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How to Formulate and Apply Effectively the Policy on the Assessment of the Levels of Working Completion

(MsLe Thi Minh Thu and Esq. Nguyen Huu Phuoc – Phuoc & Partners)

Why should the Policy on the assessment of the levels of working completion be established?

The Labour Code No. 45/2019/QH14 was promulgated by the National Assembly on 20 November 2020, which came into effect on 01 January 2021 (“Labour Code 2019”), with basic revisions and supplements for the content of the Labour Code No 10/2012/QH13 dated 18 June 2012 (“Labour Code 2012”). Apart from some critical revisions related to internal labour regulations, overtime hours, etc., the Labour Code 2019 also has other notable modifications such as limiting types of labour contract to only two types, as well as no longer allows the parties to use annexes to labour contract to amend the term of labour contract. Therefore, it will be more difficult for an enterprise to terminate labour contract with any of their employees; thus, it is necessary for the enterprises to establish key performance indicators as a basis for them to determine as to whether the probationary period of any employee is satisfactory or not, which is to use as a legal basis for the enterprise to terminate labour contract with any of their employees under the laws.

Decree 05/2015/NĐ-CP of the Government dated 12 January 2015, guiding on the implementation of the Labour Code 2012, compels the enterprises to issue Policy on Assessment of Levels of Working Completion (“Policy“) after consulting the employees’ internal representative organisations as a basis for assessing as to whether the employees regularly complete the assigned works according to the labour contract or not, which is to serve as a legal basis for the enterprises to unilaterally terminate the labour contract with any of the employees according to Article 38.1 of the Labour Code 2012. Moreover, the Labour Code 2019 has concretised and expanded this clause in Article 36.1.a. Accordingly, an enterprise has the right to unilaterally terminate labour contract with an employee if such an employee repeatedly fails to perform his or her assigned work under the criteria for assessment of the employees’ working completion in the Policy established by the enterprise. It can be seen that the labour laws also have a mechanism to protect the enterprises from any employee who fails to perform the assigned work as agreed upon by allowing the enterprises to unilaterally terminate the labour contract of an employee if the employee fails to ensure the agreed level of working completion. However, this right has not been effectively and appropriately used by the enterprises under the laws. The enterprises do not comprehensively understand the nature of “not meeting the levels of working completion”, leading to the situation where the enterprises arbitrarily apply when using the right to unilaterally terminate the labour contracts, resulting in the case that many enterprises have to confront with labour disputes arising from their unlawful acts of unilateral termination of labour contracts with their employees.

Besides, the outbreaking and severe implications of the Covid-19 pandemic in Vietnam have fundamentally transformed the working model of the employees from the typical working model at the enterprises’ workplaces to working from home, remotely, online, mobile. The employees can now work at different places which are different than the workplace, such as working through technology applications at home, coffee shops, or at any other locations that the employees choose without going to the enterprises’ workplaces according to the signed labour contracts. Although this trend leads to the more flexible in the employees’ working time, it also leads to many consequences, including assessing the level of working completion which is considered to be more difficult than when the employees work under the typical working model at the enterprises.

In line with such changes of the Labour Code 2019, the transformation of the typical working model at the enterprises’ workplaces to the model of working from home, remote, online, mobile and to serve the needs of the enterprises in the termination of labour contracts with respect to their certain employees, the enterprises need to issue the Policy. This Policy is a legal basis for the enterprises to unilaterally terminate labour contract with any of their employees if the employees fail to satisfy the level of working completion and it increases the enterprises’ management of the employees’ working capacity. It also contributes to the selection of the outstanding employees and the legal basis for the enterprises to unilaterally terminate the labour contracts with any incapacitated employee. Besides, the Policy forces the enterprises to be more responsible for assessing the employees’ working completion, select the good employees who fixed the enterprises’ business demands, and from the employees’ side, they need to be more responsible for supporting the enterprises in business development activities, even when they are considered to be signed long-term labour contract or indefinite-term labour contract. Furthermore, it is also to avoid the circumstances whereby after a long time working for the enterprises, the employees no longer desirably contribute their efforts, resulting in the surplus-value expected by the enterprises cannot be formed which may delay the enterprises’ operation but the enterprises do not have sufficient legal basis to terminate the employment relationship with these employees.

How should the Policy be constituted to be in accordance with the labour laws and enforceable?

In recent years, the formulation and application of the Policy in the enterprises’ management in Vietnam have become more and more popular. Yet, the Policy is formulated more commonly for the enterprises that can quantify the employees’ capacity based on indicators through criteria such as sales, number of real estates sold, insurance contracts to be signed, key customer relationships. As for qualitative jobs such as secretarial, accounting, legal, administrative, even though the indicators have been formulated, they have not been applied accurately and effectively to measure the employees’ working performance. In addition, when using the Policy, the enterprises only consider it as a tool to manage the quality of their employees’ working performance and a basis for internal consideration of rewards, salary increases, promotions for the employees, etc., and they did not apply the Policy as an effective tool to measure the working quality of the employees and as a legal basis for them to unilaterally terminate labour contracts with the employees in case the employees failed to complete the assigned works as agreed in the labour contracts. Therefore, in some cases, even though the enterprises have developed the Policy, they have applied the Policy ineffectively or even fail to use it, leading to wasted time, effort, and money, while the employees’ work efficiency is not significantly improved. And, despite the promulgation of the Policy, the enterprises still face labour lawsuits related to their unlawful act of unilateral termination of the labour contracts with their employees in case the employees regularly fail to complete the work described in the labour contracts and the job descriptions.

As per the Vietnamese legal perspective, neither the Labour Code 2012 nor the Labour Code 2019 has any specific regulation requiring the employers to develop the Policy based on a particular template, but it ultimately depends on the nature of business activities of each enterprise. Therefore, for the Policy to be developed legally, enforceable, applied effectively, and for sanctions for each violation to be applied, the enterprises should take into account the following specific principles when formulating the Policy:

(i)        Firstly, the Policy needs to be developed according to the specific business activities of each enterprise. Depending on the nature of business activities, workforce, the employees’ qualifications, and the enterprises’ specific circumstances, to set out its development goals, from which the enterprises will set the standards for the Policy to be qualitative or quantitative, specified not only for each department, team, group, or unit but also to each working position and title in the enterprises. The Policy’s indicators must be suitable and appropriate to the enterprises’ situation and fair for all employees (except for unique cases). The enterprises should also be noted that depending on the specific nature of business operations, they will be able to set different criteria for evaluating the employees. For instance, for any enterprises operating in the production and sales field, the criteria for working completion may be more likely to be specific numbers for easy quantification. As for enterprises with qualitative nature of work such as service field, the above evaluation criteria may be more likely to be achieved results, handle work, or customers or clients’ feedbacks for quality of the service as provided by enterprises. Formulating an appropriate policy for each enterprise is a significant factor to minimise the risk that the competent Court or State authorities may disagree with the Policy and are in favour of the employees when settling labour disputes despite the Policy is developed and promulgated following the order and procedures prescribed by the labour laws and have validity;

(ii)       Secondly, although from the legal perspective, the applicable labour laws do not force the enterprises to have a job description when entering into a labour contract with an employee, the enterprises should design the job descriptions not only for each department, team, or unit but also for each working position and title in the organisation chart of the enterprises. The job descriptions are usually designed and simultaneously signed when signing labour contract as an annex attached to and an integral part of the labour contract. From such job descriptions, the enterprises now have a full basis to parallel the criteria specified in the Policy;

(iii)      Thirdly, formulating the Policy as a policy to be applied internally within the enterprises shall get the opinion from the employees’ collective bargaining in accordance with the applicable labour laws. Especially, the enterprises shall implement internal workplace democracy by holding dialogues with the collective employees to discuss and collect opinions of the collective employees on the Policy content. The enterprises shall do so since the employees have the right under the applicable labour laws to directly express their opinions on the formulation of the enterprises’ internal policies related to their rights, obligations, and interests, or to inform through the representative organisation of the collective employees at the enterprise’s working places or any other forms of collecting opinions not prohibited by law. Regardless of the forms of collecting the employees’ opinions, the importance is that the enterprises will record the results of such consultation in a written form and indicate the employee’s agreement with the Policy;

(iv)       Fourth, consulting with the representative organisation of the employees (including the grassroots trade union and the representative organisation of the employees at the enterprises) before promulgating the Policy is a mandatory element under the applicable labour laws, serving as the legal basis for the Policy to be effective and applicable sanctions towards violations as well as also demonstrate the openness to public, transparency, and clarity in the formulation of the Policy;

(v)       Fifth, the Policy should formulate the provisions on tackling measures to be applied to situations where the employees do not achieve the expected indicators or results in the Policy. For example, based on the indicators of 100% of assigned jobs of the Policy, any employees who achieve the indicators of 80-100% are considered to have remarkably completed the assigned work and will enjoy labour incentives or other incentives under the enterprises’ labour welfare regime. If any employee achieves from 50 to 70%, he or she will be considered to have completed the assigned work. Meanwhile, any employees who only achieve 30-50% will be considered satisfying the assigned work at an acceptable level. Finally, any employees who only achieve less than 30% will be considered unacceptable. In these provisions, the enterprises should stipulate that the enterprises are entitled to send written warnings to these employees for unacceptable working completion and give them a reasonable time to improve their levels of working completion. The Policy shall also stipulate that the enterprises will have the right to unilaterally terminate the labour contracts with these employees if, after that reasonable time, the employees show no improvement in their work status.

(vi)      Sixthly, regarding the provisions on assessing the levels of working completion when the employees are working from home, remote, online, mobile, it is difficult for the enterprises to determine the levels of working completion, this is because of the absence of direct management from the direct superiors when the employees’ works are mainly conducted through technology platforms. Therefore, the Policy should flexibly regulate not only through qualitative or quantitative as described above but also through the completion of a job or a particular project within a specified period by the employees. Moreover, the criteria of discipline, continence, the ability to communicate effectively with superiors and other employees in the enterprises should also be particularly and specifically included in the Policy; and

(vii)    Finally, the Policy’s content shall openly and transparently be disseminated to all employees in the enterprises through the notice boards at the workplaces, intranet, or email files so that all employees understand and follow. At the same time, the enterprises must also show the employees that the employees must achieve the desired indicators or results in the Policy for the enterprises to determine the labour relationship among them.

How is the application of the Policy considered effective?

In order to effectively apply the Policy and bring into full functions of a tool used to assess the quality of the employees’ work and at the same time serve as a legal basis for the enterprises to apply unilateral termination of the labour contracts with the employees, the employers must first ensure that the issued Policy following the order and procedures as prescribed by the labour laws and the enterprises have arranged for their employees to work under the working positions, functions, and duties as described in the signed labour contracts and the job descriptions attached to it.

In addition, the enterprises shall ensure that the assessment of an individual or the collective employees’ levels of working completion will be based on the Policy developed by following the criteria outlined in the Policy closely for each specific work and duty as stated in the signed labour contract or the job descriptions attached to it. This is to avoid the situation that even though the enterprises formulated the Policy in the correct order and such Policy has taken effect, the indicators in the Policy cannot be applied when evaluating a particular individual employee in reality, leading to improper application of the laws. Besides, the employees’ evaluations should be conducted on reasonable timelines such as months or quarters, and documented and signed by the evaluators, and sent to the employees for their knowledge information.

Besides assessing the employees who show inefficiency and inability to work, the enterprises also need to make positive comments and evaluations for the employees who have good productivity and quality of work and allow those employees to receive benefits in salaries, bonuses, or other employment incentives. These vital ingredients will make the employees feel that their dedication has been recognised by the enterprises and create healthy competition in the employee collective. Then, the employees will gradually promote what has been achieved for the enterprises’ benefits in the future.

Conclusion

In the context of the complicated Covid-19 pandemic on a large scale and the trend of employees having to work from home, remotely, online, and mobile via technology platforms which might be maintained in the long term as long as the Labour Code 2019 and its by-law instrument are enforceable, the enterprises can facilitate their corporate governance functions effectively as well as examine and evaluate whom of their employees are qualified to work if the Policy is built and applied legally, properly and effectively for the enterprises.

A small note for the enterprises is that when applying the Policy, the enterprises should not use the Policy that has been developed and issued in the correct order and taken legal effect but it is applied so rigidly, yet should be flexible based on seasonal, the economic change, and social circumstances in each area. In particular, the Covid-19 pandemic has been causing many serious impacts on the enterprises, therefore the enterprises need to consider developing the Policy content as most appropriate as possible.