Answer:
- Is collaboration contract, professional contract, personal service contract a type of LC?
1.1 Legal grounds for governing collaboration contracts, professional contracts, personal service contracts
In the concept of law, a collaboration contract, professional contract, personal service contract may be considered a type of service contract because of the existence of a relationship between the service provider and the service consumer. The concept of the service contract is currently being governed by the two main sources of law, the Civil Code and the Commercial Law. The issue is which legislation, the Civil Code or the Commercial Law will be the governing source of law in this case? Considering the nature of a collaboration contract, professional contract, personal service contract, it can be seen that this is activity towards profits (by both the service consumer as enterprise and the service provider as an individual). Therefore, the governing source of law for the collaboration contract will be the Commercial Law according to its principles of the governing scope.
2.2 May a collaboration contract, professional contract, personal service contract be considered a type of LC?
According to the labour law, there are two types of LC which the Employer may enter into with the Employee: indefinite-term LC and definite-term LC [1]. As a result, based on the name of them, the collaboration contract, professional contract, the personal servicecontract is basically not a type of LC specified in the Labour Code.
However, considering the content of a LC, the Labour Code defines a LC as follows: “A LC is an agreement between an Employee and an Employer on paid jobs, salary, working conditions, rights and obligations of each party in the employment relationship”[2]. Specifically, a LC must contain some provisions related to the Employee’ rights, such as: LC term (for definite-term LC, the maximum term is 36 months), salary, date of salary payment, salary allowances and other additions, salary raise regime, working time, rest breaks, overtime and etc.[3] Therefore, if the collaboration contract, professional contract or personal service contract includes (nearly) the same or similar contents as a LC, those contracts may be considered the LC, i.e. the labour relationship rather than the relationship of service supply established between the parties.
2. Legal risks that the Employer faces upon entering into a collaboration contract, professional contract or personal contract instead of a LC
Firstly, for contracting parties, Article 2 of the Commercial Law states that commercial activities (including service provision) must be carried out by traders (namely, organisations and individuals that have registered for business operation), except for “individuals conducting commercial activities independently and regularly without having to register a business.”[4] Individuals conducting commercial activities independently and regularly without having to register a business are listed in detail in Article 3.1 of Decree 39/2007/ND-CP of the Government dated 16 March 2007, mainly performing retail services on a small scale such as shoe polishing, lottery ticket sale, lock repair, vehicle repair, wash and parking lot service, haircut, painting, photo taking and other services with or without any fixed location and these individuals will not be deemed as traders. Considering a relationship between individuals and the enterprise (specifically the relationship of a collaboration contract, professional contract or personal service contract), it is clear that the enterprise does not hire individuals to regularly provide the said retail services. The enterprise actually hires individuals for the purpose of conducting activities related to some professional qualification and a certain level, and individuals who provide services (other than the said retail services) must register for business in accordance with the law to be eligible to carry out said services.
On the other hand, as above analysed, collaboration contracts, professional contracts and personal service contracts are not a type of LC that is regulated and governed by the Labour Code, but the parties have established the labour relationship through those contracts nevertheless. As a result, there are too many risks to the Employer. If the collaborators, professionals, or service providers with knowledge of the labour law initiate a lawsuit against the enterprise to protect their interests, the enterprise may face a risk that the competent Courts will not recognise the legality of those contracts and the enterprise will have to sign the LCs with those individuals to develop the labour relationship between the parties in accordance with the labour law. In addition to signing the LCs, the enterprise might have to fulfil the obligations of the Employer to the Employee for the period when the Employee has worked for the enterprise under those previous service contracts (including paying benefits as mandatory insurance contribution, overtime salary, etc.). Moreover, the enterprise may be sanctioned with an administrative fine of up to VND10,000,000 for failing to enter into the right type of the LC with the Employee[5].
From the said analyses, the enterprise should consider signing seasonal LCs with their collaborators, professionals, personal service providers to comply with the labour law instead of signing those service contracts in order to comply with the current labour laws and limit any legal risk of such disputes in the future.
[1] Article 20.1 of the Labour Code
[2] Article 13 of the Labour Code.
[3] Article 21.1 of the Labour Code.
[4] Article 2 of the Comercial Law
[5] Article 5.1 and 8.1 of Decree 28/2020/ND-CP of the Government dated 01/03/2013
