Non-Compete Agreement In Labor Contract

The principle “freedom to work” is recognized and respected by the Labor Code 2012. However, this regulation may harm legitimate business interests of employers when employees, during the performance of the labor contract or especially after the termination of the labor contract, reveal the business or technology secrets to compete with the employers. Therefore it is necessary to create the limits on the freedom to work, for the purpose of preventing workers from revealing employers’ business or technology secrets. Law in many countries around the world has recognized “Non-Compete Agreement” as a tool to enforce security programs.

The Labor Code 2012 and sub-law documents do not mention to the definition of “Non Compete Agreement”, but make the provision that: “When an employee performs a job which is directly related to business or technology secrets as prescribed by law, the employer may reach a written agreement with the employees on the content and duration of protection of business or technology secrets, and benefits and compensation in case of violation by the employees”.

The definition of “Non-Compete Agreement” is inferred by explaining the provisions of law and referred to the articles of legal experts. “Non-Compete Agreement” is a legal contract between an employee and an employer, for a purpose of preventing the worker from competing directly or working for a competitor during the performance of the labor contract or especially after the termination of the labor contract. Thereby, we can infer that only when employers have business or technology secrets, they have the right to make Non-Compete Agreement. Moreover, the legitimate business interests that are protected must be legal, unique, influence the maintenance, stability and development of business activities.

Analyzing the provision “Non-Compete Agreement”, we can conclude that, the employees adjusted by the “Non-Compete Agreement” is the worker who is directly involved in business or technology secrets (such as the senior managers, senior technicians and others are obliged to keep business or technology secrets). The Labor Code 2012 has regulated that the “Non-Compete Agreement” must be on text.

The provision of Non-Compete Agreement is necessary for employers to protect business or technology secrets, but it is difficult for workers to find job after the contract terminates. Therefore, Non-Compete Agreement should balance the interests between employers and employees by setting reasonable limits in time, geographic scope and particular industry or activity.

(i) For restriction on time, the Labor Code 2012 does not specify restriction period or the point of starting restriction period. This is entirely upon the parties. However, Non-Compete Agreement can not be enforced unless it specifies a reasonable restriction period. Referring to the law of some European countries (Germany, France) and Asian countries for example in China, the maximum restriction time is 02 years, to ensure that employees have conditions to find new jobs.

Moreover, it provides opportunities for employers to motivate, improve the technology and business secrets to develop. On the other hand, law in some other countries distinguishes between highly skilled workers (group 1) and unqualified employees (group 2). Spanish law is a typical example, the maximum restriction period is two years for workers in group 1 and six months for group 2.

(ii) Restriction on geographic scope is not regulated in Vietnamese law. Meanwhile, most countries such as France, China and Russia all regulate that the restriction is on the whole country. However, due to differences in society, economic and education conditions, Vietnam can hardly regulate like that. On the other hand, when making the provisions of the restrictions on geographic scope, it is necessary to base on the performance of the company, the method of production, the size of and the type of company.

(iii) For restriction on particular industry or activity, most courts tend to consider the work that employees will work in the new labor contract. Normally, if the new job is similar to the old one, it will not be approved by the court. Under the Labor Code 2012, the content of restrictions on particular industry or activity when employees enter into agreement include: (i) obligation to keep trade information confidential (business secrets, technology secrets) ; (ii) not be able to work for the competitor of former employers or to conduct his own business competing with former employers.

Labor Code in our country does not specify the scope of the restriction on particular industry or activity, it depends entirely on the will of the parties. Non-Compete Agreement can not be applied to all jobs, but only to those who hold business and technology secrets. For every type of work there will be a different range of restrictions. The scope of the restriction is not exceeding the employee‘s professional capacity and ensuring the opportunity of works in the future.

The benefit that employees receive when signed the Non-compete Agreement can be the opportunity for promotion, high salary, and commendation if the Non-Compete Agreement is made while the labor contract is valid. If the Non-Compete Agreement is applied after the labor contract terminates, employees shall receive the compensation. The amount of compensation is upon the agreement of the parties and must be satisfactory with the restriction of job opportunities. There are some cases that employees may not be entitled compensation are to violate the Non-Compete Agreement or die or prison sentence.

According to the Labor Code 2012, in case of violating the non-compete contract, employees have obligation to compensate, but it does not give specific compensation amount as well as the method of compensation. In order to claim compensation, employers must demonstrate these following factors: (1) the violation of the Non-Compete Agreement; (2) actual damage (the lost revenue and profit of the employer); (3) the causal relationship between the infringement and the damage; (4) fault of the employee. The amount of compensation must correspond to the amount of lost revenue or profit. In addition, employees must return the non-owned assets that are exploited and developed to compete with former employers. Moreover, employees must repay the compensation and other benefits paid by former employers if agreed in the agreement.

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Regulation on Grid Connected Solar Power Investment Project

The Ministry of Industry and Trade has recently issued Circular 16/2017/TT-BCT on project development and the model purchase contract for solar power projects.

Accordingly, the grid connected solar power investment projects are regulated as follows:

– The investor can only set up a solar power investment project included in the provincial and national level solar-power development plan; or provincial and national power development plan that are approved.

– The contents of the solar power investment project must comply with the regulations on management of investment in construction and the following requirements:

+ Evaluate the impact of solar power project connection plan on the power system in the area.

+ Having equipment connected to the SCADA system or moderation information so that the forecast information on electricity output can be transmitted per hour to the regulated agency.

– The equity ratio of grid connected solar power projects should not less than 20% of the total investment.

– The area of long-term land use shall not exceed 1.2 ha/01 MWp.

Circular 16/2017/TT-BCT takes effect on October 26th2017.

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How to Obtain Business Registration Certificate in Vietnam?

Every organization and individual wishing to set up a foreign owned company in Vietnam shall need to meet some specifics conditions as promulgated under the Law on Investment and Law on Enterprise.  In specific areas being considered as conditional investment, the investor shall also need to consult with the law governing the area of investment. Once the investment registration certificate is completed, the investor has the obligation to apply for enterprise registration.

The procedure to register for a certificate of enterprise registration of a joint stock company or limited liability with two or more members are herein mentioned:

Dossiers:

i) Application form for enterprise registration

ii) The company’s charter.

iii) A list of founding shareholders and shareholders being foreign investors/ a list of capital contribution members.

iv) Valid copies of:

Copies of the ID card or other ID papers of founding shareholders and foreign investors/members being individuals; list of authorized representatives of foreign shareholders being organizations.

Decision on establishment, certificate of business registration, or an equivalent document of the organization and the letter of authorization; the ID card or other ID papers of the authorized representatives of founding shareholders and foreign investors being organizations.

If shareholders are foreign organizations, the copy of the certificate of business registration or an equivalent document must be notarized, legalized and authenticated.

The Certificate of Investment registration of the foreign investors as prescribed by the Law on Investment.

State Authority: Business registration office of the province where the enterprise’s headquarters is situated.

Period: within 03 working days from the full receipt of the dossiers

Result: Business registration office shall issue the certificate of enterprise registration or if the application is not satisfactory, business registration office shall inform the applicant of necessary revisions and supplementation to company.

In general, Vietnam government encourages foreign direct investment.  If the investor faces challenges at state authority, whom do not issue notification or request of supplementation to the application for enterprise registration, the investor cold lodge a complaint as prescribed by regulations of law on complaints and denunciation to the state authority to protect its right in doing business and investment in Vietnam. A law firm in Vietnam with expertise in both business registration and dispute resolution could assist the investor in the process.

The enterprise is entitled to do business from the issuance date of the certificate of enterprise registration. For conditional business lines, enterprises are entitled to engage in conditional business lines if they satisfy all conditions and are capable to maintain fulfillment of such conditions throughout their operation.

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Minister: Law on special economic zones will offer strong boon for investors

HANOI – Investors in Vietnam’s special economic zones would enjoy far greater incentives than those offered by similar zones in many other countries if the draft law on special administrative and economic zones is approved, said Minister of Planning and Investment Nguyen Chi Dung.

Speaking at the 14th meeting of the National Assembly Standing Committee in Hanoi on September 11, Dung said that as of 2016, there were about 4,500 special economic zones in 140 countries around the world. Therefore, Vietnam’s special economic zones must provide a much stronger boon to grab the attention of foreign investors in Vietnam.

Dung said factors that make special economic zones more appealing to investors include simple administrative procedures, fee and tax incentives, and favorable business environment and strategic locations.

According to the draft law, domestic special economic zones will receive support from the Government to develop basic infrastructure and high-quality human resources, while State management will be streamlined.

The draft law abolishes a number of conditional business sectors and simplifies business registration procedures.

Enterprises investing in priority sectors like business support, research and development, education and healthcare will be able to hold land use rights for up to 99 years. Apartments in housing or resort projects can be transferred to, donated to, acquired by or inherited by foreign organizations and individuals.

The draft law also proposes raising duty-free limits at duty-free shops in such zones, offering visa exemptions for foreigners staying in Vietnam within 60 days, issuing e-visas for foreigners and offering lower special consumption tax to casinos.

Minister Dung said Vietnam’s economic growth has slowed down in recent years, with the weak competitiveness and unattractive business environment. Therefore, the Government will have to take drastic measures and offer greater incentives to attract more investment into special economic zones.

Source: The Saigon Times

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Actively Review and Cut-off Unnecessary Business Conditions

Vietnam Prime Minister Nguyen Xuan Phuc asked the Ministries to research, actively self-review to amend or proposed modifications, cutting business conditions which are not reasonable and unnecessary.

On August 22nd 2017 , under the chairmanship of Prime Minister Nguyen Xuan Phuc, the Government held a legislative session to give comments on the draft law on competition (revised); the draft law amending and supplementing some articles of the law on environmental protection tax; draft law on administrative unit and special economic zones; discuss on the report synthesizing the results of reviews and proposals of ministries and agencies on the drafting of laws to amend and supplement the laws relating to land, construction, housing, business and planning…

According to the Ministry of Planning and Investment, there are still 4,284 business investment requirements and conditions in 243 industries under the management of 15 ministries, which are regulated in 237 legal normative documents. The Ministry of Planning and Investment proposes to abolish all or part of the business investment conditions in finance, location, production capacity, human resources, business methods, planning…

Vietnam Chamber of Commerce and Industry (VCCI) has proposed to abolish 96 conditions of business and amend 13 conditions in 3 sectors: industry, transportation, science and technology.

Regarding the draft law on special administrative and economic units aim to create legal bases for the establishment, development, management and operation of 3 special zones namely Van Don (Quang Ninh), North Van Phong (Khanh Hoa) and Phu Quoc (Kien Giang).

In terms of the draft law amending and supplementing a number of articles of the Law on Environmental Protection Tax, the Prime Minister emphasized that the role of amending and supplementing this law in the context that environmental regulations violation is complicated. complex. According to the Ministry of Finance – the drafting agency, the current environmental protection tax policy has revealed some obstacles that need to be finalized in order to ensure that this is an important economic tool, contributing to limiting the production and use of goods that pollute the environment, encouraging the use of environmentally friendly goods towards sustainable development.

Commenting on the draft Law on Competition, the Prime Minister said that the Ministry of Industry and Trade should thoroughly review the unfair competition practices so as not to overlap with other laws.

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Labour Matters and Labour Legal Compliance

The labor management is one of the most important matters in the operation of enterprises.  For the employee, he or she has to fulfill the job requirements as per labour contract, follow internal labour regulations, and work under the supervision of the employer.  For employer, complying with  regulations include paying salary, ensuring benefits, and other mandlabouratory compliance as per labour laws and collective labour agreements signed.

The following recaps the labour matters and labour legal compliance according to Vietnam labour laws:

1. To make reports on labor use according to the provisions of Article 6, Circular No. 23/2014/TT-BLDTBXH dated August 29th 2014 (Circular 23).
2. To make periodical reports on the use and change of labor according to the provisions of Point d, Clause 2, Article 6 of the Labor Code 2012 and Clause 2, Article 8 of Decree No. 03/2014/ND-CP and Clause 2, Article 6 of the Circular 23.
3. To make and use labor management books as guided in Article 7 of Circular 23.
4. Build and send wage scales, payroll, technical standards, titles, professional standards and labor norms in accordance with Article 93 of Labor Code 2012 and Chapter III of Decree No. 49/2013/ND-CP dated May 14th 2013
5. To participate and pay social insurance, health insurance, unemployment insurance for employees in accordance with current law.
6. To construct and register the labor regulations of the unit in accordance with Article 119, Clause 1, Clause 2, Article 120 of the Labor Code 2012, Chapter V of Decree No. 05/2015/ND-CP dated January 12th (Decree 05) and Chapter III of Circular 47/2015/TT-BLDTBXH dated November 15th 2015.
7. To develop and promulgate the Grassroots Democracy Regulation; Statute of periodical dialogue in the workplace as stipulated in Decree 60/2013/ND-CP dated June 19th 2013
8. To negotiate, sign and send the Collective Labor Agreement to the provincial labor authority in accordance with Chapter V of the Labor Code 2012, Chapter III of Decree 05 and Article 3 of Circular 29/2015/TT-BLDTBXH dated July 31st 2015 (this is optional).
9. To make explanatory reports on the demand for use, the procedures for the grant and re-grant of work permits and the implementation of reporting regimes according to the provisions of Decree No. 11/2016/ND-CP dated March 2nd 2016 and Circular 40/2016/TT-BLDTBXH dated October 25th 2016 (if employing foreign workers).
10. To formulate and promulgate the Regulation on evaluation of the performance of tasks as provided in Clause 1, Article 12 of Decree 05 (This content is part of the company’s working regulations and we must have this content to be able to unilaterally terminate the labor contract with the employee under Clause 1, Article 38 of the Labor Code 2012).
11. To carry out the procedures for the establishment of a grassroots trade union organization in accordance with the provisions of Paragraphs 1 and 3 of Article 189 of the Labor Code 2012 and Article 5 of the Trade Union Law 2012 (This is not mandatory but depends on the quantity of workers want to join the union of the company).
12. To report on occupational accidents, technical incidents causing serious unsafety and occupational hygiene at the unit as provided in Clause 1, Article 36 of the Law on Occupational Safety and Hygiene 2015 (if any); Periodically report on occupational accidents according to the provisions of Clause 1, Article 24 of Decree No. 39/2016/ND-CP dated May 15th 2016 (Decree 39).
13. To report annually on occupational safety and health as provided in Article 10 of Circular 07/2016/TT-BLDTBXH dated May 15th 2016
14. To declare the fatal occupational accident or serious injury of 2 or more laborers as stipulated in Clause 1, Article 34 of the Law on Occupational Safety and Hygiene 2015; Article 10 of Decree 39 (if any).
15. To monitor, manage and declare the use of machines, equipments and materials with strict requirements on labor safety in accordance with Articles 30 and 31 of the Law on Occupational Safety and Hygiene, Article 16 of Decree 44/2016/ND-CP dated May 15th 2016 (Decree 44) (if any); Circular 53/2016/TT-BLDTBXH dated December 28th 2016
16. To arrange full-time officials working in occupational safety and health in accordance with Article 36 of Decree 39.
17. To arrange staff to work in the health sector in accordance with Article 37 of Decree 39.
18. To provide material allowances to laborers working under dangerous and harmful conditions (if any) according to the provisions of Article 24 of the Law on Occupational Safety and Hygiene 2015; Circular 25/2013/TT-BLDTBXH dated October 18th 2013
19. To review, classify and organize occupational safety and health training for laborers as stipulated in Article 14 of the Law on Occupational Safety and Health 2015; Article 17 of Decree 44.
20. To organize health examination and treatment of occupational diseases for laborers according to the provisions of Article 21 of the Law on Occupational Safety and Hygiene 2015.
21. To compile the workers’ health records and labor sanitation dossiers according to the provisions of Circular No. 19/2016/TT-BYT dated June 30th 2016
22. To allocate and monitor personal protective devices for laborers according to the provisions of Article 23 of the Law on Occupational Safety and Hygiene 2015; Circular 04/2014/TT-BLDTBXH dated Feruary 12th 2014
23. To develop and implement an annual plan for occupational safety and health; Occupational safety and health regulations of the enterprise for each working area; Safe working methods for each type of work; Control of risk and harmful factors; Risk assessment on occupational safety and health; The plan for handling technical incidents causing serious unsafety and emergency rescue as provided in Articles 15, 18, 76, 77 and 78 of the Law on Occupational Safety and Hygiene 2015.
24. To develop a plan for implementation of the month of action on occupational safety and health in accordance with Circular 02/2017/TT-BLDTBXH dated February 20th, 2017

It is important the company to retain law firm in Vietnam with labour expertise to avoid non compliance and disputes to be arisen.

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How to Establish a Company in DaNang?

Foreign investors may invest in the form of 100% capital to establish a limited liability company, joint stock company, partnership company or other forms in investment in Vietnam.

Foreign investors that invest in Vietnam for the first time must have investment projects and fill in investment registration or examination procedures at state agencies in charge of investment in order to be granted investment registration certificates. Investment certificates shall concurrently be business registration certificates.  Company with 100% foreign capital has founded and operated from the date of issuance of the investment certificate.

A project dossier for Set-up business in Da Nang shall comprise:

• Registration/Request for issuance of Investment Certificate;
• A report on financial capability of the investor;
• Draft of the company’s charter;
• List of members of company;
• Copy of the people’s identity card, passport or other lawful personal certification, for individual members;
• Copy of the establishment decision, business registration certificate or other equivalent document, for member organizations;
• Copies of the authorization document, the people’s identity card, passport or other lawful personal certification, for authorized representatives.
• Copies of the business registration certificates of the foreign member organizations must be authenticated within three months before the date of submission of the business registration dossier by agencies where such organizations are registered;
• Written authorization of the investor in case investor is organization and valid copy of the lawful personal certification of the authorized representative. Documents in foreign languages must be translated into Vietnamese, notarized and legalized;
• The joint-venture contract or Business Cooperation Contract (BCC);
• Other documents required by Vietnam law.

The establishment of a company in Vietnam would take from 30 days.  The extra time might be needed in case the investment area is conditional or the State government needs to examine the investment project.  Minimum capital, special licenses or other conditions might be required in certain investment projects.

The  law  on  investment constantly changes which ANT Lawyers will monitor and provide relevant update

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Foreign travel firms to sound out business opportunities in HCMC

HCMC – Representatives of nearly 300 international travel companies keen on tourism products in HCMC and Vietnam as a whole will join the International Tourism Expo HCMC (ITE HCMC) from September 7 to 9 to sound out business opportunities.

According to the HCMC Department of Tourism, the 300 firms have been chosen from more than 700 tour operators in 40 countries and territories, including key markets of Vietnamese tourism such as the U.S., the UK, France, Italy, Germany, China, Japan, ASEAN and India among others.

Besides finding business opportunities, these firms will participate in programs introducing tourism products of HCMC, the Mekong Delta, Dalat, Ninh Thuan, Phan Thiet and Halong.

The event will be also attended by 40 journalists and professional tourism bloggers from many other countries.

Besides, high-ranking tourism officials will take part in a Tourism Ministerial Meeting involving Cambodia, Laos, Myanmar, Thailand and Vietnam to discuss solutions on tourism cooperation. This meeting is organized within the framework of the Ayeyawady-Chao Phraya-Mekong Economic Cooperation Strategy (ACMECS), which is a political, economic, and cultural organization grouping Thailand, Laos, Vietnam, Cambodia and Myanmar.

Several tourism management and promotion agencies will also meet with enterprises over the development of Meetings, Incentives, Conventions and Exhibitions (MICE) tourism in HCMC, and in other tourism markets such as China and Malaysia.

ITE HCMC is annually held by the HCMC Department of Tourism, the Vietnam National Administration of Tourism, the HCMC government, Vietnam National Trade Fair and Advertising Company (Vinexad), and Informa Exhibitions Co Ltd under the Ministry of Culture, Sports and Tourism.

The event this year will feature 300 booths covering a total area of nearly 7,000 square meters at the Saigon Exhibition and Convention Center (SECC) in District 7, HCMC, up 15% versus last year.

Travel companies and tourism promotion agencies from 18 countries and territories will also join in the expo, which will be opened to the public on September 9.

Source: The Saigon Times

See more: How to Set-up Travel Services Business in Vietnam?

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