12 COMMON LABOR VIOLATIONS THAT BUSINESSES ARE PRONE TO MAKE

Effective human resource management not only lies in building a company culture but also requires strict compliance with the provisions of labor laws. Many businesses, especially startups or small and medium-sized companies (SMEs), often focus on cost optimization and streamlining the apparatus, so it is easy to generate direct agreements that are not made in writing. However, these illegal agreements are potential risks, always ready to turn into huge financial risks when the authorities conduct inspections.

Below are 12 real-life situation questions about the most common labor violations, accompanied by detailed answers and updated legal bases according to Decree 283/2026/ND-CP.

1. Can an enterprise and an employee agree not to sign a written labour contract in order to increase flexibility?

For work with a term of 01 full month or more, the law requires the employer and the employee to enter into a labour contract in writing, either on paper or in the form of an electronic data message^[1]. If the two parties make a verbal agreement to avoid tax or insurance obligations, the enterprise will bear the risks arising from such “verbal agreements” when problems occur. If detected by the competent authorities, the violating organisation will be fined from VND 4,000,000 to VND 50,000,000, depending on the number of employees with whom labour contracts were not concluded in accordance with the law^[2].

2. Is an enterprise with fewer than 10 employees required to issue internal labour regulations?

An enterprise with fewer than 10 employees is not obliged to issue internal labour regulations as a separate written document^[3]. However, such enterprises must not disregard rules on discipline within the company. In this case, important agreements such as those on labour discipline, working hours, rest periods and material liability must be recorded directly in the labour contract of each employee^[4]. Only when an organisation has 10 or more employees is it mandatory to prepare written internal labour regulations and register them with the provincial-level state labour authority.

3. When an enterprise pays salaries by bank transfer, is it still required to provide a detailed payslip?

Although bank transfers help optimise the process, the enterprise is still obliged to provide employees with a detailed payslip for each pay period^[5]. The payslip must clearly show the components of income: basic salary, overtime pay, allowances and deductions (personal income tax, social insurance). Failing to provide a payslip, or providing one that does not comply with the regulations, may subject the organisation to a fine from VND 5,000,000 to VND 10,000,000^[6].

4. If an employee voluntarily proposes not to participate in social insurance in order to receive the amount directly in cash, may the enterprise agree?

Participation in compulsory social insurance is a social security policy of the State and is not subject to free agreement between the parties^[7]. Any agreement or waiver of liability aimed at evading insurance contributions is invalid. Therefore, purchasing social insurance for employees is a minimum obligation of the enterprise; violations may be subject to administrative fines from VND 6,000,000 to VND 75,000,000 depending on the number of employees not registered for compulsory social insurance, or, for other acts of evading contributions, fines from 18% to 20% of the total evaded amount (up to VND 75,000,000 for organisations)^[8]. Furthermore, the organisation and its legal representative may face the risk of criminal prosecution if the evaded amount is sufficient to constitute a criminal offence^[9].

5. May an enterprise keep the originals of an employee’s diplomas and certificates to secure the employee’s commitment to work?

An employer may not retain the originals of an employee’s identity papers, university degrees or practising certificates in any form, even with the employee’s written consent^[10]. Any organisation in violation will be fined from VND 20,000,000 to VND 25,000,000 and will be required to immediately return the retained documents^[11].

6. May an enterprise agree on a probationary salary lower than 85% of the official salary to optimise costs?

The probationary salary is agreed between the enterprise and the employee but must comply with the legal minimum, being at least 85% of the salary for that job^[12]. Any provision in a probation contract setting a salary below 85% has no legal effect. The enterprise will not only be subject to an administrative fine from VND 2,000,000 to VND 5,000,000 but will also be required, as a remedial measure, to pay the employee the full salary^[13].

7. May an enterprise impose fines or salary deductions for breaches of internal labour regulations (such as arriving late or leaving early)?

Using fines or salary deductions in place of labour disciplinary measures is contrary to current law^[14]. When an employee breaches the internal labour regulations, the enterprise may only apply lawful forms of discipline, including: reprimand, extension of the salary increase period, demotion or dismissal (depending on the severity as set out in the internal labour regulations)^[15]. If an enterprise arbitrarily issues rules on “deductions for violations”, it will face a fine from VND 20,000,000 to VND 40,000,000 for organisations^[16].

8. Will an enterprise be penalised for failing to declare and periodically report its use of labour to the competent authorities?

Human resource management is not only an internal matter but also comes with reporting obligations to the State. An enterprise must declare its use of labour within 30 days from the commencement of operations and must periodically report changes in its workforce for the first 06 months of the year and annually^[17]. Delayed or failed reporting will be subject to administrative fines from VND 1,000,000 to VND 3,000,000 imposed by the labour authority^[18] and may adversely affect the enterprise’s legal compliance record when participating in tenders or applying for licences.

9. When a labour contract expires, is the enterprise required to issue a written termination notice if the employee has already stopped working?

Issuing a written termination notice when the employee has stopped working is a mandatory obligation under current law^[19]. Even where a labour contract expires naturally, the employer must still notify the employee in writing of the termination of the labour relationship. Failure to follow this procedure may result in a fine from VND 1,000,000 to VND 3,000,000^[20], while also putting the enterprise at a disadvantage in subsequent disputes.

10. May an enterprise automatically cancel an employee’s unused annual leave days upon the employee’s resignation?

Annual leave is a legitimate entitlement of employees. Where an employee leaves the job without having used all of his or her annual leave, the enterprise is obliged to pay the employee’s salary for the days not taken^[21]. Refusing to pay this amount is considered a breach of financial obligations upon termination of the contract; the enterprise will be penalised and required to pay the amount owed to the employee^[22].

11. If an employee voluntarily proposes it, may the enterprise arrange overtime work exceeding 40 hours per month?

The limits on overtime are established to protect the safety and health of employees. Accordingly, overtime must not exceed 40 hours per month under normal working conditions^[23]. Even with a voluntary written request from the employee, an enterprise that arranges or allows work beyond this limit will still be found to have violated the law and will be subject to a fine from VND 20,000,000 to VND 25,000,000^[24].

12. Is a small enterprise required to include provisions on the prevention of sexual harassment in its internal labour regulations?

This is a mandatory obligation for all enterprises, regardless of their size. The law requires internal labour regulations to contain detailed provisions on identifying such behaviour, measures to prevent and combat sexual harassment in the workplace, as well as the order and procedures for handling discipline^[25]. The absence of such content in internal governance documents, or the enterprise’s failure to intervene and take action when a complaint is made, will lead to strict sanctions by the inspection authority, and it is highly likely that the internal labour regulations will not be accepted by the competent authority upon registration.