Points to Consider When Drafting Employment Contracts in the Recent Business Environment
2025/06/30
- Le Que Ngan
Introduction
In recent years, the business environment has undergone significant changes due to the spread of digital transformation, new work styles, and increasing information security requirements. In such circumstances, employers are required to periodically review the contents of employment contracts with workers in compliance with laws and regulations, ensuring that their company’s interests are not compromised. This article outlines the key points that employers should consider when reviewing employment contracts.
1. Trends in New Work Styles and Their Impact on Employment Contracts
Due to advancements in technology and changes in workers’ awareness, the traditional way of working in offices is gradually shifting to a more flexible style. Among these, two working styles that are attracting attention are remote work (or hybrid work) and freelancing. Each of these has its own unique characteristics, and in order to ensure legal clarity and practical operational feasibility, the employment contracts concluded must be designed and adjusted accordingly.
1.1. Remote Work
Under current law, the term “remote work” itself is not clearly defined, but it generally refers to a style of working in which an employee performs duties based on their labor contract entirely or on specific days at locations outside the workplace managed by the employer, such as the employee’s home. Especially in the current situation after the COVID-19 pandemic, full remote work or a combination of remote work and coming into the office is spreading throughout society.
Even in such working styles, the employment relationship remains valid, and as an employer, there are points to keep in mind when drafting the employment contract to ensure transparency in management and smooth business operations.
Clarification of the work location:
The range of locations eligible for remote work must be clearly specified in the employment contract. For example, besides specifying concrete locations such as the worker’s home, it is also possible to explicitly state that the work location can be flexibly changed if prior notice is given and the employer consents. Moreover, if work rules or internal regulations regarding “remote work” are already established within the company, it is also possible to handle this by referring to those contents in the employment contract.
By clearly specifying the work location, it is possible to prevent tasks from being performed in places with high information security risks, such as public spaces. Furthermore, in the event of an accident during working hours, clarifying the place of work is an important factor in determining whether it is recognized as a work-related accident.
Review of wages and allowances:
Based on Article 95, Paragraph 1 of the Labor Law, employers are required to pay wages to workers according to the agreed wages, labor productivity, and business results. However, in practice, each employer pays wages based on the wage regulations established by their own company. Therefore, when workers transition to “remote work,” while commuting costs are reduced, new costs such as internet fees, electricity bills, and equipment expenses at home may arise. In light of these circumstances, it is advisable to review wages and various regulations.
Furthermore, since wages are one of the mandatory items to be stated in the employment contract, if the employer wishes to change the wages, they must obtain the worker’s consent, and unilateral changes are not permitted.
Labor Time Management:
For workers who work in hourly increments, even when flexible working arrangements are implemented, it is necessary to clearly specify the regular working hours and break times in the employment contract, ensuring that workers are fully aware of their responsibilities and obligations regarding their working hours. Additionally, it is desirable for employers to introduce online time attendance management systems and performance management tools to properly monitor and manage working hours and to clarify the basis for wage calculations.
1.2. Freelance
Under current law, the working style known as “freelance” is not clearly defined, but generally refers to an independent mode of working that is free from time and geographical constraints and receives compensation based on deliverables.
In practice, many employers do not conclude labor contracts with freelancers but often adopt forms such as “business consignment contracts,” “contract for work,” or “service agreements.” However, if the content of the contract includes provisions regarding the payment of remuneration, the nature of wages, or the management, direction, and supervision of work by one party, it may be considered a labor contract in substance regardless of the contract’s title. In such cases, there is a risk that the employer may face additional social insurance premium charges, administrative sanctions, and even responsibilities under labor laws such as the obligation to conclude a labor contract, the obligation to enroll in social insurance, and the obligation to pay retirement benefits, so sufficient caution is required.
2. Electronic Labor Contracts
According to Article 14, Paragraph 1 of the Labor Law, labor contracts can be concluded through electronic means in the form of data messages, and are defined to have the same legal effect as written contracts.
Therefore, as long as electronic labor contracts are properly created and concluded in accordance with legal regulations, they hold the same legal validity as written contracts. With the acceleration of digital transformation and advancements in technology in recent years, the adoption of electronic contracts is expected to increase further and is becoming an irreversible trend. By introducing electronic labor contracts, it is possible to reduce the time and costs involved in contract conclusion and storage (such as printing and storage costs), improve the convenience of centralized management and searchability within internal systems, and facilitate remote signing in remote work environments.
However, in order to actually operate electronic labor contracts as legally effective, it is necessary to comply with laws and regulations related to electronic transactions. In particular, when using electronic signatures (tokens), it is required to use electronic signatures based on certificates issued by an electronic signature certification service provider.
3. Clauses on the Protection of Trade Secrets, Technical Secrets, and Personal Information
Clauses on the Protection of Trade Secrets and Technical Secrets
With the widespread use of online work environments and AI technology, information security has become a critical issue directly linked to the survival of companies. In particular, in fields such as consulting, IT, finance, and the creative industry, the leakage of strategic information, customer data, partner information, and intellectual property can cause significant damage to companies.
Based on this background, it is advisable to include provisions in the employment contract that clearly state the contents of confidentiality, the duration, and the response in case of violations for workers involved with trade secrets and technical secrets. These provisions can be stipulated as a clause within the employment contract, attached as an annexed document, or alternatively, a separate individual contract can be concluded with the worker.
In practice, many employers adopt the method of separately concluding an independent agreement with workers called a “Confidentiality Agreement” (known in English as a “Non-Disclosure Agreement” or “NDA”).
By stipulating confidentiality obligations within the employment contract, the paperwork burden can be reduced; however, there is a risk that the effectiveness of such obligations will cease upon termination of the employment contract. In contrast, if an NDA is concluded as a separate contract from the labor contract, it is possible to continue the obligation of confidentiality for a certain period even after retirement.
Personal Information Protection Clause
Employees are obligated to provide personal information such as their name, date of birth, gender, address, educational background, and health status to the employer at the start of the employment relationship or during the employment period.
In recent years, the importance of personal information protection has been increasing in Vietnam, and this stance is reflected in related laws such as Decree No. 13/2023/ND-CP on personal information protection, the draft Personal Information Protection Law currently being prepared, and the Cybersecurity Law.
Therefore, when employers handle employees’ personal information (collection, storage, processing, etc.) in the conclusion or execution of employment contracts, it is necessary to properly fulfill obligations based on related laws. Specifically, prior to processing personal information, it is required to conclude a “Consent Form for Personal Information Processing” with the employee to obtain their consent, clearly specifying the information to be processed and the purpose of processing within it. This consent form can be stipulated as a clause in the employment contract or as an attached document (appendix), or it can also be concluded separately as an individual contract with the employee.
By taking such measures, it is possible to thoroughly ensure compliance with related laws and regulations, minimize legal risks, and promote transparency and the protection of workers’ rights.
Conclusion
In order to accommodate the spread of new working styles such as remote work and freelancing, as well as the widespread use of electronic contracts, it is important to review the contents of labor contracts to reflect the current situation. At the same time, it is necessary to strengthen provisions related to information security and personal data protection, and to take measures against various risks in the digital age. These efforts not only ensure strict compliance with laws and regulations but can also serve as a foundation that supports the enhancement of corporate credibility and sustainable growth.
References:
– Labor Law 2019
– Electronic Transactions Act of 2023
– Government Decree No. 13/2023/ND-CP
*This article was translated by Yarakuzen.
