Labor Disputes with Foreign Workers – What Clauses Should Be Included in the Employment Contract?
1. Legal Grounds & Dispute Resolution Methods
According to Articles 188–189 of the 2019 Labor Code, individual labor disputes must go through a labor conciliator before proceeding to the Labor Arbitration Council or court, except in specific cases such as dismissal or compensation claims.
For disputes involving foreign elements, especially when the employee is a foreign national, the Labor Arbitration Council is considered the most suitable mechanism: it is faster, more flexible, confidential, and allows parties to choose arbitrators.
2. Mandatory Clauses in Employment Contracts
To minimize disputes and protect rights, labor contracts with foreign workers should include the following clauses:
Written and Certified Contracts:
Contracts must be in writing, legally valid in both Vietnamese and (if needed) the foreign language, and certified for use in disputes.
Work Permit and Visa Clause:
Clearly define responsibilities for providing and complying with visa and work permit requirements. Contracts signed without a valid work permit are considered null and void under Article 49 of the 2019 Labor Code.
Dispute Resolution Clause:
Internal mediation: Commitment to initiate dispute resolution through a labor conciliator as prescribed.
Labor arbitration clause: Use the Labor Arbitration Council in Vietnam (not commercial arbitration, which is prohibited for labor disputes).
Applicable law and language: Clearly state that Vietnamese law applies, and define a professional interpretation mechanism to ensure understanding. Note: Article 190 of the Labor Code sets a 1-year statute of limitations for filing claims.
Confidentiality – Non-compete – Intellectual Property:
Include commitments to confidentiality, non-competition after termination, and protection of the employer’s intellectual property.
Liability for Breach:
Clearly outline compensation and disciplinary responsibilities, especially in cases of labor condition violations or expired work permits.
3. Advantages of Well-Drafted Clauses
Transparency & efficiency: Shortens the mediation phase and avoids prolonged disputes.
Confidentiality & flexibility: Arbitration procedures help protect sensitive information.
Enforceability: Mediation records and arbitration awards can be enforced through court proceedings if necessary.
Legal risk mitigation: Avoid invalid contracts due to missing work permits.
4. Practical Recommendations
Begin with legal counsel – they will help draft valid clauses in international labor contracts.
Empower legal representatives to attend mediation or litigation proceedings as needed.
Track deadlines closely: 6 months for mediation, 9 months for arbitration, 1 year for court claims.
Train HR and staff on international dispute resolution to proactively manage or prevent conflicts.
Conclusion
Employment contracts with foreign nationals in Vietnam should include the following key clauses:
Work permit and visa compliance,
Clear interpretation and language mechanisms,
Mediation and labor arbitration provisions,
Confidentiality and non-compete agreements,
Commitment to comply with Vietnamese labor law.
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