not to sign a labor contract with them.

However, this behavior violates the provisions on signing labor contracts in Article 13 of the 2019 Labor Code. Specifically, businesses are required to sign a labor contract before accepting employees. In particular, labor contracts must be made in writing in the following cases:

• Labor contracts with a term of 01 month or more;
• Labor contracts are signed with persons authorized to sign contracts for groups of employees aged 18 years or older to do seasonal work or certain jobs with a term of less than 12 months;
• Labor contracts are signed with employees under 15 years old and their legal representatives.

Common mistakes businesses make when employing workers and are subject to administrative penalties

2. Collecting money from employees when recruiting

There are many cases where employees are required by recruiting enterprises to pay fees such as application fees, exam organization fees, etc. However, the act of collecting money from employees when recruiting is an illegal act. Therefore, enterprises will be subject to administrative penalties as follows:

• Fines ranging from VND 2,000,000 to VND 6,000,000;
• Remedial measures: Enterprises are required to return to employees the money collected when recruiting.

(Based on Point b, Clause 1 and Clause 4, Article 8, Decree 12/2022/ND-CP)

3. Keeping the original copies of employee's identity papers, degrees, and certificates

According to Clause 1, Article 17 of the 2019 Labor Code, keeping the original copies of employee's identity papers, degrees, or certificates is an act that enterprises are not allowed to do when entering into and implementing labor contracts.

Therefore, if an enterprise keeps the original copies of the above documents, it will be fined from VND 40,000,000 to VND 50,000,000 and forced to return the original copies of employee's identity papers; degrees; and certificates that have been kept (Point a, Clause 2 and Point d, Clause 3, Article 9, Decree 12/2022/ND-CP).

Enterprises that use probationary periods in violation of regulations will be subject to administrative sanctions.

4. Transferring employees to work other than the labor contract

In some cases when the enterprise encounters sudden difficulties such as natural disasters, fires, dangerous epidemics, etc., the enterprise can temporarily transfer employees to work other than the labor contract, but not more than 60 cumulative working days in 01 year. In case of more than 60 days, the employee's written consent must be obtained.

At the same time, the enterprise must notify the employee at least 03 working days in advance, clearly state the temporary work period and arrange work suitable for the employee's health and gender (Article 29 of the Labor Code 2019).

Accordingly, enterprises will be penalized when temporarily transferring employees to work other than the labor contract in the following cases:

- Failure to notify or failure to comply with the notice period to employees or unclear notification of temporary work duration or assignment of work not suitable for the health or gender of employees: fine from VND 2,000,000 to VND 6,000,000.

- Transferring employees to work other than the labor contract without the right reason; duration or without written consent from employees when temporarily transferring employees for more than 60 days:

+ Fine from VND 6,000,000 to VND 14,000,000;

+ Forcing enterprises to arrange employees to work in accordance with the signed labor contract.

(Pursuant to Clause 1, Point c, Clause 2 and Point c, Clause 5, Article 11 of Decree 12/2022/ND-CP)

5. Failure to complete the procedures for closing the insurance book for employees

Completing the procedure for confirming the period of social insurance and unemployment insurance payment (also known as closing the insurance book) for employees is the responsibility of the enterprise when terminating the labor contract (Point a, Clause 3, Article 48 of the Labor Code 2019).

Accordingly, if an enterprise fails to close the insurance book for employees when terminating the labor contract, it will be fined and forced to complete the procedure for confirming the period of insurance payment for employees.

Specifically, depending on the number of employees whose insurance books are not closed, the fine for the enterprise will range from VND 2,000,000 to VND 40,000,000 (stipulated in Clause 2, Article 12 of Decree 12/2022/ND-CP).

6. Fines or salary reductions for employees

It is not uncommon for many businesses to impose fines or salary reductions on employees when they violate company regulations. However, this behavior of businesses is strictly prohibited when handling labor discipline.

Specifically, businesses can be fined from VND 40,000,000 to VND 80,000,000 and forced to return the collected amount or pay the full salary to employees.

(Point b, Clause 3 and Point d, Clause 4, Article 19, Decree 12/2022/ND-CP)

Above is the latest regulation regarding using labor in business that Faro Vietnam gathers and hopes it bring benefits for audiences.

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