VIETNAM Law and Practice Contributed by: Minh Duong, Phong Nguyen and Justin Gisz, Asia Counsel Vietnam Law Company Limited
Pensions Pension benefits are not part of employer-paid com - pensation. Instead, employees and employers are obliged to make respective contributions to the State- run pension scheme calculated based on the employ - ees’ salary, which then provides the employees with pension benefits upon retirement. Compensation in Acquisitions and Investments The Labour Code does not have separate regula - tions on employee compensation in the context of acquisitions, changes of control or other investment transactions. In such situations, existing compensa - tion arrangements typically remain in effect, unless otherwise agreed upon during the deal negotiations. 10.3 Employment Protection Impact on Employees in Acquisitions and Investments When an acquisition, change of control or similar investment transaction significantly affects many employees (eg, potential redundancies), the employer has the following obligations under the Labour Code. • Prepare a labour usage plan outlining the employ - er’s proposed changes to employment arrange - ments, including potential redundancies, transfers or changes in working conditions. • Consult with employees or trade unions – employ - ers must discuss the plan with the relevant trade union or, in its absence, directly with the affected employees. This consultation allows for feedback and potential adjustments to the plan. • Inform employees and authorities – the approved plan must be communicated to employees and, in some cases, to the provincial People’s Committee. However, this procedure only applies to specific types of transactions as defined by the Labour Code, includ - ing: • restructuring or technology changes that signifi - cantly impact the business operations and employ - ee roles; • economic reasons, in situations where the employ - er faces financial difficulties or needs to downsize due to market conditions; and
• where division, merger, sale or asset transfer lead to changes in ownership or control of the company or its assets. Labour Usage Plan and Consultation The labour usage plan is intended to address the potential impact on employees during these trans - actions. Employees have the right to express their opinions during the consultation process, either them - selves or through their trade union. While this consul - tation does not directly affect the completion of the M&A transaction, it can influence the timeline if no agreement is reached with employees. Possible Outcomes of the Labour Usage Plan The consultation may not necessarily change the pre-determined employer-employee settlements, but it can influence the benefits and allowances offered to employees as part of the plan’s implementation. Three possible scenarios can arise: • redundancy, where employees may be laid off, and the employer must pay them retrenchment allow - ances; • employees may be transferred to work for the new owner of the company, with their years of service recognised for future benefits calculations; or • the employment relationship between the employ - ee and the original employer remains unchanged. 11. Intellectual Property and Data Protection 11.1 Intellectual Property Considerations for Approval of FDI Understanding Vietnam’s IP protection regime is cru - cial for FDIs to effectively safeguard their valuable assets. The main regulations governing IP protection are the Law on Intellectual Property No 50/2005/QH11 (as amended) (IP Law) and its guiding documents. IP Categories and Protection Mechanisms The IP Law categorises intellectual property rights into three main types:
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