AMENDMENT AND SUPPLEMENTATION OF LABOR CONTRACTS 2025
Topic 11:
AMENDMENT AND SUPPLEMENTATION OF LABOR CONTRACTS
MSc. Hoàng Thị Minh Tâm
SUMMARY OF THE CASE AND COURT DECISION
[Judgment No. 723/2020/LĐ-PT dated July 29, 2020, of the People’s Court of Ho Chi Minh City]
Summary of the Case:
After a probationary period, Ms. Hoàng Thị Phương and DH Company Limited (abbreviated as DH Company) entered into a fixed-term labor contract of 36 months (from August 1, 2018, to August 1, 2021). Under the labor contract, the employee’s workplace was designated as 903-904, 9th Floor, M Building, No. 1060 N.L. Road, T.P. Ward, District B, Ho Chi Minh City. On September 10, 2018, Ms. Phương received a notice of reassignment to work in T.U. Town, Bình Dương Province.
On the same day, Ms. Phương responded with a letter expressing her disagreement with the change of workplace, citing its inconsistency with the terms of the labor contract. On September 13, 2018, DH Company issued a second notice, reaffirming that if Ms. Phương did not accept the reassignment, the company would terminate her labor contract 30 days after the expiration of the second reassignment notice. Ms. Phương again submitted a response to DH Company, reiterating her refusal to accept the reassignment. Due to Ms. Phương’s non-compliance with the change of workplace, DH Company issued a decision to terminate her labor contract.
The court held that if an employer wishes to change an employee’s workplace, the employer must negotiate with the employee to amend the labor contract or enter into a new contract. If no agreement is reached, the terms of the existing labor contract must be followed.
Court Decision:
[…] DH Company’s change of the employee’s workplace and subsequent termination of the labor contract were unlawful […]
COMMENTARY
I. Introduction
The stage of concluding a labor contract plays a critically important role, laying the foundation for establishing the employment relationship between the employee and the employer. The conclusion of a labor contract is a process of negotiation and agreement between the employee and the employer to establish the terms of the contract. The purpose of this process is to create an employment relationship. This initial phase involves negotiation and agreement to align the parties’ intentions toward establishing an employment relationship. Therefore, to establish a harmonious and stable employment relationship based on mutual respect, both parties must act with awareness and good faith, particularly with a strong sense of legal consciousness and goodwill during negotiations.
Once a labor contract takes effect, both parties are obligated to fully and faithfully perform the agreed-upon terms. However, since the agreement is established at a specific point in time with certain conditions and feasibility of performance, while the employment relationship typically spans an extended period and is significantly influenced by objective market conditions, challenges may arise.
Consequently, during the performance of the labor contract, the parties may, for various reasons, be unable to fulfill the agreed terms as intended. Thus, amending the content of a labor contract becomes, in certain cases, an objective necessity. Fundamentally, the provisions of the 2019 Labor Code regarding the conditions under which the parties may amend or supplement a labor contract do not differ significantly from prior regulations [Article 33 of the 2019 Labor Code].
II. Legal Issues
- Conditions for the Parties to Amend or Supplement a Labor Contract
The parties may agree to modify the terms of a labor contract, but such modifications must comply with the legal provisions governing the amendment process. Pursuant to Article 33 of the 2019 Labor Code, during the performance of a labor contract, if either party requests an amendment or supplementation of its terms, that party must notify the other party at least three working days in advance regarding the proposed changes.
If the parties reach an agreement, the amendment or supplementation of the labor contract may be effected by executing an annex to the contract or entering into a new labor contract. If the parties fail to agree on the amendment or supplementation, they must continue to perform the labor contract as originally concluded [Article 35 of the 2019 Labor Code].
At the time of concluding a labor contract, the parties agree on their respective rights and obligations, including the job duties, salary, and other terms. Any subsequent changes to the contract’s terms, once it is in effect, must be based on the mutual consent of both parties. In the case referenced above, the employee and employer had specifically agreed on the job duties, workplace, and other benefits of the employee. Accordingly, Ms. Phương’s workplace was designated as Ho Chi Minh City.
Therefore, if DH Company wished to transfer the employee to a new workplace in Bình Dương Province, it was required to negotiate this change with her. Ms. Phương’s repeated responses indicating her refusal to accept the change of workplace, as compared to the terms of the labor contract, signified that the parties failed to successfully negotiate an amendment to the contract’s terms.
DH Company was thus obligated to continue performing the labor contract in accordance with its original terms. Consequently, the author concurs with the court’s ruling, which declined to recognize the employer’s decision to reassign the workplace and determined that DH Company’s termination of the labor contract was unlawful.
From another perspective, it is evident that although an employment relationship is formed based on the voluntary agreement of the employee and employer, the balance of power in labor supply and demand often tilts in favor of the employer during negotiations. In some instances, employers include provisions anticipating changes to job duties, workplace, or other rights and obligations at the time of concluding the labor contract.
For example, in a case resolved under Judgment No. 03/2018/LĐPT dated April 17, 2018, of the People’s Court of Đà Nẵng City [Mr. Tiến and N Commercial Joint Stock Bank entered into a labor contract, wherein Clause 1.4 of Article 1 stipulated that Mr. Tiến’s job duties were “debt recovery and/or other titles as determined by the bank’s decision.” Additionally, the contract included a provision stating that “during the term of the contract, the employee’s salary may change in accordance with the bank’s regulations and applicable law.
Such changes are deemed automatically accepted by the employee, and the parties are not required to execute an annex or re-sign the labor contract. Decisions regarding salary changes are considered an inseparable annex to this contract.” Based on this provision, the bank issued a decision reassigning Mr. Tiến from a debt recovery specialist to a non-specialized debt recovery officer and individual customer relations officer. Mr. Tiến argued that this constituted a change to the labor contract’s terms, but the bank neither provided prior notice nor negotiated with him, which he claimed violated labor law provisions. Both the trial and appellate courts rejected Mr. Tiến’s claims.]
The parties had agreed that the employee’s job duties and salary could change during the performance of the labor contract without requiring further negotiation with the employee. The court upheld this agreement as compliant with legal provisions. However, from a certain perspective, this places the employee at a disadvantage, as they may be assigned undesired job duties or receive a salary disproportionate to their performance, potentially even lower than that of their previous role, thereby prejudicing the employee’s rights.
It can be observed that the terms agreed upon in the labor contract in this second case effectively nullified the provisions of Article 33 of the 2019 Labor Code. The employer could rely on the contract’s clauses to alter the employee’s job duties without negotiation, without adhering to the notice requirement, and without executing a new contract or annex for such changes.
- Consequences of Amending or Supplementing the Terms of a Labor Contract
In essence, the amendment or supplementation of a labor contract’s terms stems from the voluntary intent of the employer and the employee. Each party to the employment relationship has the right to propose changes to the contract’s terms to the other party, provided that they notify the other party at least three working days in advance. If the parties successfully negotiate the amendment or supplementation, the agreed changes may be documented in the form of an annex to the contract, or the parties may enter into a new labor contract.
Conversely, if the parties cannot reach an agreement on the amendment or supplementation, they must continue to perform the labor contract as originally concluded. However, in the first case analyzed by the author, DH Company, after issuing two notices regarding a change of workplace that were not accepted by the employee, proceeded to terminate the labor contract.
Notably, in the second reassignment notice, the employer included a statement indicating that it would terminate the labor contract if the employee did not comply with the change. In practice, the company terminated the contract after receiving the employee’s response refusing the workplace change. Consequently, DH Company violated Article 33 of the 2019 Labor Code (equivalent to Article 35 of the 2012 Labor Code) concerning the conditions for amending or supplementing a labor contract, as well as the regulations on unilateral termination of a labor contract.
The employee’s refusal to agree to changes in the terms of the concluded labor contract does not constitute grounds for the employer to unilaterally terminate it. Therefore, the court’s determination that the employer unlawfully terminated the labor contract unilaterally and its order for the employer to compensate the employee are entirely persuasive.
III. Conclusion
An employment relationship is established based on the freedom of agreement between the employee and the employer, which is recognized and protected by law. However, during the performance of a labor contract, certain terms agreed upon at the time of its conclusion may no longer be suitable. In such cases, both the employee and the employer may consider and adjust these terms. The amendment or supplementation of a labor contract alters one or more of its provisions to ensure that the contract aligns with current realities and meets the needs of both parties. Nevertheless, such changes must be carried out in good faith, adhering to the principle of voluntariness in the conclusion and performance of the labor contract.
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