INSIGHTS

Q&A Labor Law: Transferring the Employee to another job with a lower salary

September 25, 2018 Labor & Employment

Q :The company has an employee who is considered to be ineffective and the company wishes to transfer this employee to another job in another department. According to the job description and salary after transferred, the employee is transferred to a job with a lower salary. The company and the employee have agreed to the terms of changes with each other. What additional procedures does the company need to do to prove that the employee consents to this agreement, as in many cases, labor inspectors will be able to argue that the employee was compelled by the company to accept a position at a lower salary?
In addition, the company would like to place the employee in a probationary period for the new position for a period of two months and the employee has agreed. Is the company in compliance with the law? After the probationary period expires, what actions should the company take between the below options:
(1) The employee applies to terminate his current labor contract and then apply for a new recruitment vacancy? Or
(2) Amending his existing labor contract by making appendix for changes in job description and salary?

A:

1.“Probation” applies only if the employee has not signed a labor contract with the company before; the maximum term for a probationary period is only 60 days (Article 27, the 2012 Labor Code).

2.Under a company-employee labor contract, when the employee and the company agree to allow the employee to do another job in another department, it may be considered a temporary assignment. As such, the employee will perform a job which is not stated in the labor contract due to business and production needs as prescribed in Article 31 of the 2012 Labor Code. It is noteworthy that the company must specify in its internal regulations the criteria that would allow, due to business and production needs, the company to temporarily assign an employee to perform a job which is not stated in the labor contract (Article 8, Decree No.05/2015/ND-CP).

3.Should the company wish to alter the jobs and/or salary for an employee, it is advisable that the company should create an appendix amending the current labor contract (Article 35, the 2012 Labor Code) instead of terminating the current labor contract and entering into a new labor contract (although it is possible for the company to apply either of these two options, and in both cases there must be a consent from the employee). The option of signing an appendix amending the contents of the labor contract will help to limit issues such as providing notification for increase or decrease of labor (if any), payment of salary and allowance, payment of severance allowance (if any) and so on.

It is worth noting that in the event the company chooses to terminate the current labor contract and sign a new labor contract, the company still has to comply with the regulations on the number of times for the signing of definite-term labor contracts. For example, if currently the company has twice entered into a definite-term labor contract with the employee, upon signing a new labor contract for a new job position, the company is required to sign an indefinite-term labor contract.

4.If the State inspectorate agency conducts an inspection and concludes that the company has coerced the employee, the inspectorate agency must produce evidence and legal grounds to prove their claim. Otherwise, if the inspectorate agency does not have enough evidence and legal grounds to prove such claims, they are deemed baseless or unconfirmed allegations, and the company shall have the right to protest and make a complaint or file a lawsuit. The reason behind this is that, as mentioned above, regardless of which one of the two options the company chooses to apply, there must be the consent from the employee. Therefore, the company should keep all agreements signed with employees and, where necessary, invite representatives from the grassroot trade unions to attend meetings and witness the signing of the agreements between the company and the employee.

– Written by LE & TRAN | Vietnam’s Premier Business Litigation Firm


This insight is quoted from the Vietnam Labor Law Review (August – September 2018), you can download and read the full file on PDF file at here.