Challenges and Key Considerations of Digital Transformation in Corporate Human Resource Management
2026/03/19
- Tran Ha My
Introduction
With the advancement of the Fourth Industrial Revolution, digital transformation (DX) in human resource management has become an essential element of corporate governance for Vietnamese enterprises. While DX offers benefits such as improved efficiency and cost reduction, it also gives rise to numerous legal challenges. In particular, regulations concerning labor management, personal data protection, and information security are being rapidly developed. This article analyzes the key regulations that companies should be aware of and clarifies the challenges associated with the introduction of DX in HR management.
1. Challenges of DX
1.1 Obligation to Register and Update Labor Information
The Employment Law of 2025, which will come into effect on January 1, 2026, introduces new provisions requiring employers to register, update, and amend labor information on the national database system. Going forward, information on both employees and employers will be managed through electronic platforms operated by government authorities. Employees are required to provide their information at the request of employers, while employers are authorized to utilize employee-related information stored in the database.
From July 1, 2026, companies will be required to fulfill their obligations to register and update labor information for employees subject to compulsory social insurance. In practice, this is expected to create significant challenges in terms of collecting, managing, and updating HR data, as well as ensuring compliance with relevant laws and regulations.
1.2 Electronic Labor Contracts
labor contracts (“eContracts”) are labor contracts concluded in electronic form and have the same legal validity as written contracts. Although not mandatory, their use is encouraged as a substitute for paper-based contracts to improve the efficiency of HR management processes in both companies and administrative bodies.
The legal validity of eContracts has already been recognized under the Labor Code of 2019 and the Law on Electronic Transactions of 2023. To further enhance practical applicability, the government promulgated Decree No. 337/2025/ND-CP, effective January 1, 2026, which supplements the legal framework governing the conclusion, performance, and management of eContracts. The main points are as follows:
(1) In addition to employers and employees, eContract service providers are responsible for creating, storing, and authenticating electronic information, although they do not participate in the contract content itself.
(2) Each eContract, or contract converted from a written format into an eContract, is assigned a unique identification number. These contracts are registered on the national electronic labor contract platform, facilitating state labor management and enabling integration with related information systems.
(3) Unless otherwise agreed by the parties, an eContract becomes effective at the time of the electronic signature of the final signatory. The effectiveness is further confirmed by the timestamp attached to each party’s electronic signature and the authentication of electronic information by the service provider. This provision is particularly significant for determining the rights and obligations of the parties and for handling labor-related disputes.
1.3. Responsibility for the Protection of Employees’ Personal Data
With the implementation of the systems described in Sections 1.1 and 1.2, the collection, updating, storage, and use of employees’ personal data in electronic environments will increase significantly. As data is centrally managed across multiple digital systems, the risks of data breaches, unauthorized access, and improper use of personal information will also rise. Therefore, strict compliance with personal data protection regulations is required in HR-related DX initiatives. Under the Personal Data Protection Law, effective January 1, 2026, companies are obligated to collect and process personal data within lawful scope and purposes, and to implement appropriate management measures to prevent risks of infringement. Furthermore, companies must establish clear internal processes regarding access rights, storage, protection, and processing of personal data, while also raising employees’ awareness of their rights and obligations related to personal data protection. These measures not only ensure legal compliance but also contribute to safeguarding employees’ legitimate rights and enhancing corporate credibility and reputation.
2. Key Challenges and Considerations for Companies
While systems such as labor registration and eContracts provide benefits to both companies and administrative authorities, companies may face the following challenges:
(1) Burden of Digitalizing HR Information Management
In practice, many companies still manage HR information on paper or across multiple fragmented systems. Transitioning to a digital HR management system and updating information in accordance with new regulations is not an easy task and requires significant time, financial resources, and human capital.
(2) Increased Risks Related to Personal Data Protection
Centralizing all information within a single database increases the responsibility for protecting employees’ personal data. If companies fail to establish sufficient and effective data protection systems and processes, risks such as data breaches and improper handling may arise, leading to legal liabilities and reputational damage.
(3) Difficulty in Ensuring Legal Compliance
As employee information is registered, updated, and interconnected within government-managed electronic systems, transparency is significantly enhanced, allowing for continuous monitoring and audits. As a result, errors or inconsistencies in information are more easily detected and addressed, requiring companies to ensure full and consistent compliance with labor, social insurance, and personal data protection laws.
To address these challenges, companies should secure the necessary financial and human resources for implementing HR management systems and establish robust internal processes for managing and protecting personal data. In addition, strict compliance with labor laws, social insurance laws, and personal data protection laws is essential to mitigate legal risks.
Conclusion
DX in human resource management will become increasingly indispensable for improving operational efficiency and ensuring legal compliance within companies. At the same time, it brings challenges such as increased transparency of employee data, higher management costs, data centralization, and personal data protection concerns. Therefore, to promote effective and sustainable DX, companies must secure the necessary financial and human resources, develop appropriate systems, and establish well-structured management processes.
References
・Decree No. 13/2023/ND-CP
・Decree No. 318/2025/ND-CP
・Decree No. 337/2025/ND-CP
・Personal Data Protection Law (2025)
・Employment Law (2025)
