Regulation of property and ownership rights in Vietnamese

civil law

Definition of Property:
Property is the foundation of all societal connections and plays a crucial role in legal
frameworks. The 2015 Civil Code, Article 105, provides an in-depth explanation of
the essence of property. According to the Code, assets include tangible objects,
currency, valuable documents, and property rights. These assets can be either real
estate or movable possessions, whether they exist currently or will be formed in the
future.
Assets can be classified into four components:
First, assets are objects, money, valuable papers, and property rights.
(1) Tangible objects, which include physical items, currency, valuable documents,
and property rights. An object is considered an asset only when it becomes a subject
of legal relationships and is subject to control by an individual. This implies that it
fulfills a specific human need. It's important to note that not every element of the
physical world qualifies as an object. For instance, natural oxygen in the air only
becomes an object when it is compressed into a container, allowing it to be managed
and controlled by a person. To be recognized as a civil object, certain conditions
must be met, including being part of the material world, possessing utility, providing
benefits to the user, and having the potential for existence and success in
transactions.
Another classification arises by assessing an object's utility when divided into
smaller components, leading to the division between objects that can be subdivided
and those that cannot. Additionally, the Civil Code distinguishes between objects
based on the characteristics and value they retain after use, classifying them as
consumables or non-consumables.
Further classifications are made based on the distinguishing features of objects,
resulting in the grouping of objects into generic objects and specific objects.
Moreover, there is a division into synchronous objects and asynchronous objects,
emphasizing the temporal aspects of their use or functionality.

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(2) Marx believed that money is a separate specialization from the realm of
action. It is used to represent the value of various commodities and is a facilitator of
social labor. Money is also a medium for expressing production relations among
commodity producers. The 2005 and 2015 Civil Codes recognize money as an asset,
but they do not have specific regulations defining its legal nature. Money is only
considered an asset when its value is actively circulated and recognized by law. It
functions as a versatile payment instrument, a means of asset accumulation, and a
unit of value.

(3) Valuable papers are documents with monetary value that can be used as
currency and transferred in civil transactions. There are various forms of valuable
papers, such as checks, stocks, treasury bills, votes, promissory notes, and bonds.
Valuable papers are certificates created in accordance with established regulations
and procedures. The information presented on these papers represents property
rights, and the value of the papers corresponds to the value of these property rights
protected by legal safeguards. Valuable papers are accounts and transferable
instruments, but they can only be transferred as a whole; partial transfers are
considered void. These papers have a determinable value, which includes
considerations for deadlines, requirements, and potential risks.

(4) Other types of documents that confirm ownership and usage rights of assets, such
as land use rights certificates, house ownership certificates, and motorbike or car
registration certificates, are also considered valuable papers. It's important to note
that these documents are recognized as belonging solely to the individual whose
name is explicitly stated on the respective paper.
According to Article 115 of the 2015 Civil Code, property rights are rights that have
a monetary value. This includes rights related to intellectual property, land use, and
other assets. These rights are considered a sovereign civil entitlement of the
individual or legal entity and are protected by law. In simple terms, property rights
refer to the rights of individuals and legal entities to control and use their property
as they wish, while others have a legal obligation to support these rights. Ownership
or property rights are considered a unique form of property.
Continuing with the second classification, assets encompass both movable and real
estate. Real estate and movable property can consist of both presently existing assets
and those that will be formed successfully in the future.

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Article 107 of the 2015 Civil Code outlines the regulations for real estate and
movable property as follows:
Real estate includes:
a) Land;
b) Houses and buildings associated with the land;
c) Other assets attached to land, houses, and construction works;
d) Other assets as stipulated by law.
Movable assets are defined as assets that do not fall under the category of real estate.
The classification of assets into movable and immovable assets is based on the
physical characteristics of the asset, determining whether it can be moved or not.
Real estate, due to its inherent natural characteristics, is perceived as assets that
cannot be relocated because of the inherent nature that comprises that particular
asset.
Firstly, land in civil transactions is defined by its area and location, as depicted on
the cadastral map, and confirmed by the competent state agency through decisions
on land allocation and certificates of land use rights.
Secondly, houses and construction works are deemed real estate when they are firmly
attached to the land with a stable structure, not merely "placed" on the land.
Consequently, structures like a circus tent or a temporary market shed are not
considered real estate.
Thirdly, trees, crops, and other assets on land, such as minerals, are also considered
real estate as long as they remain unexploited, uncut, or unharvested. Once separated
from the land, these assets become movable property. However, when minerals,
trees, and crops are subject to a pre-sale contract before exploitation, they are
generally regarded as movable property, even if still situated on the land. This
interpretation aligns with the legal frameworks of many countries.
Fourthly, movable assets can transform into real estate based on their intended use.
Assets attached to houses and construction works are classified as real estate. The
conditions for considering movable property as attached to a home or construction
project typically involve creating a unified whole that serves the purpose of the house
or building. The attachment must be carried out by an individual with rights
(ownership or other authority) over the house or construction project. Additionally,
this attachment must be permanent and irremovable without causing damage or

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altering the aesthetic appearance of the structure. For instance, electrical and water
systems within a house and statues securely affixed to the wall can be deemed real
estate.
Real estate is a type of property that is governed by legal regulations. Specific legal
documents may designate assets as real estate, in addition to the types mentioned
earlier. For example, Article 5 of the Real Estate Business Law of 2014 specifies that
land use rights are considered real estate.
The classification of real estate and movable property can be based on the time of
asset formation and the establishment of ownership. Existing assets refer to those
that currently exist and have established ownership, like a built house. On the other
hand, assets formed in the future are those that do not exist at the time of
consideration but are assured to exist or be formed in the future, such as houses being
constructed based on plans or future salaries.
Assets formed in the future may also include those already in existence at the time
of the transaction but are owned only by the involved parties and not yet transferred
to the new owner, such as assets purchased, sold, or inherited but not yet formally
transferred to the new owner.
The regulations regarding ownership rights are outlined in Article 158 of the 2015
Civil Code. This article states that ownership rights include the right to possess, the
right to use, and the right to dispose of the owner's property by the law.
Article 179 of the 2015 Civil Code provides details about the right of possession. It
states that possession is the act of holding and controlling property as if the possessor
has rights to the property. Possession includes both possession by the owner and
possession by a non-owner. However, possession by a person who is not the owner
cannot be the basis for establishing ownership rights, unless the cases specified in
Articles 228, 229, 230, 231, 232, 233, and 236 of this Code apply.
The concept of bona fide possession (chiếm hữu ngay tình) has been expanded in the
2015 Civil Code as compared to the 2005 Civil Code. This concept refers to the
possession of a property by an individual who has reasonable grounds to believe that
they have the right to possess it. There are two types of bona fide possession -
possession with a legal basis and possession without a legal basis but in good faith.
Article 165 of the Civil Code outlines legally based possession and covers various
scenarios. These include the owner taking possession of the property, a person

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authorized by the owner to manage the property, individuals whose possession rights
are transferred through a civil transaction in accordance with the law, persons who
discover and retain ownerless property, or property dropped, forgotten, buried,
hidden, sunk, as per the conditions prescribed by law, and individuals who find and
keep lost livestock, poultry, and aquatic animals under the conditions stipulated by
the law.
Possession that does not align with the above criteria is considered possession
without a legal basis. Unlike the 2005 Civil Code, a bona fide possessor without a
legal basis in the 2015 Civil Code does not necessarily know or cannot know that
their possession lacks a legal basis (objective factor). This means that the possessor
is not required to be aware that their possession is without legal basis. In such cases,
even though the possessor may have doubts or uncertainties about the legality of
their possession, they are still considered bona fide possessors.
Dishonest possession is different from bona fide possession. It requires the possessor
to know that they don't have any rights to the property and that their possession is
illegal. In such cases, the law can compel them to return the property to the rightful
owner and compensate for any damages caused by their illegal possession (as per
Article 579 and Clause 1, Article 581 of the 2015 Civil Code).
Instances of dishonest possession usually involve assets with registered ownership,
such as real estate and movable property. For example, buying a motorcycle without
a certificate of ownership or transferring possession rights of jointly owned property
without the consent of all co-owners.
Continuous possession, as specified in Article 185 of the 2015 Civil Code, means
the actual and legal possession exercised by the owner of the property. Actual
possession occurs when the owner or the person with the right to possession
physically holds the property. However, in some cases, the owner may delegate the
right to possess the property to another party. In such cases, the owner retains only
the legal right to possess, while the entity entrusted with possession holds the right
to actual possession. For example, when a car owner leaves his car with a parking
attendant, the owner remains the legal possessor, while the parking attendant
becomes the actual possessor of the car.
The 2015 Civil Code introduces comprehensive regulations regarding property and
ownership rights. These regulations encompass the right to possess, the right to use,
and the right to dispose of property. Here's an overview of the key aspects:

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Right of Possession:
Legal Basis of Possession: The 2015 Civil Code recognizes two types of bona fide
possession – possession with a legal basis and possession without a legal basis but
in good faith.
Continuous Possession: The possession must occur within a certain time frame, and
there should be no disputes or, if there are disputes, they must not be resolved by a
legally effective judgment or decision of a court or competent state agency.
Public Possession: The possessor must perform physical impacts on the property
transparently, without hiding any intention.
Presumption and Disputes:
Article 184 presumes the bona fide status of the possessor, placing the burden of
proof on those who claim otherwise.
In case of disputes over property rights, the possessor is presumed to have the right,
and it is the responsibility of the disputing party to prove otherwise.
Statute of Limitations: Bona fide, continuous, and open possession serves as the
basis for applying the statute of limitations. After a specific period, the possessor
may become the legal owner unless otherwise specified by the law.
Rights to Use:
Article 189 establishes the right to use as the right to exploit uses, enjoy fruits, and
profit from property. This right can be transferred to others by agreement or
according to the law.
Right to Dispose:
Article 192 defines the right to dispose as the right to transfer ownership, give up
ownership, consume, or destroy property.
Individuals, whether owners or non-owners, can exercise the right to dispose, subject
to behavioral capacity and legal qualifications.
Limitations on the Right to Dispose:
Article 196 specifies that the right to dispose is limited only in cases prescribed by
law.

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Certain limitations, such as the State's priority right to purchase historical-cultural
relics, are outlined.
Role of the Right to Dispose:
The right to dispose, including selling, exchanging, donating, inheriting, etc., is
crucial for owners. The law emphasizes protecting the inherent rights of the owner.
In conclusion, the property and ownership regulations in the 2015 Civil Code build
upon and enhance previous Civil Codes, reflecting the evolution of civil law. These
regulations are pivotal for the development and uniform application of civil law in
the country.
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 Overview of Vietnam’s Labor Code
Vietnam’s increasingly open investment environment facilitating integration with global
business practices means that the country is continuously streamlining labor laws and
policies.

In this regard, Vietnam approved an amended Labor Code, which came into effect in
January 2021. The amendment to the labor regulations is a step towards aligning with
international labor standards, particularly as Vietnam integrates into the world economy, as
noted by the International Labor Organization (ILO).

Companies doing business in Vietnam must ensure they follow the provisions of the Labor
Code, which contains the legal framework for the rights and obligations of employers and
employees with respect to working hours, labor agreements, social insurance, overtime,
strikes, and termination of employment contracts, to name a few.

Here we discuss some basic requirements that employers must follow and fulfill when hiring
employees in Vietnam:

• Employee-employer contracts
• Rules for severance and payments
• Bonuses
• Allowances and benefits
• Retirement
• Other provisions

Employment contracts
A labor contract must contain provisions such as the scope of work, working hours, rest
breaks, wages, job location, terms of the contract, occupational safety and hygiene
conditions, and social insurance.

There are two types of labor contracts in Vietnam:

• Indefinite term - A contract in which two parties do not determine the term and the
time for its termination.
• Definite term - Two parties determine the term as a period not exceeding 36 months
and the time for its termination. The definite contract can only be renewed once.

In addition, e-contracts are officially recognized and have the same validity as those in
written form. A verbal labor contract is also recognized as long as it is valid for less than one
month. Further, seasonal contracts are not permitted.

Companies that employ ten or more people must have a copy of company rules or internal
labor regulations registered with the provincial labor department. This includes the company
policy pertaining to working and rest hours, rules and orders in the company, labor safety,
hygiene in the workplace, protection of assets, business and technology confidentiality, and
sanction methods.

Working hours
The working hour limit is 48 hours per week; the labor code states that normal working hours
cannot exceed eight hours a day or 48 hours per week. However, if the employer and
employee agree on an overtime deal, the overtime cannot exceed 12 hours a day, 40 hours
a month, and 200 hours a year.

• However, according to Resolution No. 17/2022/UBTVQH15, if the employer and

employee agree on an overtime deal, employers are permitted to assign their
employees to work overtime for over 200 hours but not exceeding 300 hours per year,
except in the following cases:
• Employees aged between 15 and under 18;
• Employees having mild disabilities with work capacity reduction of at least 51% or
employees with severe disabilities or extremely severe disabilities;
• Employees doing arduous, hazardous, dangerous or extremely arduous, hazardous
or dangerous work;
• Female employees in their 7th month of pregnancy onward (or the 6th month of
pregnancy onward in case they work in the highlands, remote areas, bordering areas,
or islands);
• Female employees nursing children aged under 12 months.

Employers that are permitted to assign their employees to work overtime for up to 300 hours
per year may assign their employees to work overtime for more than 40 hours but not
exceeding 60 hours per month if this is agreed upon by both the employer and the
employees.

For industries such as textile and clothing, footwear, and electronics, in which seasonal
orders during certain times of the year require an extensive workload, an overtime cap of
300 hours has been specified.

For employees working in heavy or hazardous conditions, the law stipulates that employers
are responsible for limiting their working limit due to exposure to dangerous substances or
chemicals as per the national technical regulations and relevant laws.

Compensation Structure in Vietnam

Minimum wages
There are two kinds of minimum wages in Vietnam.
 The first type is the common minimum wage of VND 1,490,000 (~US$64), which is used to
calculate salaries for employees in state-owned organizations and enterprises, as well as to
calculate the social contribution for all enterprises (i.e., the maximum social contribution is
20 times the common minimum wage).

The second type of minimum wage is used for employees in all non-state enterprises based
on zones as defined by the government.

Vietnam Set for 6 Percent Minimum Wage Hike in 2024

It has been announced that Vietnam will raise the minimum wage by 6 percent next year
from July. The National Wage Council met on Wednesday and voted unanimously for the
increase.

The Vietnam General Confederation of Labor had asked for between 6.48 and 7.3 percent,
with the Vietnam Chamber of Commerce and Industry suggesting that a 4.5 to 5 percent
increase would be better for business. The final outcome looks to have split the difference.

When this minimum wage hike comes into effect, it will be the first minimum wage
adjustment for Vietnam in two years. With an average rate of inflation of 3.2 percent a year
between 2012 and 2022, and inflation for the first 11 months of this year pushing 4.27
percent, this may see another wage hike necessary in the not-too-distant future.

Notably, over the pandemic, a pause in raising the minimum wage saw Vietnam’s minimum
wage workers realize a real wage increase of just 0.7 percent, according to the
International Labour Organisation.

This latest wage increase still needs to be officially approved. That said, it would be unusual
for key decision makers to go against the recommendation of the National Wage Council.

Vietnam’s new minimum wage from July 2024

Current (2022) Change (6%) New (2024)
Region VND US$ VND US$ VND US$
1 4,680,000 192.33 280,800 11.54 4,960,800 203.87
2 4,160,000 170.96 249,600 10.26 4,409,600 181.22
3 3,640,000 149.59 218,400 8.98 3,858,400 158.57
4 3,250,000 133.56 195,000 8.01 3,445,000 141.58
 Average wage growth in Vietnam
Also of note, in a Q3 Labor Market report, the General Statistics Office found that average
monthly wages had increased quarter-on-quarter and year-on-year. These increases put
the average wage well above the minimum.

The average income in Q3 of this year was VND 7.1 million (US$289). This represents an
increase of VND 146,000 (US$5.94) over the previous quarter and VND 359,000
(US$14.61) more than workers were earning over the same period last year.

Wages by selected industries, Q3 2023 vs Q3 2022

Monthly wage Change
Industry VND US$ VND US$
Mining 10.4 423.11 1.030 41.90
Accommodation and food service 6.9 280.72 0.486 19.77
Wholesale, retail, and automobile and motorbike repair 8.2 333.60 0.500 20.34
Processing and manufacturing 7.8 317.33 0.271 11.03

Performance and earnings-based bonuses for employees

Bonuses are given to employees based on company earnings and performance and as a
way of boosting company morale and productivity. There are various kinds of bonuses that
a company may grant its employees throughout the year.

All salaries and bonuses are subject to PIT in Vietnam.

Allowances and benefits

An employee may be entitled to several kinds of allowances and monetary or non-monetary
benefits designed to retain staff. According to the Circular No. 92/2015/TT-BTC, some of
these benefits are non-taxable, including:

• Payments for housing rent, power, water, and associated services for employees that
amount to more than 15 percent of their total taxable income;
• Life insurance and optional insurance;
• Payment for a membership card, which does not include the user's name, of golf
clubs, tennis courts, and other exclusive clubs;
• Payment for a membership card, which does not include the user's name, of health
care, entertainment, etc. services;
• Telephone allowance;
• Stationery allowance;
 • Uniform allowance in kind or in cash not exceeding 5 million VND;
• Lunch allowance not exceeding 730,000 VND;
• Funeral payment not exceeding any month's actual salary in the year;
• Wedding payment not exceeding any month's actual salary in the year;
• Transportation allowances;
• Training allowances;
• Employer support for fatal disease or illness;
• Round-trip flight ticket to return home country once a year for foreign employees or
Vietnamese employees working abroad;
• Tuition fees for children of foreign workers working in Vietnam study in Vietnam,
children of Vietnamese workers working abroad study overseas from kindergarten to
high school;
• Personal incomes received from any associations and organizations if the employees
receiving the grant is a member of these associations and organizations, and these
associations and organization’s funding is used from the State budget or managed
according to the State's regulations;
• Payments paid by the employer for the deployment, rotate foreign workers to work in
Vietnam according to regulations in the labor contract, complying with the standard
labor schedule according to the international practices of some industries such as oil
and gas and mining.

Overtime
If a worker exceeds the abovementioned limits, overtime will be triggered, and
compensation will be applicable.

Employee consent must be obtained if the employer plans overtime work regarding the
terms, locations, and overtime work.

In addition to working beyond a set threshold of hours, overtime compensation may be

triggered and influenced by the time and date that employees are engaged. Key triggers of
overtime beyond hours worked include weekends, public holidays, and night hours – defined
as between 22:00 and 6:00.

Termination, severance, and payment

Both employer and employee can unilaterally terminate a contract. Employers must give
prior notice of at least 120 days for labor contracts with indefinite terms or a fixed-term
contract of 12 months or more. For labor contracts less than 12 months, prior notice of at
least a quarter of the term of the contract must be given.

Further, employees will be able to immediately terminate a contract for mistreatment,

pregnancy, and if the employer fails to pay salary on time.

If a labor contract is terminated, employers may be liable for a severance payment to the
employee in question.
Under the Vietnamese Labor Code, severance compensation amounts to half a month’s
wages for every year that the employee has been working. For example, an employee who
had been with a company for three years would be eligible for one and a half months’ pay.

Retirement age
Under normal working conditions, the retirement age stands at 60 years 6 months for male
employees and 55 years 8 months for female employees in 2022. The retirement age will
increase by three months per year until it reaches 62 in 2028 for men and by four months
per year for women until it reaches 60 in 2035.

Incremental retirement age in Vietnam 2022-2026

2022 2023 2024 2025 2026
Male 60 years 6 60 years 9 61 years 61 years 3 61 years 6 months
months months months
Female 55 years 8 56 years 56 years 4 56 years 8 57 years
months months months
Further, the retirement age for employees in Vietnam is also dependent on the employees’
working conditions. Workers may retire later or sooner, depending on the situation. For
example, employees working in dangerous environments or involved in heavy lifting can
retire sooner, while those who work in the private sector or in highly skilled jobs can retire
later. The maximum extension for this is five years.

Hiring foreign employees

Foreign companies wanting to do business in Vietnam must ensure all provisions of the
Labor Code, which contains the legal framework for the rights and obligations of employers
and employees, including the provisions highlighted in this article, are followed.

Further, a Vietnamese entity is permitted to recruit foreign workers to work as managers,

executive directors, and experts where local hires are not yet able to meet production and
business requirements. Unlike in certain other Asian countries, Vietnamese representative
offices are also able to hire staff directly.

Important Tip
To demonstrate the necessity of a foreign employee, 30 days prior to recruiting the foreign
employee, the entity must publicly announce recruitment for this position to Vietnamese job
seekers in a Vietnamese newspaper or online portal.

The labor code requires that the evidence of this announcement should be provided in the
application for a work permit for a foreign employee. The other option is to recruit foreigners
through a government-owned employment service center.
Additional provisions under Vietnam's Labor Code
Unions: Vietnam allows independent trade unions to operate as opposed to currently being
supervised by the state-run Vietnam General Confederation of Labor (VGCL). The
independent union is required to get permission from state authorities to operate. Allowing
labor unions to operate is a requirement under several free trade agreements entered into
by Vietnam.

Salary
The government does not regulate salary policies at individual companies that are
negotiated between the employer and employees, however, rules on minimum
wages must be followed.

Discrimination
The labor code has safeguards protecting employees from discrimination in the workplace.
This includes protection from sexual harassment and discrimination based on skin color,
race, nationality, ethnic group, gender, marital status, pregnancy, political views, disability,
HIV status, or if in a trade group. The labor code also enhances protections for younger
workers.

Sexual harassment
The code provides guidelines to prevent sexual harassment in the workplace. This includes
any form of sexual harassment, including physical, verbal, or non-verbal harassment, such
as body language or display of sexual activity directly or electronically. The workplace has
also been defined to include anywhere where the employee actually works, including work-
related locations such as social activities, workshops, business trips, phone conversations,
vehicles, and so on.

Labor supervision
Once a company begins operations, the employer must make a labor-management book at
the head office, or branch, or representative office about the basic information about
employees. Any changes to labor must be reported every six months to the labor
department.

Female employees
To make it easier for female employees, those who have children under 12 months of age
are allowed a 60-minute break every day from work to breastfeed.
Female employees are also granted a 30-minute break during their menstruation period.
The number of days the time off will be given can be agreed upon by both parties but must
be a minimum of three working days per month.

If female employees do not have time to take the aforementioned breaks and are allowed
to keep working, the employee is required to pay additional wages for the work, which is
separate from overtime pay.