Are labor management procedures and regulations really necessary for business operations?

With recent fluctuations in the economic situation and the increasingly stringent compliance policies implemented by state authorities, along with changes in management methods and amendments to legal provisions governing economic relations, these factors have truly raised concerns for businesses about how to manage risks and maintain compliance at both the corporate level and within the human resources departments of the company. To anticipate risks, many businesses choose to establish internal regulations and procedures, from initiating transactions to managing personnel, all arranged in a structured and coordinated manner with multiple contingency plans so that, when situations arise in practice, the business will not be placed in a passive position.

To better understand the necessity of developing procedures and regulations in labor management, the following article will provide further insights.

1. What Are Procedures and Regulations in Labor Management?

Labor management procedures are understood as a blueprint for arranging all activities in the company in an order desired by the business owner, with the purpose of achieving objectives such as risk control, information security, and cost savings. With a procedure in place, the operators, managers, and employees will be able to grasp each step of implementation, the accompanying documents, detailed instructions, necessary and sufficient conditions, and other guidelines, all of which will be specified in diagrams and detailed explanatory tables.

When a company issues a procedure and incorporates it into its regulations, codes of conduct, or internal labor rules, employees are obliged to comply with the procedure set by the company; failure to do so, or failure to follow it correctly, shall be considered a violation, and naturally, the enterprise has the right to apply corresponding disciplinary measures.

Depending on the operations, scale, and nature of the industry or services, businesses will establish different procedures; however, within the scope of human resources management, most enterprises will typically set up certain procedures such as the Recruitment Procedure, the Labor Discipline Handling Procedure, the Training Procedure, the Document Issuance Procedure, and the Employee Complaint Resolution Procedure.

Regulation is frequently used in labor management, and it also originates from provisions recorded in administrative documents of state authorities. In labor management, we generally refer to the documents used to govern the relationship with employees as “regulations,” for example, internal labor rules, collective labor agreements, salary–bonus regulations, information confidentiality regulations, and overtime work regulations. In practice, labor management regulations are essentially a compilation of rules and provisions stipulating the code of conduct that both employees and the enterprise must comply with, and the policies promulgated by the enterprise to ensure that all employee behavior is aligned with the company’s direction. In addition, such regulations serve as the basis for protecting the legitimate rights and interests of the enterprise in matters relating to labor, taxation, and social insurance, as well as demonstrating the company’s commitment and transparency, oriented toward sustainable ESG values.

2. Why establishing procedures and regulations is necessary?

It is evident that when any labor dispute arises, or other violations occur—such as the leakage of customer information, failure to follow proper service procedures resulting in negative impacts on clients or the company, or even an employee’s negative actions on social media that affect the company—these issues, in practice, will inevitably lead to financial losses, reputational damage, wasted time in resolution, and, in some cases, require the enterprise to undergo inspections or audits by regulatory authorities. Anticipating this, many businesses have developed their own internal regulations and procedures for corporate operations and human resources management in order to achieve the following objectives:

Ensuring Legal Compliance — Under the provisions of labor law, an enterprise may not impose labor discipline on an employee if their violation is not stipulated in the company’s internal labor regulations. For example, acts such as failing to switch off equipment before leaving, not safeguarding documents, not complying with dress code requirements, or failing to observe working hours are not specifically regulated in the Labor Code or its guiding documents. Labor law grants enterprises the authority to set out these detailed rules themselves; therefore, if the enterprise does not include them in its regulations, it will have no legal basis to impose disciplinary action.

In addition, the law also provides that an enterprise has the right to unilaterally terminate a labor contract if the employee “frequently fails to perform the work as agreed.” However, what constitutes “frequently failing to perform” is left to the enterprise to define, provided that the company explicitly records it in its internal regulations on performance evaluation and applies it consistently in its operations. If the enterprise does not record this, it will have no legal basis to unilaterally terminate the contract.

Standardizing Human Resources Management Activities — When all activities are operated in a defined sequence and manner—from recruitment to training, disciplinary actions, termination of labor contracts, information storage, and personal data processing—this creates stability, mitigates risks, and ensures that, in the event of personnel changes, successors can quickly take over and continue operations seamlessly.

Enhancing Labor Productivity — A clearly and reasonably designed procedure helps shorten the time required to complete tasks and eliminates unnecessary steps. As a result, departments avoid overlapping duties or disputes over responsibility. For example, if the overtime approval process is standardized, the HR, accounting, and production management departments can coordinate smoothly, reduce waiting times, and avoid missing information. This transparency directly contributes to improved productivity and overall efficiency for the enterprise.

Creating a Foundation for Corporate Culture — Well-developed and strictly enforced procedures and regulations help create a transparent and fair working environment. Employees clearly understand their rights, obligations, and evaluation criteria, thereby increasing their trust in the enterprise. This contributes to greater cohesion, reduced internal conflicts, and the development of a professional corporate image. An organizational culture built on discipline and transparency becomes a significant advantage in attracting and retaining talent.

Avoiding Conflicts — The absence of standardized procedures and regulations means the lack of common rules to govern interdepartmental relations and no guidance for employee conduct. This can lead to overlapping duties, internal disputes, disruptions to work, and the waste of corporate resources.

In conclusion, in the current context, procedures and regulations are tools that enable businesses to operate all activities in alignment with the company’s strategic direction and to create standardized modes of conduct. Enterprises should not wait until disputes arise or inspections occur to begin refining their procedures and regulations. Proactively reviewing, updating, and improving the labor management system now will help businesses save costs, reduce crisis management pressure, and maintain stable operations. At the same time, consulting with lawyers or legal experts is an essential step to ensure that the system is both compliant with legal requirements and compatible with the company’s operational specifics. This is a strategic investment for sustainable development.

Time of writing: 12/08/2025

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

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• Foreign-Invested Enterprises: How to properly identify the Beneficial Owner?
• Who is the Beneficial Owner? – Legal Perspective from the Latest Regulations of Vietnamese Enterprise Law