1. Do enterprises need ILRs
Pursuant to Article 119 of the Labor Code, when enterprises use 10 or more Employees, they must issue written ILRs and perform ILR registration procedures with competent local labour authorities for its validity. Thus, in cases where an enterprise employs less than 10 Employees, the law does not require enterprises to issue written ILRs. In this case, the enterprise will have two options as follows:
- Option 1 – The enterprise issues a written ILR without registering it with competent local labour authority. In this case, the ILR will take effect in accordance with the decision in the written ILR. Experience shows that this option should be prioritised for application to help enterprises build a system of regulations on handling LD applied in the enterprise. Note that enterprises may register ILRs with provincial state labour management authorities if they so wish;
- Option 2 – The enterprise does not issue the written ILR, but it had to put the agreement on LD in each LD for Employees to comply with the contractual commitments. At that time, the effect on LD will be in accordance with the agreement of the parties in LC.
2. If no, may Employers deal with Employees’ discipline violations based on the violations stipulated in the Labor Code?
Under the current labour law, if enterprises have less than 10 Employees, they are not required to prepare written ILRs. Accordingly, it may be understood that when enterprises with less than 10 Employees do not issue ILRs (as permitted by law), the Labor Code may be applied to discipline Employees. However, there are now many controversial points about whether enterprises need ILRs to be able to discipline their Employees. This comes from Article 128.3 of the Labor Code.
Pursuant to Article 128.3 of the Labor Code, enterprises must discipline Employees when they have committed acts which are not defined as violations in ILRs. Thus, if enterprises do not have ILRs, the application of LD against Employees may be considered inconsistent with the principles of the Labor Code. In addition, in practice, if enterprises only rely on the Labor Code to discipline Employees, enterprises may not have sufficient legal basis to apply the appropriate LD form to Employees because the prevailing Labor Code only specifies the acts subject to dismissal for enterprises to apply while, for the remaining LD forms (including reprimand, removal from office, extension of the salary raise period for less than 6 months), the Labor Code does not contain specific provisions on acts which may be subject to disciplinary action. This may explain that the Labor Code gives enterprises the right to regulate disciplinary actions corresponding to the form of reprimand, removal from office, extension of the salary raise period for less than 6 months, depending on the characteristics of each enterprise. Therefore, if enterprises only rely on the relevant Labor Code to deal with LD against Employees (in the absence of ILRs), enterprises will not have sufficient legal basis to apply discipline forms to Employees.
To ensure the interests of enterprises, enterprises should elaborate ILRs to serve as a basis for disciplining Employees. In cases where enterprises do not want to issue ILRs pursuant to Article 10.4 of Circular 47/2015/TT-BLDTBXH, they may put detailed agreements on LD in LCs for Employees to comply with, which provides a basis for disciplining Employees when necessary.
3. In case of any need for ILR, is such ILR required to be registered with the competent local labour authority?
In principle, enterprises with 10 Employees or more, when issuing written ILRs, are obliged to register with competent local labour authorities. However, in cases where enterprises with less than 10 Employees issue written ILRs and wish to register the ILRs, enterprises may also carry out procedures for registering ILRs in the same way as enterprises with 10 Employees upwards.
In order to register ILR in accordance with the labour law, enterprises should pay attention to the following issues:
- Within 10 days of the date of issuing ILRs, enterprises must submit ILR registration dossiers to state labour management authority of the province where business registration is carried out (i.e. DOLISA or Industrial Sone Management Board, export processing zones and hi-tech parks having the authority to approve ILR registration where Employers’ offices are located in industrial parks, export processing zones, hi-tech parks);
- ILR registration dossier includes: (i) Written request for ILR registration (made according to a provided form); (ii) Decision on issuing ILR; (iii) Minutes of Consultation with grassroots TUEC or immediate superior TUEC (if there has not yet been grassroots TUEC); (iv) ILR; and (v) the corporate documents with provisions related to LD and material liability, if any. ILR will come into force 15 days after the date on which the provincial labour management state authority receives ILR registration dossier and inform that the ILR is in compliance with the law; and
- If any enterprise has branches, units and production and business establishments located in many centralised provinces and cities, it shall send ILR after effective date to labour management state agencies of the province where its branches, units or production and business establishments are located.
4. In case of no ILR registration, may Employees’ violations be dealt with?
Pursuant to the current law, ILRs only take effect after any enterprise have implemented ILR registration procedures with the competent labour authority of the locality where Employers employs 10 Employees or more. Specifically, an ILR will take effect 15 days after the date on which the provincial labour management state authority receives ILR registration dossier and announces that the ILR is in compliance with the law. According to this principle, for an enterprise with 10 or more Employees, the precondition for such enterprise to have legal grounds for disciplining its Employees is that the ILR must be registered in accordance with the law.
However, this principle will not apply to enterprises employing less than 10 Employees. Specifically, under Article 119 of the Labor Code and Article 10.4 of Circular 47/2015/TT-BLDTBXH, enterprises employing less than 10 Employees will not be required to issue ILRs in writing and register the ILRs with competent local labour authorities. Accordingly, if enterprises issue ILRs in writing, the effect of the ILRs will be decided by enterprises themselves therein. Or, if enterprises do not issue ILRs in writing, they may agree with Employees and record that in LCs for implementation. Thus, if any enterprise has less than 10 Employees, even if its ILR is not registered with the competent local labour management agency, it will still have the right to rely on the ILR for disciplining Employees in accordance with the law.
5.Will any failure to register ILR be sanctioned for administrative violations
In cases where enterprises are subject to compulsory ILR registration (specifically when they employ 10 or more Employees but fail to perform the said registration obligation), they may be fined from 10,000,000 to VND20,000,000 for administrative violations[1].
6. What benefits does ILR bring enterprises to prove that it is needed for them to elaborate ILR?
The labour law do not define what ILR is. However, based on the main contents of an ILR required by Article 119.2 of the Labor Code, it should be understood that ILR is a document issued by an enterprise, which stipulates Employees’ responsibilities and obligations the enterprise as well as sanctions through disciplinary measures against any Employee who fails to abide by or improperly performs the labour obligation prescribed by the enterprise.
In terms of
corporate governance, ILR really plays a very important role in helping
enterprises to ensure the stability, orderliness and efficiency of their
management and operation. In addition, the issuance of ILR also helps
enterprises establish a system of rules on LD to prevent Employees’ violations
that may damage corporate property and reputation.
[1]Articles 3.1 and 15.2(b) Decree 95/2013/NĐ-CP dated 22/8/2013 as amended and supplemented by Decree 88/2015/NĐ-CP dated 07/10/2015