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ASIA LABOR LAW BULLETIN Vol. 2, No. 1 March 19, 2007 Disclaimer – This newsletter is intended to provide general information from our independent group firms and should not be relied upon for legal advice on any particular matter; for any questions or legal advice kindly contact the corresponding group lawyer.

Australia

Long stay temporary business visas

(Sub-class 457)

Among the visas available to foreigners in Australia is the so-called long stay Sub-class 457 temporary business visa which allows overseas staff to reside temporarily and work in Australia for up to 4 years. The application process for a sub-class 457 visa consists of three components: sponsorship, nomination and visa application. Sponsorship application The employer (or an entity related to the employer) must apply for sponsorship status. As part of the sponsorship application the employer must demonstrate that it has good financial standing and a satisfactory history of compliance with immigration laws, and (if the sponsor is to be an Australian subsidiary or other Australian entity) that it has a satisfactory record of, or a demonstrated commitment towards, training Australian citizens and Australian permanent residents. Sponsor’s undertakings By sponsoring an employee under a sub-class 457 visa, the sponsor gives a number of undertakings to the Australian Government in relation to the sponsored person and accompanying family members. Those undertakings include

financial commitments by the sponsor, such as (among others) to:

• ensure that the cost of return travel by a sponsored person and his/her dependents is met;

• pay all medical and hospital expenses for a sponsored person that are not covered by insurance;

• pay any costs incurred by the Australian Government in relation to a sponsored person (e.g. locating and detaining the sponsored person).

Nomination of the position The nominated position to be filled by the overseas employee has to be one of the occupations listed in the governmental Gazette Notice as applicable at the time. In general, these are occupations for executives, managers and experts. The position must also meet the minimum salary requirement which is currently (for occupations other than IT related occupations) a base salary of AU$41,850 per year based on a 38 hour working week. Visa application The employee and his/her dependants must lodge a visa application and meet health and character requirements. The employee must have the qualifications and work experience required to fill the nominated position. What if the employee relationship ceases? Sponsoring an employee under the sub-class 457 visa regime does not compel an employer to stay in a contractual relationship with the sponsored employee for the full term of employee’s visa (being up to 4 years). An employment contract can be terminated according to its terms at any time. However, if the employment relationship comes to an end, the employer is obliged to notify the Department of Immigration and Citizenship (DIAC) of this within 5 working days. DIAC then generally notifies the employee of impending visa cancellation.

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Is the employee permitted to change employer? A sub-class 457 visa is linked to the employer who sponsored the employee. This means that if the employee wishes to change employer, a new sub-class 457 visa under the sponsorship of that new employer has to be applied for. Can the employee’s spouse work? Generally, the dependant spouse (or de facto spouse) included in the application of a sub-class 457 visa holder is permitted to engage in employment (for any employer) during the validity of the sub-class 457 visa. It is, however, necessary to check the specific conditions under which the particular visa is issued.

Contact: Philip Mitchell TressCox, Sydney Group email : [email protected]

China New Labor Law Generates Controversy One of the most controversial laws ever to be considered in recent times in China is the proposed new Labor Law. It has been under consideration for two years and has received apparently over 200,000 comments and submissions by stakeholders. Why is it so controversial? Generally, because draft versions were thought to give too much power and rights to employees, and this did not go over well in a system that was already thought by many to favor employees at expense of businesses. Later drafts have addressed this concern and tried to create more balance. Here we summarize the major changes proposed in the law. Contract terms related provisions:

• Presumption in favor of the employee regarding the existence of the employment relationship and towards the

content of the employment contract clauses in case of discrepancy.

• In case of a “de facto” employment relationship (relation that amounts to an existing employment relationship but without a written employment contract), unless the employee wishes otherwise, the employer is deemed to have established a permanent contract.

• Probation shall apply to labor contracts with terms longer than three months. There are different provisions for probations for non-technological positions, technological positions and highly-skilled technological positions.

• Non-competition has been codified for the first time, with maximum period of two years. The employer must give the employee compensation of at least one years’ salary. If case of violation the employee shall pay a fine to the employer which shall be no more than three times the compensation paid by the employer in consideration of the non-competition restriction.

• If the employer provides full time

professional training for a period of at least six months he may require the employee to complete a particular period of employment. In the event that the employee is in breach of this service period requirement the employer may impose a fine

Termination of Labor Relationship related provisions:

• For those employees who maintain employment relationships with more than one employer, impacting adversely upon the performance of his or her duties and refuses to rectify the position after an employer has raised the performance


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problems, the draft provides that this sole circumstance justify the immediate termination of the labor relation at the employer’s request.

• On one hand the concept of “redundancy” is expanded to include “all material changes in the objective circumstances”, so there is a widening of the situations where an employer is likely to be able to justify dismissals by reason of redundancy. On the other hand the draft imposed more restrictions seeing that if 50 or more employees need to be made redundant, the employer must inform the trade union or, alternatively, provide that information to all of its employees.

Employees’ organization related provisions:

• Rules and regulations which directly involve the personal interest of employees must be adopted through the use of one of the three democratic options known, namely: trade union, staff meeting, or staff representative meeting. If these are put in place unilaterally by the employer will be deemed invalid and the rules and regulations proposed by the trade union, staff meeting, or staff representative meeting will be implemented.

• The employer must notify the trade union in advance of any termination of the employment contract by the employer.

Foreign investors are generally of two minds regarding the draft law, one group called the “European group” is familiar and supportive of the balance between employers and employees and the second “American group”, which feels the balance is tilted too far in favor of the employees. It will again be considered by China’s National People’s Congress when it meets Spring 2007 and it is generally

believed it will be passed into law at that time. Contact: Blaine Turnacliff Lehman, Lee & Xu, Shanghai Group email : [email protected]

Indonesia Labor Union Rules Changed The basic legislation governing labor unions in Indonesia is Law No. 21 of 2000 Regarding Labor Unions (“Law 21”). Law 21, which was implemented by several Ministry of Manpower (“MOM”) decrees and regulations, has significantly changed Indonesian law on labor union issues. Prior to the enactment of Law 21, Indonesia ratified International Labor Organization Convention No. 87 concerning Freedom of Association and Protection of the Right to Organize, pursuant to Presidential Decree No. 83 of 1998. By this ratification, the Government of Indonesia guarantees employers and employees the right to establish labor unions without government intervention. The government’s current involvement in this area lies solely with the registration of unions. A group of at least ten employees is entitled to establish a labor union. Notification and registration of labor unions is governed by MOM Decree No. Kep-16/MEN/2001. According to this regulation, labor unions must give written notification to the local Department of Manpower and Transmigration in order to be registered. A labor union must apply for registration by attaching its articles of association and by-laws, a list of the names of the management, the composition of the management, the members of the union and its official name. Despite the fact that the Government of Indonesia does not currently intervene in the establishment of labor unions, labor


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unions are required by law, based on Pancasila (basic fundamental of the Republic of Indonesia) and the 1945 Constitution to be democratic, independent and responsible, and not to base membership on politics, religion, race and/or gender.

MOM Decree No. Kep.187/MEN/X/2004 Regarding Employee Union Contribution Fees provides that a registered union is entitled to request an employer to collect union dues from the union’s members if the union meets certain administrative requirements. The employer must collect the dues in accordance with the request of the union, transfer the money to the union’s bank account and provide evidence of the transfer to the union’s management.

Law 21 states that the objective of a labor union is to: (i) improve the members’ skills, knowledge and productivity; and (ii) improve the protection of members. Law 21 permits a union to be disbanded by the following reasons: (i) if its members agree; (ii) if the company goes out of business; or (iii) if the union is closed by a court, if the labor union has principle contrary to Pancasila and the Constitution of 1945, as well as having the executive board and/or the members on behalf of the labor union are proven to have committed crimes against the state security and are sentenced to prison for minimally 5 years which already have binding legal force. A registered union can (i) represent employees in labor disputes, (ii) negotiate a collective labor agreement with the employer, (iii) establish institutions or undertake activities to improve employees welfare, (iv) plan, implement and take responsibility for employees strikes and (v) represent employees in attempting to obtain share ownership in the company. Law 21 permits the union to affiliate with an international union or federation. Law 21 imposes criminal sanctions on anyone who engages in certain anti-union activity. Such activities include (i) preventing employees from forming a labor union, becoming a member of a

labor union or conducting labor union activities, (ii) terminating an employee or reducing their salary for conducting labor union activities, (iii) conducting an anti-labor union campaign, and (iv) intimidation in any form. The penalty for criminal sanctions are one to five years of imprisonment and a fine of Rp.100 million to Rp.500 million.

Further, the Indonesian Labor Law, Law No. 13 of 2003 Regarding Labor (“Labor Law”), rules that termination of an employment relationship shall not be permitted if it is based on ideology, religion, political inclination, ethnic group, race, social group, sex, physical condition or marital status of the employee (Article 153 (i) of the Labor Law). Any termination based on one such discrimination will be void by law and the employer must reinstate the employee. The Labor Law prohibits termination of employees in connection with the labor union in which the employee establishes a labor union, becomes a member or part of the management of a labor union, or conducts union activities outside office hours or during office hours by the agreement of the employer or pursuant to the provisions of the employment agreement, company regulation or collective labor agreement.

Contact: Ira Eddymurthy; Moh. Fajar Yanuardi SSEK, Jakarta Group email : [email protected]

Japan

New Labor Conciliation

Proceedings in Japan

The new Labor Dispute Conciliation Proceedings Act became effective on April 1, 2006. The new law aims to expedite the resolution of certain labor disputes between employers and employees such as termination of employment contracts, and unpaid salaries or severance payments, separate from the usual court procedures so that


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such labor disputes will be resolved within three hearings. These proceedings are characterized as alternative dispute resolution proceedings (“ADR”) and are determined by a panel consisting of three professional members; a judge and representatives of the employer and the employee who have considerable experience in labor disputes. This new ADR will take place under the aegis of the district courts.

The gist of the new proceedings is as follows: 1. the first hearing date will be set

within 40 days from the date of the filing of the petition for the dispute;

2. the time spent for the first hearing

will be at least an hour; 3. the petition and the answering

documents must demonstrate the contents of the dispute in full so that the panel members can understand the facts and the issues of the dispute in as detailed a form as possible;

4. oral presentation is strongly

recommended rather than documentary evidence;

5. the petitioner and the respondent

himself/herself must attend the hearing together with counsel (if any);

6. conciliation of both parties will be

strongly encouraged in order to settle the dispute by mutual agreement although a decision will be rendered by the panel if the dispute cannot be resolved by conciliation;

7. if the panel decision is not objected

to by either of the parties, such decision will become final and enforceable, and

8. either party may object to the

decision of the panel whereupon the dispute will be decided by the district court.

Since there are only three hearings in these proceedings, both parties must analyze the issues of the dispute well in advance and prepare their brief and evidence in a concise manner. In this sense, each party should be encouraged to hire experienced counsel to prepare the briefs and evidence for the hearings. More than six months have passed since the introduction of new ADR in the resolution of labor disputes. These proceedings have generally been welcomed by both employees and employers since the disputes are resolved more quickly than through the traditional court proceedings. To date, most of the disputes have been settled at an early stage - usually within six months or so. The success of the new labor conciliation proceedings is an encouraging sign of the effectiveness of ADR in labor disputes.

Contact: Hiroyuki Kanae New Tokyo International Law Firm Tokyo Group email : [email protected]

New Zealand Air New Zealand Holidays Act Decision

The Court of Appeal has recently dismissed the appeal of Air New Zealand against a decision of the Employment Court under the Holidays Act 2003 in relation to public holidays. The case was taken by the Airline Pilots’ Association (‘the union’) in relation to the provisions of a collective agreement in place between it and Air New Zealand. The collective agreement provides for a rostering system for pilots. The system means that each year, a pilot is likely to work on some of the 11 public holidays specified in the Holidays Act.


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The agreement, which was concluded under the Holidays Act 1981, provides that rather than receiving additional remuneration in exchange for working on public holidays, pilots receive eleven additional days’ leave, regardless of the number of public holidays actually worked. The Holidays Act 2003 provides that employees who work on public holidays and would normally work on that day are entitled to “time and a half” pay and an alternative holiday. The union conceded that the entitlement to an alternative holiday was covered by the 11 days’ extra leave. However it alleged that the agreement did meet the minimum requirements of the Holidays Act 2003 because pilots were not paid time and a half for working on public holidays. Air New Zealand contended that the agreement did meet the Act’s requirements, arguing that the Act allowed it to agree with the pilots to transfer the observance of public holidays and the entitlements that go with them to another day – within the eleven days’ extra leave. Because the pilots never worked on these transferred holidays, time and a half requirements never arose. The Court of Appeal was asked to determine:

• Whether an employee’s public holiday entitlements could be transferred to another day; and

• If transfers were permitted, whether this collective agreement effected such a transfer.

The majority of the Court of Appeal considered the relevant provisions of the Holidays Act 2003. It noted that the Act provides minimum entitlements, and that agreements that exclude, restrict or reduce employees’ entitlements would be of no effect to the extent that they did so. Section 44 of the Act specifies eleven public holidays. Subsection 2 of that

section provides that “an employer and employee may agree (whether in an employment agreement or otherwise) that any public holiday … is to be observed by the employee on another day”. Subsection 3 provides that such an agreement cannot diminish the total number of paid public holidays that would otherwise be available. Under section 50 of the Act, employees who work on public holidays are paid time and a half. Section 56 provides an entitlement to an alternative day’s holiday. 8 Air New Zealand accepted the time and a half requirements, but argued that where an employee agrees to transfer a public holiday (under section 44(2)), and therefore observe it on a different day, time and a half will only apply if the employee works on the day that they observe the holiday. The union contended that an employer and employee could not agree to transfer the day in respect of which time and a half would apply. It argued that pilots should be paid time and a half whenever they worked on a public holiday stipulated in the Act. The majority of the Court of Appeal disagreed with the union’s argument. It illustrated the problem with it accordingly: A non-Christian employee says to his employer, “Christmas Day has no significance for me, but a feast day in my religion does. I would like to swap the Christmas Day public holiday for the feast day”. The employer agrees to this variation of the employment arrangements between them. It seems unlikely that Parliament would have wished to impose on an employer that agreed to this request an obligation to pay the employee time and a half on Christmas Day.

Accordingly, the majority held that if an employer and employee agreed to transfer the observance of a public holiday to a different day, that different day would be treated as the public holiday for the purposes of any entitlement to time and a half.


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Having concluded that an employer and employee could agree under section 44(2) to transfer the observance of a public holiday, the majority went on to consider whether in this case such an agreement had been reached between Air New Zealand and the union. Air New Zealand argued that the agreement for 11 days’ extra leave for pilots in exchange for them working on public holidays was such an ‘exchange agreement’ under section 44(2). The Court of Appeal found that the Holidays Act 2003 required that where an agreement was entered into to under section 44(2) to transfer the observance of a public holiday to a different day, this different day would have to be a particular and identifiable day. Such identification would mean that employers and employees could easily tell whether time and a half would apply on the public holiday as specified in the Holidays Act, or on the day it was agreed the holiday would be observed, if the employee worked on either of those days. Because individual days could not be identified in the agreement between Air New Zealand and the union, there was not a valid exchange agreement. Accordingly, time and a half applied to the public holidays specified in the Act that pilots had worked on since the Act came into force. As a postscript, the Court noted that : …the explanatory note to the Holidays Bill [began] with the confident statement “The Holidays Bill implements government policy by providing entitlements that are easy to understand and apply’” . The Court noted that in this case it had been faced with three different, credible interpretations of the Act, which “would tend to suggest that the objective of providing for entitlements that are easy to understand and apply has not been met.” While agreeing with the majority on the overall result, Justice Chambers disagreed on the first issue. He considered that the specified public

holidays are especially significant, and accordingly employees should generally be allowed to observe them or to receive time and a half for working on them. He considered that the majority’s view would allow employers to avoid the time and a half regime “by the simple expedient of an agreement to transfer the public holiday”. On the assumption that many employers would push strongly for such transfer agreements, Justice Chambers saw the majority’s conclusion as meaning that the only time the time and a half and ‘alternative holiday’ provisions would apply was the unlikely event that an employee ended up working on the day to which they transferred observance of a public holiday. Contact: David Quigg Quigg Partners, Auckland Group email : [email protected]

Philippines Control Test of Employment Relations -- Qualified To determine the existence of an employer-employee relationship under Philippine jurisdiction, the Supreme Court has consistently applied the “four-fold” test which has the following elements: 1) Who has the power to select the employees; 2) Who pays for their wages; 3) Who has the power to dismiss them; and 4) Who exercises control in the methods by which the work is accomplished. The most important test is the last, the so-called “control test”. Under the “control test”, there is an employer-employee relationship when the person for whom the services are performed reserves the right to control not only the end achieved but also the manner and means used to achieve that end.


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The instant case under review (Leonardo, et al. vs. Court of Appeals, et al., GR No. 152459, 15 June 2006) presents to us a qualification on the “control test” ruling. In the case, BALTEL, a franchise holder of telephone service operations, hired complainants-employees for various positions in the company. Subsequently, BALTEL and DIGITEL entered into a management contract. Under the contract, DIGITEL was to provide consultancy and technical expertise in the management, administration, and operation of BALTEL’s telephone service. In 1994, BALTEL ceased operations due to serious business losses. As a result, complainants’ services were terminated. Not too soon, complainants filed an action for salary differentials and illegal dismissal against BALTEL and DIGITEL. DIGITEL denied liability on the ground that it was not complainants’ employer. The pertinent issue to be resolved by the court is whether DIGITEL can be held jointly and severally liable with BALTEL. Based on the findings of the court, DIGITEL undoubtedly has the power of control. However, DIGITEL’s exercise of the power of control necessarily flows from the exercise of its responsibilities under the management contract. Thus, it was held that the “control test” has no application in this case. Ergo, no employment relations exists between complainants and DIGITEL; DIGITEL was therefore not liable in solidarity with BALTEL. We agree with the ruling of the Supreme Court in the instant case. Although it was not enunciated therein, the said ruling is in consonant with the long settled principle that “control test” only requires the existence of the right to control the manner of doing the work, not necessarily the actual exercise of the power. It is not essential for the employer to actually supervise the performance of duties of the employee. It is enough that the former has the right

to wield the power (Dy Keh Beng vs. International Labor and Marine Union of the Philippines, L-32245, 25 May 1979; MAM Realty Development Corporation vs. NLRC, et al., GR No. 114787, 02 June 1995; RVM vs. NLRC, et al., GR No. 103606, 13 October 1999). In the present case, albeit the power of control was delegated to DIGITEL by virtue of the management contract and the latter has the actual exercise of it, in truth and in fact, BALTEL is the real possessor of such right and definitely reserves the right to control. Contact: Herminio A. Liwanag; Ernesto T. Caluya Jr. JGLaw, Philippines Group mail : [email protected]

Singapore Fair Employment Practices Initiative

The Tripartite Alliance for Fair Employment Practices (TAFEP) was formed in May 2006 and is committed to adopting a concerted, promotional and educational approach to raise awareness and share knowledge on fair employment practices. Since its formation, TAFEP has recently undertaken several new initiatives to promote the adoption of fair and responsible employment practices in Singapore. The Tripartite Alliance for Fair Employment Practices TAFEP has adopted the following terms of reference: a. Formulate guidelines for fair

employment practices towards workers of all ages, genders, races and religion;

b. Initiate a fair employment movement

through national and sectoral programmes to facilitate broad and


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effective adoption of fair employment practices;

c. Partner relevant agencies to develop

industry capability and training programmes for managers, supervisors and union leaders on fair employment practices;

d. Profile case studies and best

practices to create greater awareness and to facilitate sharing of experiences among employers, unions and the public; and

e. Give recognition to employers that

are exemplary in implementing fair employment practices.

With a view to changing the mindsets among employers, employees and the general public towards fair employment practices, TAFEP has formulated the Employers Pledge of Fair Employment Practices (the “Pledge”), which includes the five key principles of fair employment as follows: 1. Recruit and select employees on the

basis of merit, such as skills, experience and ability, regardless of age, race, gender, religion or family status.

2. Treat employees fairly and with

respect and implement progressive human resource management systems.

3. Provide employees with equal

opportunities for training and development based on their strengths and needs, to help them achieve their full potential.

4. Reward employees fairly based on

their ability, performance, contribution and experience.

5. Abide by labor laws and adopt

Tripartite Guidelines which promote fair employment practices.

At its launch event on 6 September 2006, 173 companies committed themselves to the 5 key principles of fair employment practices by signing the Pledge. Since then, TAFEP has continued to promote awareness of the principles of

fair employment practices and to encourage more companies in Singapore to commit to the Pledge.

The problem of discrimination primarily takes root in the mindsets of employers and employees alike. Therefore instead of enacting non-discrimination laws, the Tripartite partners believe that discrimination in the workplace should be dealt with by promoting awareness through workshops, seminars, focus group discussions, training programmes and promotional materials. The formation of TAFEP and its formulation of the five key principles of fair employment practice bode well in this respect. The Tripartite partners will also consider revising the Code of Responsible Employment Practices which was issued in December 2002. The Code encourages self-regulation on the part of employers and employees in areas of employment including recruitment, selection, appraisal, job upgrading, posting and training, as well as terms and conditions of employment. Contact: Natalie Goh ATMB Law Singapore Group email : [email protected]

Taiwan New National Immigration Administration to Handle Alien Resident Certificates The beginning of 2007 marked the opening of Taiwan’s National Immigration Administration (NIA), which absorbed many responsibilities and personnel from National Police Agency, Ministry of the Interior, as well as airport and harbor police forces. The government has touted the NIA as a streamlined solution to deal with a recent influx of immigrants to Taiwan, as well as handle visits by


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increasing numbers of Chinese business professionals and tourists. Of interest to most foreign professionals in Taiwan is that alien resident certificate and permanent residency applications, visa renewals and lost passport declarations will now be handled by the National Immigration Administration. Additionally, visas and resident permits for Macau, Hong Kong and Chinese visitors will now be handled by the new administration, as will alien residence certificate applications for foreign, blue-collar workers. The administration has a total of 25 offices around the island. It should be noted that work permits are still being handled by the Council of Labor Affairs, the Ministry of Transportation and Communications, or the Hsinchu Science Park Administration, depending on the type of work permit needed. Although the new administration has promised to lessen the bureaucracy involved with applying for and amending resident permit applications, the NIA has been criticized by local NGOs as an agency bent on enforcement of immigration laws rather than one dedicated to helping immigrants. For example, the Administration currently requires PRC nationals wishing to visit relatives in Taiwan for family reunions, or to reside or settle in Taiwan to go through a fingerprinting process before arriving in Taiwan. Visitors from Macau and Hong Kong, however, are not subject to fingerprinting. The Administration also intends to add high-tech iris and facial scanning systems in the near future. Contact: Steven J. Hanley Winkler Partners, Taiwan Group email : [email protected]

Thailand

Effective Written Warnings:

Their Role in Reducing the Likelihood

of Severance Pay Obligation Most employers, at one time or another, are faced with problem employees who often act in violation of company policies and work rules. Most of these employers are also aware of the importance of documenting such behavior and warning the employee. The means of warning an employee vary depending on the wrongdoing and individual company policies, with some employers opting for verbal warnings or regular written warnings for relatively minor violations of company work rules, such as tardiness and unexcused absences. While these policies may be prudent internal measures of documenting employee wrongdoing, they may not be enough to be taken seriously by the problem employee and, most importantly, they may not legally support later termination of the employee without severance pay. Here we address requirements for effective written warnings under Thai law. Thai law recognizes that, except for the most serious of actions, an employer may not terminate an employee for violations of company work rules, policies, or its legal and fair orders without first providing a written warning to the employee. Otherwise, the employer has to provide severance pay and also risk charges of unfair termination. In fact, Section 119(4) of the Labor Protection Act (“LPA”) provides that if an effective written warning has been issued to an employee for the above-mentioned violations and he or she refuses to correct his behavior, then the employer may terminate the employee without providing statutory severance pay.


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However, this provision does not apply to terminations due to unsatisfactory job performance. So, where an employee has been warned in writing about his or her job performance and he or she does not improve, the employer can terminate employment but must pay the affected employee statutory severance pay.

What constitutes an adequate written warning under Thai law? Interestingly, the LPA does not specifically address this matter. Rather, the definition and specific requirements are extracted from Supreme Court precedent and are followed by the Thai labor courts. With these requirements in mind, the following should be considered by an employer when drafting warning letters to their employees:

• A written warning should provide the facts relating to the employee’s wrongdoing or misconduct.

• Such wrongdoing should be described clearly.

• The written warning should refer to the specific provision in the employer’s work rules or codes of conduct so that the employee is adequately informed of what provision applies to his case.

• The written warning must contain a sentence warning the employee not to repeat the same wrongdoing and that if he ignores such warning and repeats the wrongful conduct, it may result in termination.

• The warning notice must be issued by the actual employer or its authorized representative.

It is important to note that there is no requirement that the warning notice actually contain a caption or heading stating that it is a “warning notice.” It is the content of the notice that is determinative, and the warning notice will be considered valid as long as it contains the information defined above.

Supreme Court precedent offers further explanation of the strict burden of written notification placed upon the employer. For example, the Supreme Court has ruled that even in cases where a terminated employee has offered a written confession of wrongdoing with promises not to repeat the wrongdoing, and has acknowledged having received several verbal warnings from his employer prior to termination, there must be an actual written warning from the employer before terminating the employee. So, while the facts point to actual notice being served on an employee, the courts have been quite strict in interpreting the written warning requirement. Thai law also prescribes a strict time requirement in the use of written warnings to justify later termination of employees. A written warning is effective for only one year from the date of the wrongdoing. So, if the employee receives a written warning for late attendance on January 1, 2007, he may be dismissed without severance pay for his second late attendance, as long as it takes place before January 1, 2008. Contact: Chusert Supasitthumrong; Tiziana Sucharitkul Tillee and Gibbins, Bangkok Group email : [email protected]

Vietnam Restrictions on the Employment of Vietnamese Citizens

Though all employers may be equal to one another under the labor code of Vietnam but there are certain restrictions applicable only to a foreign invested enterprise, branch office or


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representative office of a foreign company or organisation in Vietnam. In general, employment of minors ( from 15 years old to under 18 years old) and even children (under 15 years old) in certain works are allowed under the laws of Vietnam. However, a foreign invested enterprise, branch office or representative office of a foreign company or organisation in Vietnam can only sign an employment contract with a Vietnamese citizen who is at least 18 years old and permanently residing in Vietnam. The person should also have a clear curriculum vitae and the full capacity for civil acts (not incapacitated through mental or other illnesses or under affection of drugs or stimulants), and not be one of the following:

1. Civil servants, government officers,

officers, non-commissioned officers and soldiers of the Vietnamese People’s Army and Vietnamese People’s Public Security who are on active service;

2. Civil officers, government officers,

military officers, commissioners and soldiers of the Vietnamese People’s Army and Vietnamese People’s Public Security, who have been in connection with State secrets during office or service tenures and have been retired for less than five years;

3. Spouse of a person in connection

with State secrets; 4. A person who has had disciplinary

actions imposed on them for disclosure of State secrets or National Security information; and

5. A person who is under criminal

prosecution or who had been a convicted criminal but has not been granted criminal remission.

An employment contract with any of the above-mentioned persons by a foreign invested enterprise, branch office or representative office of a foreign

company or organisation in Vietnam is unlawful. In order to ensure that the new hire for any job offered by a foreign employer does not fall under the restricted criteria, the incumbent must submit along with the job application, among others, the following documents:

• Detailed curriculum vitae with information on current or last employment as well as information on employment of spouse certified by the People’s Committee of the ward where the incumbent is then residing;

• Certification from current or last employer on whether the incumbent has been in connection with any State secrets or National Security information, if the incumbent falls under criterion 1 or 2;

• Certification from current employer of spouse on whether the spouse is in connection with State secrets or National Security information;

• Criminal History Report of the incumbent issued by provincial Department of Justice.

The last three documents are important to ensure the validity of the employment contract but they are surprisingly ignored by many employers in Vietnam. Of note, the Criminal History Report is valid for 6 months only. Therefore, it is recommended that a foreign employer may need to put into its works rules/policies requiring the staffs to obtain and submit Criminal History Report periodically.

Contact: Nguyen Tuan Minh Tilleke and Gibbins, Hanoi Group email : [email protected]


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Global Business and Legal Solutions©

Transatlantic Law Asia is the Asia service group of Transatlantic Law International, a global legal and business solution provider

with affiliates in over 50 countries.

For questions about this Bulletin or Transatlantic Law, kindly contact

Transatlantic Law at : [email protected] or the Asia Labor Law Bulletin newsletter editors, Steven J. Hanley and Lloyd G.

Roberts, at [email protected]

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