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Probation under the New Regulations and Matter to Take into Consideration

“The Labor Code 2019 was issued and officially took effect on 01 January 2021. It has been a while since enterprises started to apply the new law and have noticed that some regulations are stated clearly and favorable for labor management. In particular, the regulation on probation is much different than the old law in the direction of actual conformity based on the needs of companies. The following analyses will further clarify the said difference.“

  1. It is possible to agree and write the contents of the probation in the labor contract

According to the new regulation, the involved parties (employee and employer) can choose to regulate the probationary contents either in labor contract or the probation agreement. If the probationary content is written in the labor contract, all the terms to adjust the probationary relationship, including conditions for the parties to perform and terminate the probationary relationship must also be stipulated in the labor contract, which should be noted by the employer.

  1. Probation is not applied to employees working under labor contracts with a duration of less than 01 month.

This is a new regulation in the Labour Code 2019 for employees working under labor contracts with a term of less than 01 month. This content has not been mentioned in Labour Code 2012, because there are differences between the old and new labor codes in terms of the structure of all types of labor contracts, and the nature of the work which leads to different probation periods. At Labour Code 2019, the form of part-time labor has been removed and the probation period is not allowed to apply for the labor contracts with a duration of less than 01 month. While Labour Code 2012 stipulated the part-time labour contract as one type of labour contract with under 12 months term and the probation period was not allowed to apply for this contract.

  1. The Probation period can last up to 180 days.

The probation period agreed upon by the two parties shall be based on the nature and complexity of the job position but there is only one probation period for each job position and must ensure that it is “not exceeding 180 days for the work of the enterprise manager in accordance with the Law on Enterprises, law on management and use of state capital invested in production and business in enterprises”. This is a new regulation added in labour code 2019, which really relieves the difficulties of companies as employers. In fact, managers of a company such as General Director and Director are positions that have a great influence on the development of the company. They play a role in making the business plans of the company. Thus, it must take a long time to be able to assess the capacity and cultural conformity of the management position for the company.

With the old regulations, the maximum probation period was only 60 days including the manager position. In practice, this period is quite short and only enough for the employee to familiarize himself with the position. There was no basis to accurately determine the capacity of the manager, or in other words, because of the short time, the business could not determine the efficiency and the profit that the company achieves based on the management of this employee. The inadequateness of the old law has led to this situation. After a short period of contract performance, the company realizes that the manager has not met the needs of position and falls into the dilemma of accepting a violation of regulations to terminate the labor contract or maintaining the labor relationship between the two parties in a stressful situation, which may be the reason for labor disputes that may arise.

  1. Matter to take into consideration

With the changes on probation in the Labour Code 2019, company needs to rebuild the probation agreements, labor contracts that include the content of the probation, which is the basis for directly adjusting the relationship between the company and the employee. With the probation contents in general and the one for the manager position in particular, the documents (probation agreement/ labour contract) need to record in detail the scope of work or, more precisely, describe the work to be done and develop criteria to evaluate the results of the work; especially for the management position. This is the basis for determining whether the “probation” is meeting the requirements or not. Article 27 of the 2019 Labour Code provides for this assessment as follows:

“Article 27. Probation period

The probation period must be based on the nature and complexity of the job but probation is applied only once for each job and assures the following conditions:

  1. It does not exceed 60 days for posts which require professional and technical qualification of collegial or higher level.
  2. It does not exceed 30 days for posts which require professional and technical qualifications of intermediate vocational level, professional secondary level, or for technical workers and skilled employees.
  3. It does not exceed 6 working days for other types of jobs.”

However, the above provisions are only general and do not clearly indicate that the criteria or level cannot be met. Therefore, it is necessary for the company to build evaluation criteria for each job position which serves as a basis for determining whether the employee meets the requirements during the probationary period. Based on that evaluation, it is decided whether to proceed with signing a labor contract or not. The clear regulations also help businesses save time and money when participating in dispute resolution.