ARE THE EMPLOYEE’S RIGHTS GUARANTEED WHEN THE LABOR CONTRACT IS INVALID?

In practice, labor relationships are not always legal and healthy. There are many cases where employees are forced to enter into contracts, even when the employer, based on their position to makes inappropriate commitments, violating the rules as prescribed by law. Employees are always the weaker party and sometimes they do not realize, do not know that these acts are violations and lead to their contracts being invalid in fact. In that case, what provisions will protect employees from risks?

Invalid labor contract

There are many reasons in which the labor contract is invalid, the labor contract will be wholly invalid in the cases specified in Article 49.1 of the Labor Code 2019: (i) The entire contents of the labor contract breach the law (ii) A person entering into the labor contract lacked authority or breached the principles of voluntary commitment, equality, goodwill, co-operation and honesty (iii) The job in the labor contract is work prohibited by law. In addition to the cases that make the labor contract wholly invalid, the labor contracts will be considered partially invalid under Article 49.2 of the Labor Code 2019 when the contents of a part of the contract are illegal without affecting the residual contents of the contract.

According to Article 401.1 of Civil Procedure Code 2015, the following objects have the right to petition the competent Court to declare a labor contract invalid (i) employee (ii) employer (iii) organization acting as the representative of a labor collective (iv) competent State agency.

When the labor contract is declared to be invalid by the Court, the employee is often confused with thinking that similar to ordinary civil transactions, the invalidation of the contract will lead to the parties to restore the original state, complete return what was received. In addition, working time also directly affects other benefits such as retrenchment allowance, unemployment benefit, etc. However, in the labor relationship, the performance of this contract by employees can not be "refunded" but must be replaced by other forms to guarantee their rights. So the question is, how will employees protect their rights in this case?

Dealing with a labor contract which is declared wholly invalid

According to Article 51.2 of the Labor Code 2019 and Articles 10, 11 of the Decree No. 145/2020/ND-CP dated December 14, 2020, detailing and guiding the implementation of several articles of the Labor Code on working conditions and labor relations, dealing of a wholly invalid labor contract is as follows:

The contract is wholly invalid, resulting in the parties in the labor relationship having to re-sign the labor contract (in case of wholly invalid due to an unauthorized signatory or breach of the principles on entering into labor contracts) or sign a new labor contract (in case of wholly invalid because its contents are in breach of law or the job or work under the labor contract is prohibited by law) that correctly complies with labor law.

To ensure the rights of employees from the beginning of work under an invalid labor contract until the signing of the new contract, the Labor Code 2019 has also resolved two main issues for employees.

The first issue on the benefits agreed in the invalid labor contract, whereby (i) If the rights and interests of each party to the labor contract are not less than those prescribed by law and/or the currently applicable collective labor agreement, then such rights, obligations, and interests of the employee are implemented following the contents of the invalid labor contract (ii) If the amount of the wage in the labor contract declared invalid is lower than that prescribed by the law on labor and/or the currently applicable collective labor agreement, the two parties must reach an agreement on a wage level that complies with the law. At the same time, the employer is responsible for determining the difference between the re-agreed wage and the wage under the labor contract declared invalid to refund the employee in proportion to the actual working time under the labor contract declared invalid.

The second issue on the working time calculation to implement the regimes for employees: the time that the employee has worked under the labor contract declared invalid is still recognized and used as a basis for implementing the regimes for employees.

Dealing with a labor contract which is declared partially invalid

For a partially invalid contract, the employer and the employee only need to amend and supplement the part of the contract declared invalid to be consistent with the collective labor agreement and the law. The rights, obligations, and interests of the two parties from the beginning of work under the labor contract declared partially invalid until the contract is amended or supplemented will be settled according to the applicable collective labor agreement. Where the collective labor agreement is not available, the provisions of law shall apply. If the amount of the wage in the labor contract declared invalid is lower than that prescribed by the law on labor and/or the applicable collective labor agreement, the two parties must reach an agreement on a wage level that complies with the law. At the same time, the employer is responsible for determining the difference between the re-agreed wage and the wage under the labor contract declared invalid to refund the employee in proportion to the actual working time under the labor contract declared invalid.

In case the parties do not agree to amend and supplement the contents declared invalid, the labor contract shall be terminated. Rights, obligations, and interests of both parties from the beginning of work under the labor contract declared partially invalid until the termination of the labor contract are implemented similarly as above. Employers must settle retrenchment allowances for employees.

Therefore, employees can rest assured because even if the two parties do not agree to amend, re-sign or enter into a new contract leading to the termination of the labor relationship, the employee's rights will still be resolved reasonably, including settlement of retrenchment allowances for employees.

In general, the current regulations are protecting employees pretty well. It is clear that their rights are still being performed by the employer regardless of the invalidity of the labor contract. The above also makes employees feel more secure and proactive when participating in labor relations.

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