Vietnam: Government Delays Rules to Jail Employers for Illegal Layoffs

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By Lien Hoang

July 5—An 11th-hour decision in Vietnam’s parliament has shelved legislation that would have punished employers with jail time for firing workers illegally.

The 2015 Criminal Code, which also includes penalties for forced and underage labor and failure to pay worker benefits, was slated to take effect July 1, but the National Assembly opted to postpone the law for further amendment, according to a June 30 posting on its website. Communist Vietnam has never made it easy to dismiss employees, and the pending rules would go further in that direction.

The new penal code, a sweeping revision with 26 chapters made of 426 articles, allows for jail sentences of up to three years for employers laying off workers “against the law.” Penalties are most severe in cases involving workers who commit suicide or women who are pregnant or have children less than a year old.

Oliver Massmann, a partner at law firm Duane Morris Vietnam, said a company’s legal representative would likely be the one to serve the jail term.

Authorities also can fine rule-breakers up to 200 million Vietnam dong ($9,000) and bar them from certain jobs for five years.

Pension Fraud

In 2015, tens of thousands of Vietnamese making Nike and Adidas shoes went on strike, saying they weren’t receiving their fair share of pension payments, which Vietnam calls social insurance.

The updated criminal code clamps down on social insurance infractions, threatening employers that withhold benefits with seven years in jail, a five-year professional suspension and/or a fine of one billion dong ($45,000).

The changes were overdue because previous penalties, such as a $1,000 fine, were “ridiculous,” said Erwin Schweisshelm, Hanoi-based resident director of Friedrich-Ebert-Stiftung, a nonprofit that promotes social democracy.

Schweisshelm said some companies held onto their workers’ pension money because the cost of getting caught—repayment plus a below-market interest rate—was minimal.

“So it was good business for the employer to use their employees’ social security payments for liquidity of the company,” he told Bloomberg BNA. “It is good that this gap has been closed.”

The punishment also applies when businesses dodge payments for unemployment and health insurance.

Empowering Workers

Helena Worthen, professor emerita at the University of Illinois, School of Labor and Employment Relations, would like to see the law do more to empower workers.

Worthen, who was recently a visiting lecturer at Vietnam’s Ton Duc Thang University, recommended a more “bottom-up” approach that facilitates strikes and whistle-blowing.

“While it's good to discourage employers from treating workers badly, legislating penalties top-down against employers will not be effective,” she told Bloomberg BNA. “Instead, look at what is needed to make it easier and safer for workers to recognize, report, and act on abuses.”

To contact the reporter on this story: Lien Hoang at

To contact the editor responsible for this story: Rick Vollmar at

For More Information

The Vietnamese National Assembly’s web posting on the delay of the 2015 Criminal Code is available in Vietnamese here.

For more information on Vietnamese HR law and regulation, see the Vietnam primer.

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