An employment contract is a crucial legal shield. However, many foreign workers (including experts and English teachers) and even Vietnamese citizens are signing agreements with unfavorable terms. The consequences? Slashed salaries and overlooked insurance obligations. These are critical errors in employment contracts, disguised as the five “red flags” this article will analyze.
Read the following precautions for signing an employment contract carefully to protect your interests before it is too late.
Red Flag #1: Vague Salary Clauses
One of the most prevalent contract errors is vague salary documentation. Many contracts only mention a “basic salary” without specifying the total actual income, which includes allowances, bonuses, and insurance. More dangerously, some enterprises intentionally state a lower salary than the amount actually paid to reduce their social insurance contribution obligations.
Under Article 21 of the 2019 Labor Code, the contract must fully detail the salary, allowances, and other supplementary payments. If only an ambiguous figure is recorded, the employee will be at a disadvantage when calculating severance pay, unemployment insurance, or maternity benefits. The insurance agency will base its calculations only on the figure officially stated in the contract—which is often the lower amount.
How to protect yourself: Always demand the contract clearly differentiate between “gross salary” (total income) and “net salary” (take-home pay). Furthermore, add an appendix (phụ lục) that itemizes every single component. If the company refuses, reconsider signing.
Red Flag #2: Unreasonable Contract Durations
Many employees find themselves at a disadvantage due to inappropriate contract durations. Some teachers or experts are only given 3–6 month contracts, even when the job is clearly long-term. Conversely, others are pressured into signing long-term contracts that lack clauses permitting early termination.
Under Article 20 of the 2019 Labor Code, only two types of employment contracts exist:
- Definite-term contracts (up to a maximum of 36 months).
- Indefinite-term contracts.
If the contract is too short, the employee faces constant renewals and is vulnerable to pressure for salary reductions or unfavorable changes. If the contract is too long and lacks clear provisions for unilateral termination, you can be “shackled” to a low salary or an unsuitable work environment.
Many employees find themselves at a disadvantage due to inappropriate contract durations. Some teachers or experts are only given 3–6 month contracts, even when the job is clearly long-term. Conversely, others are pressured into signing long-term contracts that lack clauses permitting early termination.
Under Article 20 of the 2019 Labor Code, only two types of employment contracts exist:
- Definite-term contracts (up to a maximum of 36 months).
- Indefinite-term contracts.
If the contract is too short, the employee faces constant renewals and is vulnerable to pressure for salary reductions or unfavorable changes. If the contract is too long and lacks clear provisions for unilateral termination, you can be “shackled” to a low salary or an unsuitable work environment.
The safe solution: Insist the contract specifies the right to unilateral termination as stipulated by law—requiring 30 days’ notice (for definite-term contracts) or 45 days’ notice (for indefinite-term contracts). For stable roles like teaching or management, a 12-month minimum contract is advisable for legal stability.
Red Flag #3: Irrational Penalty and Compensation Clauses
Another common “trap” involves unreasonable penalty and compensation clauses. Many contracts vaguely state that the employee will be “fined” for early resignation or internal rule violations, but fail to specify clear limits. Worse, some companies attempt to force employees to compensate for the entire cost of training, flights, or even housing.
This is completely against the law. Under Article 127 of the 2019 Labor Code, employers are not permitted to financially penalize (fine) employees. They may only request compensation for actual, proven damages. Imposing “arbitrary” fines is not only unjust but may also be deemed invalid (vô hiệu) in a dispute.
How to avoid this: Only accept compensation clauses that have clear limitations (e.g., “capped at one month’s salary”). Demand a specific itemization of training costs, supported by invoices or receipts (hóa đơn, chứng từ). If a clause seems highly unfavorable, firmly request its removal or amendment.
Red Flag #4: Bypassed Insurance Obligations
A very frequent contract error is the employer evading their mandatory insurance obligations. Some companies sign “service contracts” (hợp đồng dịch vụ) instead of employment contracts, or state that the “salary is inclusive of insurance,” while in reality, they contribute nothing for the employee.
This directly contravenes the 2024 Law on Social Insurance: all employment contracts lasting one (1) month or longer require mandatory participation in social insurance (SI), health insurance (HI), and unemployment insurance (UI). If the company evades this, the employee forfeits benefits related to illness, maternity leave, or work-related accidents, and must bear all medical costs personally.
The solution: Only sign a legally compliant employment contract. Do not accept a “disguised service contract” (hợp đồng dịch vụ trá hình) if the work is regular and ongoing. Crucially, demand the contract explicitly state the salary base used for calculating insurance contributions to prevent future disputes.
Red Flag #5: Unfavorable Dispute Resolution Clauses
The dispute resolution clause is another point many people overlook, yet it is critically important. Some contracts stipulate that disputes must be resolved in a foreign court or apply foreign law. Other contracts might simply state “to be resolved by mutual negotiation,” without specifying a recourse if negotiations fail.
If you accept such unfavorable terms, the cost of litigation abroad can far exceed your financial capacity, essentially meaning a complete forfeiture of your rights (mất trắng quyền lợi).
Advice: Demand that the dispute resolution clause applies Vietnamese law, and that the resolving body is a domestic Court or Labor Arbitration center. If the company refuses, weigh this risk very carefully before signing.
The employment contract is the most important legal foundation protecting your rights while working in Vietnam. The five “red flags” we have just analyzed—from vague salaries, unreasonable durations, irrational penalties, evaded insurance, to unfavorable dispute resolution—can all cause you to lose money unfairly and expose you to significant legal risks.
Signing a contract without fully understanding the potential risks of its terms can lead to unnecessary financial and legal damages. Remember: Do not sign until you are certain.
If the content of this article is unclear, or if you require further consultation or information about our support services, please connect to the Quang Huy Law Firm online legal consultation hotline at HOTLINE +84-678910-86 or +84-1900-6671 for direct assistance.
