My company wants to demote me!

I have been working for a Vietnamese company for about a year under a labor contract with a two-year term. Last week, my boss told me that the company is in financial trouble and that they cannot afford paying me my full salary any longer. Now he wants to assign me a different kind of work within the same company for about 60 percent of my current salary. This is not acceptable to me and I already made this clear to the management of the company. Their reply was that I could either accept the proposal or that I would be fired! What to do? Are my rights protected under Vietnamese law?

The two most important documents stating your rights and obligations as an employee in Vietnam are the recently modified Labor Code and your labor contract. Whereas the Labor Code provides for minimum protection regarding labor standards and the rights and obligations of employers and employees, in your labor contract you should find your rights and obligations in more detail.

The principal right of an employee is the right to be paid a remuneration directly, in full and in a timely manner in accordance with the provisions set out in the labor contract. As the rights of the employee are the obligations of the employer, the latter is required to abide by the terms and conditions on payment of remuneration provided in the labor contract.

Generally speaking, the only way for your employer to change any provision of your labor contract during its term is to reach a new agreement with you. The new terms and conditions could either be effected through an addendum (or amendment) to your current contract or by entering into a new labor contract. Failing to reach an agreement would mean that you and your employer must continue implementing the current labor contract.

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Now what if the company that you work for is indeed facing a situation that objectively makes it difficult for it to keep you at your current position? Below, I will explain two ways in which your employer may unilaterally modify the terms and conditions of your labor contract.

In case of unforeseeable difficulty, for example due to a change in business and production demand, your employer may unilaterally assign you to another position. However, the Labor Code provides that such a repositioning may only last for an accumulated period of 60 days in one year unless the employee agrees to a longer period. Secondly, and this is especially relevant for your situation, when assigning you to another position, your employer may pay you a different salary. If the salary associated with your new position is less than that of your current position, your employer must pay your current salary for the first 30 days of the period of reassignment and after that you will be entitled to a salary amounting to at least 85 percent of your current salary.

Additionally, the Labor Code provides grounds for employers to dismiss their personnel for economic reasons. Such dismissal, however, is subject to several important conditions.

First of all, if for economic reasons the employees of a company are in danger of losing their jobs, then the employer, in cooperation with the representatives of the labor collective, must formulate and implement a “labor usage plan.” Such a plan must, among other things, list those employees who will continue to be employed and those who will retire, as well as those who will be assigned to part-time jobs and those whose labor contract will be terminated. When an employer is unable to offer an employee a suitable job and if the labor usage plan advises the dismissal of that employee for economic reasons, then the employer must pay an allowance to that employee. If that employee has worked for a full 12 months or more, then he or she will be entitled to receive a “normal severance allowance” of half a month’s salary for each year of employment and a “severance allowance for job loss” amounting to one month’s salary for each working year, with a minimum of two months.

Practically speaking, I would advise you to discuss this issue with your employer as soon as possible. Being more confident about your rights under the Vietnamese Labor Code now, you may try to negotiate a compromise, reasonable to both parties. If such negotiations prove unsuccessful, then the Labor Code provides for an official conciliation process before you or your employer may file a petition to a court to ultimately resolve the dispute. Best of luck!

If you have any legal questions you want answered, send them to legal@oivietnam.com.

Bio: A member of the Paris Bar, Hadrien Wolff has been practicing law in Vietnam for six years, currently as a partner of Audier & Partners. He specializes in banking and corporate law, regularly advising major foreign banks and assisting foreign investors in setting up joint venture companies with Vietnamese partners in sensitive sectors such as media, power and natural resources

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1 thought on “My company wants to demote me!”

  1. The advice was professionally prepared addressing all and every details that a client needs to know. it really was an excellent advice. However, I still want to add one point at the end of the advice which relates to the solution to/ recommendation for this situation.

    I agree that the client should discuss this issue with the employer and try to negotiate a compromise, reasonable to both parties. The negotiations may prove unsuccessful. However, as long as the employee is still working and the employer is still paying employee fully as agreed in the labor contract, dispute does not happen yet. Dispute only happens when the employer fires the employee against the employee’s agreement. That will be the time for the employee to start the dispute settlement process.

    Anyway, I just want to contribute my knowledge and really appreciate the legal advice prepared by Mr. Hadrien Wolff.

    Thank you for your time.

    Reply

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