PROBATION PERIOD IN LABOR CODE 2025
Topic 9:
PROBATION PERIOD IN LABOR CODE
MSc. Lương Minh Sơn
SUMMARY OF THE CASE AND THE COURT’S DECISION
[Judgment No. 05/2022/LĐ-PT dated June 7, 2022, of the Đồng Nai Province People’s Court.]
Case summary:
On March 19, 2020, Z Company Limited (referred to as Z Company) sent Mr. Đỗ Ngọc a bilingual English-Vietnamese job offer letter for the position of Quality Manager, with a probation period of 60 days and a probation salary of 43,000,000 VND. The letter stated no agreement on social insurance contributions during the probation period and that an employment contract with fixed-term conditions would be signed upon completion of the probation period. Mr. Đỗ Ngọc began working at Z Company on April 13, 2020.
On June 9, 2020, Z Company sent Mr. Đỗ Ngọc a second offer letter in English titled “Letter of Offer,” which he signed on June 13, 2020. The position was again stated as “Quality Manager” (translated as either Head of Quality Department or Quality Management Director), with a probation period of two months that could be extended by agreement, a probation salary of 43,000,000 VND, and no agreement on social insurance contributions. On July 17, 2020, Z Company notified Mr. Đỗ Ngọc of the termination of his employment.
Mr. Đỗ Ngọc argued that after the expiration of the probation period (June 12, 2020), according to the March 19, 2020 offer letter, his continued work at Z Company established an official employment relationship, resulting in a one-year fixed-term employment contract effective from June 13, 2020. He claimed that Z Company’s termination of the employment contract on July 17, 2020, without prior notice, violated legal regulations, and he requested compensation and social insurance contributions from Z Company.
Z Company disputed Mr. Đỗ Ngọc’s lawsuit, asserting that the company and Mr. Đỗ Ngọc had signed two probation contracts for two different job positions. The company argued that terminating the probation before its expiration date per the June 8, 2020 job offer letter was lawful, as no notice requirement was mandated by law.
The dispute was brought before the Court for resolution.
Court’s decision:
The Court did not accept the plaintiff Mr. Đỗ Ngọc’s claims against the defendant Z Company regarding the “Dispute over the probation contract and unilateral termination of the employment contract.”
COMMENTARY
I. Introduction
Probation constitutes a legal relationship that has been recognized in the Vietnamese Labor Code throughout its various iterations. The rationale behind probation is to allow the parties to better understand each other’s characteristics and capabilities, thereby paving the way for a stable and sustainable official employment relationship.
Under the provisions of the current labor law, before entering into a labor contract for official work, the employer and employee may agree on probation, including the rights and obligations of both parties during the probation period. If the parties agree to probation, they may either conclude a separate probation contract or include probation terms in the labor contract [Clause 1, Article 24, the 2019 Labor Code]. This means that the probation relationship is entirely voluntary and non-mandatory. The parties may agree to conduct probation or skip it altogether. If the parties immediately conclude a labor contract to establish an official employment relationship without going through the probation phase, it remains consistent with the legal regulations.
Clause 1, Article 26, the 2012 Labor Code stipulates the form of agreement on probation, stating: “If there is an agreement on probation, the parties may conclude a probation contract.” This implies that the parties can conclude an independent probation contract. However, in practice, to minimize paperwork and administrative burden, as well as to streamline negotiations over similar terms multiple times, the employer and employee may agree on probation terms directly within the labor contract. Furthermore, incorporating probation terms in the labor contract can mitigate risks when the probation period ends, particularly if the employer announces satisfactory probation results but has not yet signed the labor contract with the employee.
A legal issue that arises in such situations is whether such agreements hold legal validity. This issue was once a matter of varying opinions. Therefore, when the 2019 Labor Code was promulgated, the law explicitly recognized this form and directly acknowledged probation clauses within labor contracts. Specifically, if the parties agree on probation, they may either conclude a separate probation contract or include probation terms within the labor contract [Clause 1, Article 24, the 2019 Labor Code].
Moreover, during the probation relationship, the law specifies provisions to protect the interests of the parties, such as their rights and obligations, the duration of probation, and wages during the probation period. Specifically, the rights and obligations are agreed upon by the parties based on terms similar to those of an official labor contract, including:
(i) the job and workplace;
(ii) contract duration;
(iii) wages, payment methods, payment deadlines, wage supplements, and other allowances;
(iv) working hours and rest periods; and
(v) provision of labor protection equipment to the employee [Clause 1, Article 26, the 2012 Labor Code; Clause 2, Article 24, the 2019 Labor Code]. Additionally, since probation is founded on freedom and voluntariness, beyond the above-mentioned terms, the parties may agree on any other terms as long as they do not contravene the law or social ethics.
Regarding the probation duration, the 2012 Labor Code stipulates that probation must not exceed 60 days, 30 days, or 06 working days, depending on the nature and complexity of the job subject to probation. Probation may only be conducted once for a specific job [Article 25, the 2019 Labor Code], while ensuring compliance with the legal time limits. This duration was extended under the 2019 Labor Code, which added a probation period of up to 180 days for managerial positions in enterprises pursuant to the provisions of the Enterprise Law and the Law on Management and Use of State Capital Invested in Enterprises [Clause 1, Article 25, the 2019 Labor Code].
Regarding wages during probation, such wages are agreed upon by the parties. However, the employee’s wages during probation must be at least 85% of the wages for the job in question [Article 26, the 2019 Labor Code].
In the situation mentioned above, it can be observed that the parties voluntarily and lawfully agreed to and entered into a probation contract.
However, similar to other legal relationships, the probation relationship, apart from establishing its content foundations, must also encompass legal consequences upon its termination. According to Article 27 of the 2019 Labor Code concerning the conclusion of the probation period: “Upon the conclusion of the probation period, the employer must notify the employee of the probation results. If the probation requirements are met, the employer shall continue implementing the labor contract already concluded in cases where probation terms are included in the labor contract, or shall conclude a labor contract in cases where a separate probation contract was signed.”
To provide detailed guidance on this matter, Article 7 of Decree No. 05/2015/ND-CP, which provided guidance on the 2012 Labor Code, included additional provisions on notifying the results of probation. Specifically, in cases where the probation meets the requirements, the employer must immediately conclude a labor contract with the employee upon the end of the probation period. However, under Decree No. 145/2020/ND-CP, which provides guidance on the 2019 Labor Code, no additional provisions are included.
Thus, it is evident that the current labor law contains limited provisions and lacks clarity regarding the procedures and legal consequences upon the termination of the probation relationship. This raises legal questions concerning how the consequences following the conclusion of the probation contract should be addressed if the parties (particularly the employer) fail to adhere to the legal requirements fully.
Specifically, in the situation described above, the employer failed to notify the probation results or conclude a labor contract after the probation period ended, yet still allowed the employee to continue working as usual. Subsequently, the employer decided to terminate the relationship with the employee. Does this comply with the legal regulations? Does an employment relationship arise after the probation contract concludes? If so, what type of labor contract corresponds to that relationship?
II. Legal Issues
- The Relationship After the Conclusion of the Probation Period
In the case mentioned above, the Court stated:
“Regarding the job offer letter (considered a probation contract) dated March 19, 2020, both parties admitted that it was terminated as of June 12, 2020, without any disputes arising regarding rights and obligations from this contract. As for the job offer letter dated June 8, 2020, with a probation period of 60 days starting from June 13, 2020, the plaintiff claimed to have been coerced into signing it but could not provide evidence to prove coercion.
The defendant argued that the job offer letter dated June 8, 2020, was for probation for a new job position, ‘Head of Quality Department,’ but also failed to provide evidence proving this new job position. Meanwhile, the titles and salaries in both job offer letters were identical. Therefore, there is a basis to determine that Company Z and Mr. Đỗ Ngọc entered into two probation contracts (job offer letters) for the same job position of ‘Quality Manager,’ and with identical salaries.
Pursuant to Article 27 of the 2012 Labor Code, which provides: ‘The duration of probation depends on the nature and complexity of the job, but probation can only be conducted once for a job and must meet the following conditions: Not exceeding 60 days for jobs requiring qualifications from college level or higher;… […]”
Thus, the Court’s findings indicate that the Court did not recognize the existence of an employment relationship after the probation period ended where the employee did not receive notification of probation results but continued to work. This aligns with the view that:
“This is merely a case of exceeding the legally prescribed duration or frequency of probation, and therefore does not establish an official employment relationship. In such cases, the employer shall be subject to administrative sanctions pursuant to the provisions of Decree No. 93/2013/ND-CP (as amended and supplemented by Decree No. 88/2015/ND-CP)” [This conduct is now regulated under Article 10 of Decree No. 12/2022/ND-CP dated January 17, 2022, of the Government, which prescribes administrative penalties in the fields of labor, social insurance, and Vietnamese employees working abroad under contracts].
The Court further noted:
“Clause 2, Article 9 of Decree No. 28/2020/ND-CP of the Government, which prescribes administrative penalties in the fields of labor, social insurance, and Vietnamese employees working abroad under contracts, provides:
- A fine ranging from 2,000,000 to 5,000,000 VND shall be imposed on employers committing one of the following acts:
a) Requiring employees to undergo probation more than once for a single job;…”
The signing of two job offer letters (probation contracts) by Company Z and Mr. Đỗ Ngọc for the same job position contravenes the provisions of the 2012 Labor Code by violating the allowed frequency of probation. However, this act of Company Z only results in liability toward the administrative labor authorities and does not establish a labor contract relationship with Mr. Đỗ Ngọc pursuant to the provisions of the Labor Code. Therefore, Mr. Đỗ Ngọc’s claim that he and Company Z had established a one-year fixed-term labor contract as of June 13, 2020, and that the Company’s termination of his employment as of July 17, 2020, without prior notice constituted unlawful unilateral termination of the labor contract, is unfounded.”
The author argues that the Court’s reasoning is entirely unconvincing. In reality, when the employee continues to work, it signifies their willingness to persist with the key terms agreed upon in the probation contract (regarding job duties, workplace, working conditions, rights, and obligations). At the same time, in their managerial role, the employer is fully aware that the employee continues to work and whether the employee has met the requirements of the probation period for the tested job. In other words, the employer must bear responsibility for supervising and managing probation-related matters.
Thus, if the employer assigns tasks to the employee and does not object to the employee continuing to work, this can be considered tacit approval. Therefore, from a conceptual standpoint, both parties have mutually agreed and expressed their desire to continue the relationship, thereby giving rise to an employment relationship [Lường Minh Sơn, “Some Issues Regarding Probation Regulations in Vietnamese Labor Law,” Journal of Legal Science, Issue 6 (109)/2017].
The issue of establishing an employment relationship after the probation period has also been addressed in Precedent No. 20/2018/AL, approved by the Council of Judges of the Supreme People’s Court on October 17, 2018, and published under Decision No. 269/QĐ-CA dated November 6, 2018, by the Chief Justice of the Supreme People’s Court.
Accordingly, the precedent’s content pertains to Mr. Trần working at Limited Liability Company L – L Supermarket – Branch B from September 9, 2013, under a Job Offer Letter dated August 20, 2013, issued by Limited Liability Company L. According to the job offer letter, Mr. Trần worked in the position of Non-Food Department Head with the type of labor contract: Fixed-term (12 months or more), probation period: two months…
Mr. Trần began working on September 9, 2013. After the two-month probation period (from September 9, 2013, to November 9, 2013), Mr. Trần continued working. On December 19, 2013, Mr. Trần resigned. On December 28, 2013, the Human Resources Department of Limited Liability Company L invited Mr. Trần to a company meeting and drafted a “Minutes of Agreement Re: Termination of Labor Contract Ahead of Schedule.” Mr. Trần noted in the minutes: Disagreement with the handling of labor contract termination.
On December 29, 2013, Limited Liability Company L issued Decision No. 15/QĐKL-2013, unilaterally terminating Mr. Trần’s labor contract, citing reasons of frequent failure to complete duties as stipulated in the contract; the termination was effective as of December 28, 2013. On January 6, 2014, Mr. Trần received the termination decision.
On February 24, 2014, Mr. Trần filed a lawsuit regarding the unilateral termination of his labor contract.
The precedent’s findings include:
[2] Mr. Trần began working for Limited Liability Company L under the Job Offer Letter dated August 20, 2013, which specified: “Type of labor contract: Fixed-term (12 months or more). Probation period: two months. After the probation period (from September 9, 2013, to November 9, 2013), Mr. Trần did not receive any notice regarding the probation results but continued working.
Limited Liability Company L asserted that after the two-month probation period, Mr. Trần did not meet job requirements, and the company decided to extend his probation by one additional month to give him an opportunity to complete his duties and to allow further assessment of his performance. However, there is no documentation evidencing any agreement between Mr. Trần and Limited Liability Company L on extending the probation period.
[3] Clause 1, Article 27 of the Labor Code stipulates that the probation period “Shall not exceed 60 days for jobs requiring technical or professional qualifications from college level or higher.”
In the self-disclosure statement dated June 14, 2014, the representative of Limited Liability Company L stated: “The company understands that after the probation period (60 days) ends, if no labor contract has been signed, the employee shall officially work under a fixed-term 12-month contract.”
Thus, the representative of Limited Liability Company L admitted that after the probation period, Mr. Trần became an official employee under a 12-month fixed-term labor contract. In practice, Limited Liability Company L negotiated with Mr. Trần regarding termination of the labor contract on December 28, 2013. When negotiations failed, on December 29, 2013, the CEO of Limited Liability Company L issued Decision No. 15/QĐKL-2013 regarding unilateral termination of the labor contract with Mr. Trần.
Therefore, there is sufficient basis to affirm that the relationship between Mr. Trần and Limited Liability Company L after the probation period constituted a labor contract relationship.
Thus, the precedent’s content demonstrates that following the probation period, if the employee continues to work, a labor contract relationship is established between the parties. This resolves the gap in determining the legal consequences post-probation as stipulated in Article 27 of the 2019 Labor Code (corresponding to the earlier Article 29 of the 2012 Labor Code).
- Type of Labor Contract After the Conclusion of the Probation Period
Determining the type of labor contract in this relationship is of paramount importance because it significantly impacts the conditions under which the employment relationship may later be terminated.
In the aforementioned case, the Court did not recognize an employment relationship after the probation period had ended; consequently, the Court neither reviewed nor resolved Mr. Đỗ Ngọc’s request, nor did it determine the type of contract as requested by Mr. Đỗ Ngọc, who argued that it was a fixed-term contract of 12 months.
The author opines that the Court’s resolution was not entirely appropriate or convincing. The current legal framework does not stipulate that, upon the conclusion of the probation period without the signing of a labor contract, the employee continuing to work automatically results in an indefinite-term labor contract or a fixed-term contract of 12 months, 24 months, 36 months, or any other duration. This represents a legal deficiency that requires attention and consistency in approach.
Meanwhile, similar cases have been interpreted differently by courts. For instance, in the dispute between the News Department of Vietnam Television (VTV) and an editor, the Ba Đình District Court in Hanoi required the News Department of VTV to reinstate the plaintiff into work under a fixed-term labor contract of 12 months and pay wages for the days the plaintiff did not work [Tâm Lụa, “News Department of VTV Lost Case,” https://tuoitre.vn/ban-thoi-su-vtv-thua-kien-1100944.htm, last accessed January 22, 2025].
Thus, there is a significant disparity between court judgments. In the case under review, after the probation period ended and Mr. Đỗ Ngọc continued to work (probation for the second time), the Court ruled that no employment relationship existed (or no labor contract was concluded). Conversely, in the dispute between the editor and VTV, when the employee continued working for just one month after the probation period, the Court ruled that a fixed-term labor contract of 12 months had been established.
The author suggests reconsidering this matter based on the original intent of both parties when concluding the probation contract. Two scenarios may occur:
- If the parties initially agreed on the type of labor contract to be concluded after the probation period, their original intent should be respected. Up to the point of the incident, the parties had not reached any subsequent agreements differing from their original intent.
- If the parties did not make an initial agreement to express their intent, it should be determined that the type of labor contract is a fixed-term contract, specifically for 12 months. Such determination achieves a balance of interests between the parties in the employment relationship, protecting the employee by ensuring the continuation of the employment relationship after the probation period while simultaneously safeguarding the employer’s ability to manage and utilize labor. If, at the conclusion of the 12-month term, neither party wishes to continue the relationship or the employer does not wish to retain the employee, the employment relationship may be terminated.
At the same time, according to the content of Precedent No. 20/2018/AL, from the outset, Mr. Trần worked for Limited Liability Company L under the Job Offer Letter dated August 20, 2013, which specified: “Type of labor contract: Fixed-term (12 months or more). Probation period: two months.”
Accordingly, after the Court established that an employment relationship had arisen between Mr. Trần and the Company, the Court further noted:
“In the Self-Disclosure Statement dated June 14, 2014, the representative of Limited Liability Company L stated: ‘The Company understands that, after the conclusion of the probation period (60 days), if no labor contract has been signed, the employee shall officially work under a fixed-term contract of 12 months.’ Thus, the representative of Limited Liability Company L acknowledged that, after the probation period ended, Mr. Trần became an official employee under a labor contract with a fixed-term duration of 12 months.”
The above content demonstrates, to some extent, the Court’s recognition of the value of the initial agreement between the parties in defining the specific purpose of the probation relationship. However, the precedent’s content does not clearly affirm the Court’s stance regarding situations where, from the outset, no agreement was made concerning the type of contract to follow the probation relationship.
While awaiting unified legal provisions, the courts should adopt consistent judicial perspectives to best protect the rights of employees participating in probation relationships.
III. Conclusion
Probation is a voluntary relationship mutually agreed upon by the parties and legally recognized. Nevertheless, the law also provides standardized principles to protect the rights of the parties involved. The issue of determining the consequences of this relationship, as analyzed above, remains unresolved, resulting in numerous disputes due to varying interpretations in practice. Moreover, judicial decisions have also differed in applying the law, leading to inconsistencies and unfairness. Therefore, it is necessary to supplement related legal provisions in a clear and consistent manner to ensure fairness and ease of implementation for all parties involved.
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