Labor Regulations – Are they truly necessary for Businesses and Guidelines for Drafting (Part 2)

More than anyone else, we understand the crucial importance of well-structured labor regulations for enterprises. Such regulations serve as the core legal document that enables businesses to effectively manage their human resources, maintain compliance, and avoid labor disputes that consume both time and cost. Following the first part of our discussion on “Labor Regulations – Are They Truly Necessary for Businesses and Guidelines for Drafting”, in this article we continue to provide several key aspects:

1. Temporary reassignment of employees

In business operations, force majeure situations such as natural disasters, epidemics, technical incidents, or market fluctuations may compel an enterprise to reallocate its workforce. The right of “temporary reassignment” thus becomes a flexible mechanism that allows business continuity in unpredictable circumstances.

However, such flexibility can easily lead to disputes if the internal regulations do not clearly define the applicable cases, duration, and salary arrangements. Employees often perceive that they are being forced to work outside their expertise or unfairly subjected to salary reductions. Without transparency, it will be difficult for the enterprise to defend its decisions before the authorities or the court.

A sound set of regulations should specify: (i) legitimate circumstances for reassignment (natural disasters, epidemics, production needs); (ii) maximum duration and cumulative limits; and (iii) mechanisms ensuring minimum wage or allowances during the reassignment period.

2. Disciplinary violations

According to the law, an enterprise may not impose labor discipline on any act of misconduct unless such act is recorded in the Labor Regulations. In practice, this presents a challenge as the enterprise must anticipate potential scenarios and record them in advance. Moreover, the company must arrange corresponding disciplinary measures appropriate to each level of violation, ensuring that the rules are both comprehensive and lawful. It is critical to note that disciplinary actions are only valid if permitted by law. For instance, provisions such as “monetary fines” or “salary deductions” would be invalid if stipulated in the regulations.

3. Material liability – Legal boundaries to avoid disputes

Material liability is among the most contentious issues, as it directly relates to employees’ income. If an enterprise sets out vague provisions or those contrary to the law, the rules on material liability may inadvertently expose the company to legal violations and compensation claims.

The regulations should clearly affirm the principle that employees are only required to compensate when: (i) actual damage occurs, (ii) fault is attributable to the employee, and (iii) there is clear evidence. In addition, the monthly salary deduction must be limited. This is not only a statutory requirement but also an element of fairness, ensuring the minimum protection of employees’ rights.

A transparent damage assessment process, with written minutes and signed confirmation, is mandatory to ensure persuasiveness in enforcement. In practice, many enterprises have lost disputes simply because they imposed compensation subjectively without proving the causal link between the fault and the damage.

4. Authority to Impose disciplinary measures

A disciplinary decision only has legal validity if it is issued by a person with the proper authority. While this may seem straightforward, in reality, the corporate structure—with multiple legal representatives and various levels of delegation—often leads to misunderstandings regarding who is authorized to impose disciplinary measures corresponding to each form of sanction.

The legal consequence of handling the correct misconduct but through the wrong procedure, including misidentification of disciplinary authority, may result in the enterprise being obliged to compensate the employee, and in certain cases, even reinstate the employee to their position…

5. Principles – Procedures – Statute of limitations for disciplinary actions

Labor discipline is not only an internal sanction but also a legal procedure. If an enterprise fails to comply with the prescribed principles and procedures, the disciplinary decision will be rendered invalid, regardless of whether the employee has actually committed a violation.

Common mistakes include issuing a decision after the statute of limitations has expired, failing to prepare minutes with the proper participants, or procedural errors as simple as missing a notification step, sending the notice to the wrong address, having the wrong issuer, or including inaccurate content. All of these may result in adverse consequences for the enterprise, including the obligation to compensate the employee, as discussed above.

6. Personal data

With the issuance of regulations on the Personal Data Protection Law, enterprises are now required to address in their internal rules the collection, storage, use, and deletion of employees’ personal data. This development also shapes employees’ expectations regarding the obligations that enterprises must fulfill with respect to the personal data obtained during the course of employment. Therefore, to proactively protect themselves, enterprises should include in their labor regulations provisions recognizing the company’s rights concerning employees’ personal data. While this is not yet a mandatory component of the labor regulations, it is advisable to include it. At the same time, the rules should reference prohibited acts by other employees or managers that may breach the enterprise’s statutory obligations regarding personal data protection.

7. Recommendations for enterprises

Through many years of advising large enterprises and FDI corporations, we have observed that labor regulations are often underestimated and treated as a mere administrative formality. In reality, a well-prepared set of labor regulations not only enables compliance to avoid administrative penalties, but also serves as the foundation to prevent disputes, minimize losses from labor conflicts, and mitigate damages caused by employees’ violations. We also recognize that most business risks do not arise from unexpected incidents but rather from the lack of standardization in labor management systems. Many large corporations with strong resources have nonetheless lost lawsuits or faced significant compensation liabilities simply because their labor regulations were weak or invalid. Therefore, we always recommend that enterprises should:

• Invest seriously in drafting and registering labor regulations: Labor regulations are not just a procedural requirement but the only legal document that provides a lawful basis for imposing discipline and defending the company before the courts. A robust set of rules equals a strong legal “shield.”
• Align labor regulations with other internal policies: The regulations must be consistent with policies on remuneration, disciplinary procedures, data security and safety, and anti-harassment. This not only ensures legal compliance but also demonstrates systematic governance in the event of disputes.
• Ensure continuous training and communication: Even the most well-structured regulations are meaningless if employees are “unaware” or “uninformed.” Enterprises should organize periodic training, conduct comprehension assessments, and retain signed acknowledgments as evidence in case of claims or lawsuits.
• Review and update regularly: Labor laws evolve, and business models also change. If regulations are not updated to reflect new contexts (e.g., remote work, data protection, rules on overtime), they risk becoming outdated and unenforceable during disputes.
• Implement discipline transparently and procedurally: The disciplinary process must be strictly followed—from proper notification and summoning of the required participants, to issuing decisions within the statutory time limit. Only when the regulations are “sound” and their enforcement strictly complies with the law will the enterprise gain an advantage in litigation.

In the current trend where businesses are building ESG (Environmental, Social, and Governance) criteria, maintaining compliance in labor relations will be considered a competitive advantage in the eyes of investors and partners. To achieve this, enterprises must devote real attention to building labor regulations that are both legally sound and practically aligned with their operations. Each enterprise should view the issuance and updating of labor regulations not as a legal burden, but as an essential step toward establishing a foundation for sustainable and secure development.

Time of writing: 19/08/2025

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:

• • Labor Regulations – Are they truly necessary for Businesses and Guidelines for Drafting (Part 1)
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