Employment contracts are among the most frequently used legal documents in any business. Yet, they are also one of the most common sources of disputes, penalties, and inspections—even for companies that believe they are acting in good faith.
In Vietnam, many labor-related violations do not stem from intentional wrongdoing, but from incorrect, incomplete, or outdated employment contracts. Small drafting errors or misunderstandings can expose businesses to labor disputes, administrative fines, or unfavorable outcomes in court.
This article explains where businesses commonly make mistakes when signing employment contracts, why these errors persist, and how ongoing legal consultancy helps companies avoid labor risks before they escalate.
One of the most common mistakes is relying on:
Old employment contract templates
Templates copied from other companies
Online or foreign templates not adapted to Vietnamese law
Labor laws and implementing regulations in Vietnam change regularly. Contract templates that were compliant a few years ago may no longer meet current legal requirements.
Outdated templates often miss mandatory clauses or contain provisions that conflict with labor law, making them vulnerable during inspections or disputes.
Vietnamese labor law distinguishes between different types of employment contracts, particularly regarding term and renewal.
Businesses frequently make mistakes such as:
Repeatedly renewing fixed-term contracts without legal basis
Using fixed-term contracts where indefinite-term contracts are required
Misunderstanding probation and contract commencement
These errors may lead authorities or courts to reclassify the contract, triggering additional obligations or penalties.
Many employment contracts contain vague job descriptions, such as “other duties as assigned” without clear limits.
This creates risks because:
Employees may refuse tasks outside their perceived role
Employers may struggle to enforce performance standards
Disciplinary actions become harder to justify
Clear job scope is essential for performance management and dispute prevention.
Compensation-related clauses are closely scrutinized in labor disputes and inspections.
Common mistakes include:
Failing to clearly separate base salary and allowances
Improper treatment of overtime payments
Unclear payment schedules or calculation methods
Ambiguity in salary clauses often results in disputes over unpaid wages or benefits, even when employers believe they have paid correctly.
Probation clauses are frequently misunderstood.
Businesses often:
Apply probation longer than legally permitted
Include probation terms without proper contract structure
Fail to specify salary during probation clearly
Improper probation clauses can be declared invalid, leading to retroactive obligations for full salary or benefits.
Employers commonly attempt to protect business interests through confidentiality or non-compete clauses. However, not all such clauses are enforceable.
Mistakes include:
Overly broad non-compete restrictions
Lack of compensation for non-compete obligations
Vague definitions of confidential information
When poorly drafted, these clauses provide a false sense of protection and may be rejected entirely in disputes.
Termination is one of the most sensitive areas of labor law.
Many employment contracts:
Oversimplify termination rights
Ignore statutory notice periods
Allow termination in situations not permitted by law
Even if both parties sign the contract, clauses that violate mandatory labor rules may be invalid, exposing the employer to reinstatement or compensation claims.
Some businesses label workers as “independent contractors” to reduce labor obligations.
However, authorities and courts assess actual working relationships, not just contract labels.
Misclassification can lead to:
Reclassification of contractors as employees
Retroactive social insurance contributions
Penalties and labor disputes
Employment contracts must reflect reality, not just commercial preference.
Employment contracts do not operate in isolation. They must align with:
Internal labor regulations
Company policies
Disciplinary procedures
Inconsistency between contracts and internal rules weakens the employer’s position during disputes and inspections.
Many businesses repeat these mistakes because:
HR teams are not legally trained
Legal review is only sought when disputes arise
Templates are reused without updates
Compliance responsibility is fragmented
As a result, risks accumulate silently until inspections or disputes expose them.
Errors in employment contracts can lead to:
Labor disputes and lawsuits
Administrative fines
Forced contract amendments
Back payment of wages or benefits
Increased scrutiny from labor authorities
These consequences often cost far more than preventive legal support.
Some businesses only consult lawyers:
When drafting contracts for senior employees
When disputes arise
During inspections
This selective approach leaves gaps in everyday employment contracts, where most risks originate.
Labor compliance requires consistent legal oversight, not occasional intervention.
With ongoing legal consultancy, employment contracts are treated as part of continuous compliance, not one-off documents.
Ongoing legal support helps businesses:
Update contract templates regularly
Ensure compliance with current labor law
Align contracts with internal policies
Support lawful probation and termination
Reduce labor disputes and inspection risk
This proactive approach protects both employer and employees.
FDI companies face additional labor challenges due to:
Language barriers
Differences between group HR policies and Vietnamese law
Use of foreign contract templates
Higher inspection scrutiny
Local ongoing legal support ensures employment contracts are enforceable and compliant in Vietnam.
DEDICA provides ongoing legal consultancy services to help businesses manage labor compliance effectively.
As an outsourced legal department, DEDICA supports clients by:
Reviewing and drafting employment contracts
Updating templates based on legal changes
Advising on probation, termination, and discipline
Supporting inspections and labor dispute prevention
Aligning HR practices with Vietnamese law
DEDICA’s approach is practical, prevention-focused, and business-oriented, helping companies avoid labor risks before they become disputes.
Most labor disputes and penalties do not arise from bad intentions, but from small mistakes in employment contracts that accumulate over time.
By identifying common errors and addressing them early, businesses can significantly reduce labor risk and compliance costs.
For companies operating in Vietnam, ongoing legal consultancy is the most effective way to ensure employment contracts support stable operations rather than create hidden liabilities.
📞 Hotline: (+84) 39 969 0012 (Available via WhatsApp, WeChat, Zalo)
🕒 Working Hours: Monday – Friday (8:30 – 18:00)
Contact us today for a free initial consultation with our experienced lawyers!
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