Any Employee who causes damage to devices, equipment or conduct other acts causing damage to the Employer’s properties must pay compensations. If the Employee causes slight damage due to his or her negligence with the value of fewer than 10 months of the area minimum wage announced by the Government and applicable at the workplace, the said Employee must compensate a maximum amount of 3 months’ salary that is monthly deducted from his or her salary; and
If the Employee loses any tools, equipment, properties or other assets which are handed over to them by the Employer, or use materials more than the permitted standard, he or she must compensate a part or whole value of such materials at the market price or as prescribed in the ILR; if a liability agreement is available, they must pay compensation as prescribed in such an agreement; in case of natural disasters, fires, enemy sabotage, epidemics, acts of God, events which are unpredictable and irrecoverable despite all measures taken, the Employee will not be responsible to pay compensation.
What are the “other acts” in this context? Assets thereof only mean tangible assets or include enterprises’ intangible assets (e.g., trademarks, prestige etc.). For other violations that also cause material damage to the Employer but do not fall into the circumstances above, how does the Employee pay the compensations?
3. What are the “other acts” in this context?
The Labour Code does not provide or construe the concept of “other acts” as prescribed in Article 129.1 of the Labour Code.
From the perspective of legal science, a material responsibility requires an Employee to indemnify for the damage caused by the breach of ILR or due to Employee’ lack of duty of care in the performance of his or her obligations. In practice, “other acts” therein are often interpreted as the Employee’ acts (either due to negligence or intention) in the performance of his or her obligations which cause damage (to be broken or decreased in value of use) to the Employer’ assets.
However, since this matter is not construed in detail by law, the Employer should expressly specify “other acts” in the ILR (by defining and listing specific acts) to have a solid and facilitated ground for claiming compensations from the Employee.
4. Asset means tangible asset only or include intangible asset as well
The Labour Code and its guiding by-law instruments have no regulation to determine what is the damaged asset of an enterprise. Therefore, in principle, the asset can be interpreted according to the definition of “asset” in the fundamental law, i.e., the Civil Code which provides that “Asset comprises objects, money, valuable papers and property rights, including real estate and movable assets, existing assets and assets formed in the future”. This means the concept of asset is construed as including tangible and intangible assets such as property rights, intellectual property rights, know-how.
In addition, Article 69.2 of Decree 145/2020/ND-CP prescribes that IRL must include the list of assets, documents, know-how, business secrets, and intellectual property rights; measures taken to protect enterprise’ assets and secrets; the acts of infringement of enterprise’ assets and secrets. As such, it is evident that from the labour law perspective, intangible assets such as know-how, business secrets and intellectual property rights are also deemed as enterprise’ assets.
In practice, competent State authorities often refer to the list of assets, documents, technological know-how, business secrets, and intellectual property rights which are under the Employees’ protection and responsibility in accordance with the ILR as a basis to consider whether the Employees’ violation causes any damage to the assets listed in the ILR or not. Therefore, the Employer should expressly prescribe the list of assets, documents, know-how, business secrets, and intellectual property rights which must be under the Employees’ protection and responsibility to have a basis for determining which assets to be under the indemnification liability according to material responsibilities.
5. If other violations also cause material damage to the Employer but do not fall into the said circumstances, how do the Employee indemnifies to the Employer?
The regulation on the ground for indemnification according to material responsibilities between the Employee and the Employer is only prescribed in Article 129 of the Labour Code and its guiding by-law documents. Therefore, with regard to other violations which also cause material damage to the Employer but does not fall into any of the circumstances as mentioned in this regulation, such violations do not fall into the case of indemnification according to material responsibilities.
In practice, other than the primary employment relationship between the Employer and the Employee, there are many other legal relationships that will be governed by other forms such as civil or criminal relationships. Therefore, if the Employee’ conduct does not fall into the case of indemnification according to material responsibilities, the Employer may request the Employee to remedy in accordance with tort law as regulated in civil code, or the Employee may be subject to compensation under criminal sanctions if his or her conduct reaches the conditions as prescribed by law.
Article 105 of the Civil Code