preservation of leave for Vietnamese employees, preservation of leave in Vietnam, preservation of leave, preserve the leaves, paying for unused leave days,

Preservation of leave for Vietnamese employees

Normally, at most businesses, for reasons of facilitating employees as well as settlement procedures, employees are often entitled to reserve their leave days until the end of the first quarter of the following year, equivalent to the end of March. However, is this a mandatory condition under the provisions of the Labor Code 2019? There are many cases where enterprises do not allow to reserve leave days or do not pay employees for unused leave days, is it a violation of labor law?

According to the provisions of Article 113 of the Labor Code 2019, an employee who has worked for a full 12 months for an employer is entitled to annual leave with full salary according to the labor contract as follows:

+ 12 working days for people doing work in normal conditions;

+ 14 working days for minor employees, disabled employees, people doing heavy, hazardous and dangerous jobs;

+ 16 working days for people doing particularly heavy, hazardous or dangerous occupations or jobs.

For every full 05 years working for an employer, the number of annual leave days of the employee shall be increased by 01 day.

For employees who have worked for less than 12 months for an employer, the number of annual leave days shall be calculated in proportion to the number of working months.

Article 66 of Decree No. 145/2020/ND-CP stipulates how to calculate the number of annual leave days of employees by taking the number of annual leave days plus the number of additional days off according to seniority (if any), dividing by 12 months, multiply by the actual number of working months in the year to calculate the number of annual leave days.

The exact calculation depends on the labor rules of each enterprise, however, usually, according to the correct understanding, in a working year, only after the end of the working month will the employee be entitled to a leave of absence for that month.

That is, for the leave day of January, the employee will only have the right to enjoy that leave when entering the first day of February. Accordingly, if calculated according to regulations, in January, the employees in many businesses will not have the right to take leave.

However, according to Clause 2, Article 66 of Decree No. 145/2020/ND-CP, in case the employee has not worked for a full month, if the total number of working days and paid leave days of the employee (holidays, Tet holidays, annual leave, personal leave with pay) account for 50% of the normal working days in the month as agreed, then that month is counted as 01 working month to calculate the annual leave.

For example, for an employee with 22 working days in a month, when 11 working days have passed including paid leave (if any), then the employee has the right to take that month’s leave.

However, leave is inherently a unique mechanism. Although the employee has the right to take time off, the employee will not be entitled to leave if the employer does not allow it for a reasonable reason such as the company is in a stressful period, and in need of human resources.

In addition, despite taking leave, employees in some specific positions will still have to ensure that the work is completed, on duty, and ready to answer the company’s requests when necessary. In Vietnam, there are few cases where leave actually allows the employee to ‘leave’ completely, no longer having any problems or connections with work.

On the contrary, in case an employee has the right to take 4 days off until the end of April, but want to take 10 days off for personal reasons, they can ask the employer’s permission to facilitate conditions for them to take premature leaves.

Accordingly, the actual leave and annual leave mechanisms of employees will depend more on the internal labor regulations than the labor code, along with the actual status of employees and employers at the time of requesting leave.

Mechanism of collective leave

For some enterprises in Vietnam, the employee’s leave will be divided into two types: individual leave decided by the employee, and collective leave decided by the enterprise.

An example of a collective leave is when a manufacturing company has a low volume of customers, resulting in less work, they will give employees annual leave for that period to reduce the fees payable (Salary may remain the same, but the fees for cleaning, meals, vehicles, etc. will be reduced). In addition to direct costs, businesses also benefit when they count that period as annual leave and in the remaining working period of the year, employees will be forced to take less personal leave.

The collective leave, if done in accordance with the notice issued in consultation with the employee and notified in advance to the employee, will not be considered a violation of the law, except in the case of excessive abuse, for example, in 12 days of leave, there are 6 days of collective leave.

Preserve the leaves

With regard to the mechanism of reserving leave for the next year, currently, most Vietnamese enterprises allow employees to reserve their leave until March of the next year.

Accordingly, for employees with 12 days of leave, by March next year, they will have 12 days of leave along with 3 days of leave in the first 3 months equivalent to 15 days of leave.

However, as analyzed above, the employee can agree with the employer on the provision of leave in advance, so in a better scenario, the employee can even take 24 days of leave during this period, which is usually the time of the Vietnamese Lunar holidays.

However, it should be noted that excessive leave can hardly be applied to any employee, regardless of their high or low position at the company.

A high position means a higher amount of work and responsibility for the business, through which it will be difficult for them to take a lot of time off and will always have to be available when the company needs it. Low positions do not have great responsibilities but also because of the low position, the employees will have less weight on the business to negotiate for such a large leave.

This multi-day leave may constitute compounded leave, which is expressly provided for in the Labor Code (combining annual leave).

Specifically, Clause 4, Article 113 of the Labor Code 2019 stipulates that an employee can agree with the employer to take annual leave in instalments or combine annual leave of up to 3 years at a time.

As analyzed above, compound leave is difficult to apply in practice. In addition, even though it is stipulated that it is a maximum of 3 years, if the employee can agree with the employer, they can have more than one compound leave in the same time period.

Thereby, after 1 year or 3 years of working, they can apply for a compound leave of 12 or 36 days at a time, or a certain number of leave days corresponding to their remaining leave or advance.

Although this is somewhat contrary to the provisions of the law (the regulation on compound leave is not completely clear, there are many different interpretations), due to the nature of the case, which is beneficial to the employee and somewhat unfavorable to the employer, depending on the management and business orientation of the employer, mutually beneficial agreements or agreements with more benefits for employees are always encouraged.

This is because the essence of the Labor Code is to protect the interests of employees – the party is always the weaker side in the labor relationship than the employer.

The issue of paying for unused leave days

Clause 3, Article 113 of the Labor Code 2019 stipulates that in case of severance, or job loss without taking annual leave or not taking all annual leave days, the employee will be paid by the employer for unused leave days.

This regulation significantly changes the salary payment mechanism for unused leave days because the Labor Code 2012 stipulates that employees will be paid wages for leave according to the above two cases or due to other reasons resulting in them not yet using up all the number of leave days.

The latter term has been deleted in the Labor Code 2019. Accordingly, now, only in case an employee is laid off or loses his/her job, will the employee be paid wages for the remaining number of leave days.

If the employees still work normally at the enterprise, when the year of calculating the number of leave days in December or March ends, they will not be paid money for the remaining leave days.

This regulation was created for employees to preserve their own health, not to try to work, regardless of health status to be paid year-end leave.

In addition, as mentioned above, the Labor Code 2019 was only created to protect the interests of the parties in the labor relationship, especially for the group of employees. Thereby, if the employer still wants to pay wages for unused leave days, it is completely legal and is encouraged to apply.

ASL LAW is the top-tier Vietnam law firm for Employment and Labor Law. If you need any advice, please contact us for further information or collaboration.


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