Answer:
- Does an enterprise need to have an ILR?
According to the regulation[1], an enterprise must issue its ILR, if they use 10 or more Employees, the Enterprise’s ILR must be made in writing and perform ILR registration procedures with a competent labour management authority for its validity. Thus, a written ILR has not required if the enterprise has fewer than 10 Employees, but labour discipline and material responsibility must be included in the content of the LCs signed with the Employees[2]. In this case, the enterprise can still issue their ILR in writing, depending on the needs of each enterprise but they do not have to register their ILR with the competent labour management authority. Should be noted that the enterprise, in this case, may definitely register their ILR with the labour authorities of the People’s Committee at the provincial level if necessary.
2, In case of any need for an ILR, is such ILR required to be registered with the competent labour management authority?
As prescribed above, in principle, any enterprise with 10 Employees or more, when issuing their written ILR, is obliged to register the ILR with the competent labour management authority. However, in case where any enterprise with less than 10 Employees issues a written ILR and wishes to register their ILR, such an enterprise may also carry out procedure for ILR registration in the same way as an enterprise with 10 Employees or more.
In order to register an ILR of an enterprise in accordance with the Labour Code, the enterprise should pay attention to the following issues:
- Within 10 days from the date of ILR issuance, the enterprise must submit the ILR registration dossiers to the labour specialised authority of the People’s Committee of the province where business registration is carried out (i.e., DOLISA or Industrial Zone Management Board, export processing zones and hi-tech parks having the authority to approve the ILR registration if the Employer’s office is located in an industrial park, export processing zone, hi-tech park);
- The ILR registration dossier includes (i) Request for ILR registration (made according to a provided form); (ii) Decision on ILR issuance of the enterprise’s legal representative; (iii) Minutes of Consultation with the organisation representing the Employees at Grassroots level of any enterprise having organisation representing the Employees at Grassroots level; (iv) the ILR; and (v) the corporate documents with provisions related to labour discipline and material liability, if any. The Enterprise’s ILR will come into force 15 days after the date on which the provincial labour management State authority of People’s Committee at provincial level receives the ILR registration dossier and inform that the enterprise’s ILR is in compliance with the law; and
- If any enterprise has branches, units and production and business establishments located in many provinces and centralised cities, the enterprise shall send its ILR after the effective date to the labour management State agencies of the province where its branches, units or production and business establishments are located.
3. In case of no ILR registration, may the enterprise impose disciplinary actions on an Employee’s violation?
Pursuant to the relevant regulation of the Labour Code, the enterprise’s ILR only takes effect after the Employer has implemented the ILR registration procedure with the competent labour management authority of the locality where the Employer employs 10 Employees or more. Specifically, the enterprise’s ILR will take effect 15 days after the date on which the labour management state authority of the People’s Committee at the provincial level receives the ILR registration dossier and announces that the ILR is in compliance with the law. According to this principle, for any enterprise with 10 Employees or more, the precondition for such enterprise to have legal ground for disciplining their Employees is that such enterprise’s ILR must be registered in accordance with the law, except in the case the violation is clearly prescribed in the Labour Code or are agreed by the parties in LCs.
However, this principle will not apply to an enterprise employing less than 10 Employees. Specifically, in accordance with Article 118 of the Labour Code, an enterprise employing fewer than 10 Employees will be not obliged to issue a written ILR as well as register such ILR with the competent labour management authority. Accordingly, if the enterprise issues their ILR in writing, the effect of the ILR will be decided by the enterprise themselves therein. Besides, the enterprise still has to agree on the content of labour discipline, material responsibilities in LCs, then the Employees comply with the contract even when issuing the enterprise’s ILR in writing. Thus, for any enterprise that has less than 10 Employees, such enterprise still has the right to rely on their ILR for disciplining the violating Employees in accordance with labour law, although the ILR is not registered with the competent labour management authority.
4. Will any failure to register ILR be sanctioned for an administrative violation?
In case where an enterprise is subject to compulsory ILR registration (specifically when they employ 10 Employees or more) but fail to perform the aforesaid registration obligation), such enterprise may be fined from VND10,000,000 to VND20,000,000 for the administrative violation.[3]
5. What benefits does an ILR bring to an enterprise in order to prove that it is needed for the enterprise to elaborate the ILR?
The regulations of the Labour Code do not define what constitutes a ILR of enterprise is. However, based on the main content of an ILR required by Article 118.2 of the Labour Code, it should be understood that the ILR is a document issued by an enterprise, which stipulates Employees’ responsibilities and obligations to the enterprise as well as sanctions through labour disciplinary measures against any Employee who fails to abide by or improperly performs the labour obligation prescribed by the enterprise.
In terms of corporate governance, the ILR of an enterprise really plays a very necessary role in helping the enterprise to ensure the stability, orderliness and efficiency of their management and operation. In addition, the insurance of ILR also helps the enterprise establish a system of rule on labour discipline to prevent the Employees’ violations that may damage corporate property and reputation.
[1] Article 118 of the Labour Code
[2] Article 69.1 of Decree 145/2020/NĐ-CP of the Government dated 14/12/2020
[3] Article 5.1 and Article 18.2(b) of Decree 28/2020/NĐ-CP of the Government dated 01 March 2020
