Tax Alert - New regulations on administrative violations in Labor field

On 1st March 2020, the Government of Vietnam had promulgated Decree No. 28/2020/ND-CP ("Decree 28") replacing Decree No. 95/2013/ND-CP dated 22nd August 2013 and Decree No. 88/2015/ND-CP dated 7th October 2015 on penalties for administrative violations in the field of labor, social insurance and oversea manpower supply by contract.

Decree 28 shall come into effect on 15^th April 2020. Compared to the preceding regulations, Decree 28 provides more detailed sanctioning measures applicable to violations, specifically as follows[1] :

1. Violations against regulations on labor recruitment and management

Supplementing the provision prescribing that employers who fail to report on the employment situation or changes of employment situation to competent labor authorities, or fail to timely and duly make, prepare and update the labor management book shall subject to a monetary fine ranging from VND 1 million to VND 3 million.

2. Violations against regulations on conclusion of labor contract

Raising the amount of monetary fine applied to the act of failure to lawfully conclude labor contracts. Accordingly, the fine is VND 2 million at minimum and VND 25 million at maximum, respectively replacing the current range from VND 1 million to VND 20 million. 

3. Violations against regulations on implemenation of labor contract

Supplementing the following provisions:

• Monetary fine ranges from VND 1 million to VND 3 million shall be imposed on employers who temporarily transfer an employee to do another job other than as described in the labor contract without three-day advance notice on such transfer or without clear notification on the term of such temporary transfer, or transfer the employee to do a job not appropriate to such employee’s health condition and/or gender. 
• Monetary fine ranges from VND 50 million to VND 75 million shall be imposed on employers who commit acts of forced labor or employee mistreatment of which seriousness is not subject to criminal prosecution.

4. Violations against regulations on labor outsourcing

Supplementing the provisions prescribing that a monetary fine ranging from VND 40 million to VND 50 million shall be applied to any labor outsourcing service user who commits the following acts:

• Entering into labor outsourcing contract with a labor outsourcing service provider not licensed to provide labor outsourcing service;
• Using labor outsourcing service while handling labor dispute, strike or for the purpose of substituting employees exercising their rights to go on strike or resolve disputes;
• Using labor outsourcing service to substitute employees discharged on the account of organizational restructure, changes of technology or merger, consolidation, division, separation of the enterprise or for economic reasons.

For the act of re-assigning outsourced employees to other employers, the maximum fine is raised from VND 50 million to VND 75 million.

5. Violations against regulations on wages

In the spirit of the Labor Code 2019 (effective as from 1^st January 2021), Decree 28 abolishes the sanction against employers who fail to send the pay scale, payroll, labor norms to the district-level labor authority as prescribed.

6. Violations against regulations on working hours, rest break

A fixed fine ranges from VND 10 million to VND 20 million shall be imposed on all employers’ violations against regulations on weekly days off, annual leave or public holiday. This is a new point in comparison with current regulations which determine the fine on the ground of the number of employees whose benefits are violated.

Increasing the maximum fine from VND 50 million to VND 75 million for the act of mobilizing employees to work overtime in excess of the prescribed overtime hours.

7. Violations against regulations on labor discipline

Supplementing provisions stipulating that the act of unlawful temporary suspension of an employee’s work shall be sanctioned by a fine of VND 5 million to VND 10 million; the act of simultaneous application of multiple forms of labor discipline to one violation shall be applied a fine of VND 10 million to VND 15 million.

8. Violations against regulations on foreign employees

Supplementing penalties in the form of monetary fine from VND 1 million to VND 3 million to be imposed on employers committing any of the following acts:

• Failing to make or failing to timely and duly make report on employment of foreign employees at the request of the State labor authority;
• Failing to send a copy of the concluded labor contract to the authority issuing work permit for  foreign employees working under the form of execution of labor contract.

Additionally, employers who employ foreign employees inconsistently with contents of the issued work permits or certificates of work permit exemption shall be subject to a fine of between VND 5 million and VND 10 million for each case of violation but not exceeding VND 75 million in total.

Regarding foreign employees working in Vietnam without work permits or certificates of work permit exemption, or with expired permits or certificates, in addition to sanction in the form of expulsion, such employees will also be subject to a monetary fine of VND 15 million to VND 25 million.

9. Violations against regulations on female employees

Employers have to pay overtime salary to the female employees not being entitled to take 30 minutes off per day during their menstruation or 60 minutes off per day during the period of nursing a child(ren) under 12 months of age.

10. Violations against regulations on domestic servants

Supplementing monetary fine in the amount of from VND 10 million to VND 15 million and remedial measure of compelling the full payment of social and health insurance as sanctions to be applied to employers who fail to pay for social and health insurance of the domestic servants as prescribed by laws.

11. Violations against regulations on compulsory social insurance and unemployment insurance

Supplementing the following provisions:

• Monetary fine in the amount of from VND 500 thousand to VND 3 million shall be imposed on employers failing to annually publish information on payment of social insurance of employees as provided by the social insurance agency.
• Monetary fine in the amount of from VND 50 million to 75 million shall be imposed on employers evading compulsory social insurance, unemployment insurance of which seriousness is not subject to criminal prosecution.
• Remedial measure to be applied in cases of failure to pay, timely pay or evade compulsory social insurance, unemployment insurance for 30 days or more: Being compelled to pay the amount of interest equal to twice the average investment interest rate of social insurance fund in the immediately preceding year and calculated based on the amount and period of late payment, non-payment and evasion. If an employer fails to comply with such remedial measure, at the request of competent persons, banks, other credit institutions or the State treasuries shall be responsible for deducting from such employer’s deposit accounts the unpaid or overdue amounts and the interest amounts which shall be calculated based on the highest interest rate applied by State-owned commercial banks to demand deposits announced at the time of sanctioning, and transferring such deducted amounts to the social insurance agency's account.

[1]  The fines mentioned herein are applicable to individuals; the fines applied to organizations are twice the fines applicable to individuals.

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