Understanding Labor Law and Employer Obligations Toward Employees

Why Should Businesses Understand Labor Laws?

Comprehending labor laws not only ensures legal compliance but also offers several benefits:

• Fostering Harmonious Labor Relations: When businesses fulfill their obligations, employees feel respected and are more likely to stay loyal to the company.
• Preventing Disputes: A clear understanding of the law helps businesses minimize the risk of labor disputes, saving both time and money.
• Enhancing Operational Efficiency: A stable, law-abiding work environment enables employees to work with peace of mind, boosting productivity.

Employer Obligations Toward Employees

Adhering to obligations related to social insurance, personal income tax, and other employee benefits such as leave, sickness, and maternity is a legal responsibility for businesses. This reflects care for employee welfare and contributes to building a professional and sustainable workplace.

1. Social Insurance

• Purpose: Protect employees from life's risks, such as illness, work-related accidents, maternity, unemployment, and old age.
• Types of Social Insurance:
  • Social Insurance: Covers sickness, maternity, occupational accidents, work-related illnesses, retirement, and death.
  • Health Insurance: Ensures medical expenses for employees and their dependents.
  • Unemployment Insurance: Supports employees in case of job loss.
• Employer Responsibilities
  • Register employees for social insurance.
  • Pay contributions fully and on time.
  • Handle procedures related to employees’ insurance benefits.

See more: Key Points About Mandatory Social Insurance.

2. Personal Income Tax

• Purpose: The government collects personal income tax to fund social activities.
• Employer Responsibilities:
  • Declare and pay personal income tax on behalf of employees.
  • Deduct personal income tax before disbursing salaries.
  • Maintain records and documents related to tax calculations and payments.

3. Leave, Sickness, and Maternity

• Annual Leave
  • Employees are entitled to annual leave as stipulated by law and labor contracts.
  • Leave days typically increase with seniority.
• Sick Leave
  • Employees are entitled to sick leave with a medical certificate from a healthcare provider.
  • Duration and wage entitlements during sick leave are clearly defined.
• Maternity Leave
  • Pregnant employees are entitled to maternity leave before and after childbirth.
  • Duration and wage entitlements during maternity leave are regulated by law.​​​​​​​

4. Other Employee Benefits

• Minimum Wage: Employees must be paid no less than the minimum wage set by the government.
• Occupational Safety: Businesses are responsible for ensuring occupational safety and hygiene for employees.
• Work Environment: Employers must foster a healthy work environment free from discrimination.

Consequences of Non-Compliance

• Administrative Penalties: Businesses may face fines.
• Compensation Responsibility: Employers must compensate employees for damages caused by non-compliance.
• Reputation Impact: Failure to adhere to labor laws can harm a company’s reputation.

Vietnamese labor laws are frequently updated. Businesses should stay informed about the latest changes or consult professionals at Zora Consulting for quick resolutions to labor law issues.