Internal Labor Regulations (hereinafter referred to as “ILRs”) is a document issued by an employer, in which its provisions create grounds for employment relationships that employees must implement.
According to the Labor Code 2019, ILRs have the following main characteristics: (i) having a form of a document or other forms depending on the number of the enterprise’s employees; (ii) having statutory essential contents and other contents do not breach the laws; (iii) the ILRs must be registered at a competent state authority; and (iv) being one of the grounds for the enterprise to take employees under disciplinary and material responsibilities during their employment.
According to the regulations of the employment laws, it is mandatory for an employer has more than 10 employees to issue ILRs in writing and carry out the procedures for registration the same with a competent labor-specializing management agency of the Provincial People’s Committee for the ILRs to be valid.
Employers who employ under 10 employees have two choices. Firstly, employers will issue the ILRs in writing, but they are not required to register and such ILRs are valid according to the decision therein. In practice, this is the option that should be prioritized to help employers build a system of labor discipline applied in their enterprises. Secondly, employers do not issue the ILRs in writing but must incorporate contents of labor discipline in the labor contract for their implementation. At that time, the effect of this labor discipline will be based on the agreement of the parties in the labor contract.
The adoption and registration of ILRs should not only be seen as a mere legal requirement. There is also an opportunity for the employer to establish the legal basis for taking action against the violation of discipline and clarifying issues that are unclear or not regulated by the law. In case of dispute, the ILRs would not only provide established procedures to address such situations predictably but would also provide a legal platform for the employer to enforce the procedures contained in the law. For instance, dismissal of an employee is only allowed for reasons provided both by law and under the employer’s registered ILRs. Moreover, enacting of ILRs shall prevent the enterprise from the risk of penalties in accordance with the law. In particular, Employers that fail to register the ILRs with competent state authority shall be subject to a penalty of up to VND10,000,000.
ILRs are registered in the following steps:
Step 1: Formulating ILRs
The employer is responsible for formulating ILRs in accordance with the labor laws of Vietnam.
Step 2: Obtaining comments from the internal representative organizations of employees
Subject to the actual situation of the company, this step follows the two scenarios below:
Scenario 1: The company has at least one internal representative organization of employees
The company shall send the draft of the ILRs to the Executive Committee of the internal representative organizations of employees to obtain their comments before officially promulgating the ILRs. The Executive Committee shall issue a letter of opinion on the ILRs and deliver the same to the employer.
Scenario 2: The company does not have internal representative organizations of employees:
If the company does not have internal representative organizations of employees (ex: grassroots-level Trade Union), the company shall obtain comments on the draft of ILRs in accordance with the following steps:
(i) Delivering a draft of the ILRs to the immediate upper-level Trade Union which is Labor Union of the district where the company locates (“District Labor Union”);
(ii) At the request of the District Labor Union, convening an employee conference to comment and discuss the draft of the ILRs. The employee conference must have the presence of:
- All employees; and
- Representative of the District Labor Union.
(iii) Making minutes of the employee conference which includes comments on the draft of the ILRs by employees and shall be made in writing and signed by the parties involved.
Step 3: Issuing ILRs and preparing dossiers for registration of ILRs
The legal representative of the Company shall be responsible for signing and promulgating the ILRs. After that, the company prepares an application for registering the ILRs at the competent labor authority. The application shall consist of:
- The application form for registration of ILRs;
- The executed ILRs;
- Letter of opinion of the representative organization of employees; and
- Documents of the employer that are relevant to labor discipline and material responsibility (if any).
Step 4: Registering of ILRs
- Within 10 days from the date of promulgation of ILRs, the enterprise must submit the application for registering the ILRs to the provincial labor authority, or to district-level labor authority if it is authorized by the provincial labor authority.
- Within 07 working days from the date of receipt of the application for registration of ILRs, if any of the contents of ILRs is found contrary to the law, the provincial labor authority shall notify and instruct the enterprise to revise and re-submit the application.
- The ILRs shall take effect after 15 days from the day on which the provincial or district-level labor authority receives the adequate application for registration of the ILRs.
In conclusion, Asia Legal strongly recommends that enterprises contemplating establishing operations in Vietnam customize ILRs which are compatible to the business activities in which the enterprise is involved in an early stage, which will protect the enterprise from undesirable and unexpected legal issues in a labor dispute.