Terminating an Employee

The process of terminating an employee (without cause) is pretty formal.   (the process of terminating an employee FOR cause may also be formal,  I just have not run into the situation.

Basically,   you would have already signed an agreement with the employee which stated that you would have hired him for a 12 month contract,  which is what you are breaking at this point.  

My understanding is that the government has the ability to tell you that you must rehire the employee.  In my case though I was able to speak to the employee and we set a final termination date,  and he actually helped me to come up with the formal agreement that we executed in order to make it official.

	CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM
Số: 002.2016/MATRAEX	Độc lập – Tự do – Hạnh phúc
	Hà Nội, ngày 23 tháng 02 năm 2016

QUYẾT ĐỊNH

V/v: Chấm dứt Hợp đồng lao động đối với Ông Nguyễn Thế Mạnh

DECISION

On Termination of employment contract for xxxxxxxxxxxxxx

______________________

• Căn Bộ luật luật lao động năm 2012 và các văn bản hướng dẫn thi hành;
• Căn cứ Nội quy lao động của Công ty Matraex;
• Xét theo đơn xin thôi việc của Ông xxxxxxxxxxxxxx

• Based 2012 Labor Law and the documents guiding the implementation;
• Pursuant to the Office Regulation of Matraex;
• Considering the resignation of xxxxxxxxxxxxxx

QUYẾT ĐỊNH

DECISION

Điều 1: Chấm dứt Hợp đồng lao động đối với Ông xxxxxxxxxxxxxx, sinh ngày xx/xx/xxxx – Chức danh: Trưởng phòng Hành chính nhân sự - Văn phòng đại diện MATRAEX, INC tại Hà Nội.

Article 1: Terminate the Employment contract with Mr. xxxxxxxxxxxxxx, born on xx/xx/xxxx - Position: the Office Manager of the representative office MATRAEX, INC Hanoi.

Điều 2: Người lao động có trách nhiệm bạn giao công việc, bạn giao mọi tài sản được giao, thanh toán đầy đủ mọi nghĩa vụ tài chính và các nghĩa vụ có liên quan khác đối với Matraex Inc.

Article 2: The employee shall have resposibilities to hand over all the assigned assets, fulfill all financial obligations and other obligations related to Matraex Inc.

Điều 3: Người lao động được hưởng lương và các khoản trợ cấp, phụ cấp theo Hợp đồng lao động đã ký đến hết ngày xx/xx/xxxx

Article 3: The employee is entitled to salary and benefits, allowances under the labor contract signed by the end of the day xx/xx/xxxx

Điều 4: Quyết định này có hiệu lực kể từ ngày xx/xx/xxxx Người lao động, các đơn vị và cá nhân liên quan chịu trách nhiệm thi hành Quyết định này.

Article 4: This decision takes effect from the date of xx/xx/xxxx. Employees, units and individuals concerned shall be responsible for implementing this Decision.

	CÔNG TY MATRAEX
	CHỦ TỊCH/PRESIDENT

Help in Terminating the Office

I don't cover all of the reasons we decided to wind down the business in Vietnam. The execution was ... more expensive than expected and the timing for the expense was not correct for us.  Perhaps another time....

There are several things that have to be done to wind down the business,   we have to file with the government and we have to cancel existing employment and vendor contracts,  and clean out / vacate our offices.

As we are winding down the office we found that the cancellation of accounts is more difficult for an employee to do. The opening of the account was just a signature and a stamp from the owner,  but now an employee without a stamp and signature is attempting to close the account.  This Letter of Authorization is one that we came up with in order to help give the employee the authority to close accounts and to submit the government forms to close the business.
   

	CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM
Số: 003.2016/MATRAEX	Độc lập – Tự do – Hạnh phúc
	Hà Nội, ngày 23 tháng 02 năm 2016

GIẤY ỦY QUYỀN / LETTER OF AUTHORIZATION

V/v thực hiện các thủ tục liên quan đến chấm dứt hoạt động Văn phòng đại diện Matraex, Inc tại Hà Nội / Execute the procedures related to the termination of operation of The Representative Office Matraex in Ha Noi

• Căn cứ Bộ Luật Dân Sự nước Cộng Hòa Xã Hội Chủ Nghĩa Việt Nam ban hành năm 2005;
• Pursuant to the Civil Code of the Socialist Republic of Vietnam issued on 2005;
• Căn cứ vào các văn bản pháp luật hiện hành.
• Pursuant to current Laws.

1. BÊN ỦY QUYỀN/Mandator (“hereinafter referred to as “Party A”):

• Họ và tên/Full Name: xxxxxxxxxx
• Số Hộ chiếu/CMND: xxxxxxxxxx.
• Chức vụ/Position: Người đứng đầu Văn phòng đại diện
• Ngày cấp / Dated: Nơicấp / Issued at: xx/xx/xxxx
• Quốc tịch/Nationality: Hoa Kỳ

2. BÊN ĐƯỢC ỦY QUYỀN (Bên B)/ Authorized Party (hereinafter referred to as “Party B”):

• Họ và tên/Full Name:xxxxxxxxxx
• Chức vụ/Position: Trưởng phòng Hành chính Nhân sự (Office Manager)
• Số Hộ chiếu/CMND: xxxxxxxxxx
• Ngày cấp / Dated: Nơicấp / Issued at: xx/xx/xxxx tại Hà Nội
• Quốc tịch/Nationality: Việt Nam
• Địa chỉ thường trú/ermanent Address: Số xxxxxxxxxx,xxxxxxxxxx,xxxxxxxxxx
• , Hà Nội

3. NỘI DUNG ỦY QUYỀN / Content of Authorization:

• Bên A ủy quyền cho Bên B thực hiện các thủ tục chấm dứt hoạt động Văn phòng đại diện Matraex Inc tại Hà Nội/ Party A to authorizes Party B to execute the procedures related to the termination of operation of The Representative Office Matraex in Ha Noi.
• Bên B không được ủy quyền lại/ Party B is not allowed to re-authorized;
• Ủy quyền này sẽ tự động hết hiệu lực khi các thủ tục chấm dứt Văn phòng đại diện Matraex Inc tại Hà Nội hoàn thành/ This authorization will automatically expire upon termination procedures Matraex Inc. Representative Office in Hanoi completed.

BÊN ĐƯỢC ỦY QUYỀN/AUTHORIZED PARTY	BÊN ỦY QUYỀN/MANDATOR
NGUYỄN THẾ MẠNH	JANAE KAY BLOOD

Notice of Operations - within 45 days

Something that I had not realized when I first started the process was that within 45 days of receiving a business license the entity is required to publish a notice of operation.

The notice requires you to fill out details of your employees, office location, bank account number and more.  Then you must publish the notice in three newspapers.

This requirement should have been driving the timeline for most of what I did. While I set up the entity as soon as possible it set in motion a 45 day time clock during which time I had several things that I had to accomplish. I needed to change my cheap ro, I needed to set up a bank account which I had to be there in person for, I needed to change my address from the temporary address to the permanent address and I had to figure out what newspapers I could publish things in and in what form.

While I did not No exactly what would happen if I missed that 45 day time. My thought was that I would need to start over. Since I had not yet hired any employees the portion where I notified the government of my employees was very easy I also did not yet have a bank account so I was able to mark it as blank. However I did need to the same time I had to have my chief Ro changed to my permanent ro. With only 45 days there was very little slack between the time frames and for mailing purposes I basically have to get all my documents to my attorney in Vietnam within about a month of the company starting and then they only had a week or so to file everything all the changes and get the notices into three consecutive newspapers over the course of a week. If I were to do this again I would delay the entity set up until I had the ability to take the chief are all to Vietnam so that all of the signatures could be taken care of at once when the entity was set up. I would also before setting up the entities I would have made the office selection so that I would never have to change the office. I would also set up a bank account during that first week when I was there in Vietnam with the chief ro.

All of these decisions are based on the fact that there is no time savings benefit from doing some portion ahead of time because in the end the additional trips and documents that go back and forth make it so there is a longer delay during the setup of the company.  And a trip is still required to Vietnam for the chief ro

Changing the office address -forms

As part of the overall plan for setting up the representative office entity at a temporary attorneys address. An important next step is to change the address to be final office space that we rent. However the process is not Temple Run since we are the most we need help with an attorney to do this for the actual submission and we also need approval from the home office. Until we had 10 different forms. We had to fill out a corporate resolutio. in English and Vietnamese, A decision to change the address in English and in Vietnamese we had to fill out the application to the hanoi authority in Vietnamese and English.  We filled out an expla atiom of the address change in vietnamese and english (to describe to the authority why we are changing so quickly. We filled out a form 80 in Vietnamese only We filled out a power of attorney which was a single form with both English and Vietnamese.  For this particular filling,  I was heading to Vietnam for a week to open the office and welcome my new employees for their first day so I am just going to schedule an appointment with the Hanoi authority and my attorney and my office manager so we can do our own filings in the future.     It also saves my 65$ shipping. (Combined with the other form I would have had to send the shipping savings are almost 10% of the flight)

Notes on office space

Selecting and office space in Hanoi was rather easy.  I am a small company looking to enter the Vietnam market rather quickly and inexpensively.  So ideally I would be able to find an office space that is already built out. Even better would be if it has furniture in it.
As you may have seen in several of my other posts, that is exactly what I found. It turned out that the one i selected was the only one that a realtor search found so this might be somewhat rare.  As I was talking noncommittally. The building manager evaluating the space she did say that she would repaint the space at no cost and give us the first month free so that we could do our office fitting out.    Once I agreed however we had to work remotely in order to put the deal together. Where the quick turnaround time starts to become an issue. We talked about a start time about 7 days in the future with a one month period for a fitout.
This seems like plenty of time to implement t.  However we had to deal with a 150 page agreement,  the first original came from hanoi via some 6 day mail,  then I had to had to have time to review sign and return.  Next it takes about 3 business days for a check to clear. So realistically the lease dates started well before payment had been made and the agent is willing to turn over the keys.

Since I was not there but my office manager was he received the "handover" document.  Apparently this document is very important as the realtor was hesitant when I called her about meeting to pick up the keys.  I will be anxious to see what it is.

Once the office had been painted I asked the lard lord for a suggestion for an Internet contact.  Previously I had requested a couple of contacts in the landlord forwarded them to me. However my attempts to contact them via email and no one ever responded. Each of the Contacts also have a phone number however when I attempted to call the phone number they did not speak English so we could not get anywhere with any kind of order. Sorry I asked the landlord pearl pearl again this time she did a warm and nice and sent an email conversation that she was having with him.  I was able to respond to both of them and jump into the middle of the conversation and they very quickly forwarded Oracle. Internet speeds are interesting in that I can buy 100 mags for about $90 however only 2% of that speed is for international. That means that the majority of traffic we would be doing is severely restricted. It will be interesting to see how much speed we actually get.

Importance of Selecting a Chief RO in a Representative Office

Selecting and hiring the Chief RO of a representative in Vietnam is important.

As you may have seen in some of my other posts,  I (as the owner of Matraex, Inc) am not allowed by Vietnam statute to be the Chief RO of the entity in Vietnam,  however I must have a Chief RO

Some of the factors to consider.

• The Chief RO,  must be present to pickup the seal.  When they pick it up,  they must sign the official papers and registers to start the entity.  As they are signing they actually must use the stamp as well to stamp next to their signature on the official records at the Police headquarters.
• The Chief RO must make a decent wage.  When I wanted to add the responsibility of being the Chief RO to my wife's monthly responsibilities,  the added duties were not much.   Review the books monthly,   perform any signatures as directed by the company through corporate resolution.  These requirements would be minimal and would require at most 5 to 10 hours per month.  So I suggested that I would increase her yearly wage by $5000 for the added responsibilities.  It turned out that our Vietnam attorney thought that idea would not pass scrutiny by the Hanoi Authority.   They suggested an income of $2000 / month and they indicated that this would be one of the lowest incomes of any of the Representative Office companies already in Hanoi.
• The Chief RO must be the one to sign official contracts in Vietnam.  As a Representative Office in Hanoi,  our company will not be allowed to make agreements between the Hanoi entity and another Vietnam entity,  the Vietname Representative Office is not recognized as its own entity.   Instead Matraex must make the agreement between Matraex headquarters and any other company in Hanoi.  However,  in at least one case we found that a Vietnamese company was only willing to accept a signature from the Chief RO on a contract.  It appears that this is because the Chief RO is the only 'localized' signature that is allowed to represent the company in vietnam.  This makes sense because we had to legalize the Chief RO's passport and submit it with the application.  Even though I am the president of the company they are making an agreement with.  the only locally recognized agent,  with a legal local signature,  is the Chief RO. 
• Because of the last point,  the Chief RO of the company holds all of the power of the company; it will likely be worth while to investigate a way that I might be able to register myself (the president) as a locally approved agent of the company.  However in the mean time,  you must  have ultimate trust in the Chief RO.
• The way that I decided to get my Representative Office started in Hanoi,  coincided with an education trip to Hanoi,  so my Chief RO was a trusted school class mate.  However this meant that I had to file a change to the Chief RO soon after to the long term RO.  This meant that while I was in Hanoi the first time,  I had to either 
• prepare my interim Chief RO to sign agreements as the temporary stand in or
• wait until the Change of Chief RO was processed.
• Changing the Chief RO does not take cost any money with the Hanoi Authority and the form to do it is online here.  
• http://english.hanoi.gov.vn/documents/10180/30802/845.doc?version=1.0
• The form allows for many changes however it indicates some complexities for changing the Chief RO, which imply some items which need consideration when selecting a Chief RO.
• The amount of PIT (Personal Income Tax) that was paid by the previous Chief RO.  The form also requires a certification that the PIT was paid.
• A reason that the Chief RO is being changed is required - so basically the decision to change the Chief RO will be scrutinized and it should not be taken lightly.
• The company office location change form is included with the template to change the Chief RO,  which indicates that it may be somewhat common for the ChiefRO and the address to change at the same time
• When changing the Chief RO,  I have to certify that the previous person filed and paid all PIT. This issue somewhat explains why it was important to make a larger salary for the Chief RO.   Because this may allow the government to collect a higher tax on the salary.  I am not positive whether there will be a requirement for the payment to the Chief RO to be made subject to Vietnam payroll taxes and roles.  However because of this,  an important factor to consider when selecting a Chief RO,  is whether to select a local,  or an ExPat.  In the case that an ExPat is selected,  then a whole slew of tax relates issues becomes an issue.
• Is the Chief RO allowed to collect the income in the US since the though the services are all performed from the US?
• If the taxes must be paid to the Hanoi Authority, are taxes paid in Vietnam retaxable in the US?
• How does the company account for and report salary paid to the same individual using two different methods and tax rates.
• Each of these issues potentially creates complexity for the company that selecting a local may not.

Making a job offer - Pay - Employees request a formal offer and need between 30 to 45 days

Employment is a much more formally contracted affair in Vietnam than it is in the USA.

Most professional positions require a contract,  which addresses some very specific points.  If you are hiring an employee away from an existing job,   their existing contract requires either 45 days (if they were hired on a PERManent position) or 30 days if they were hired on a fixed length contract.

Employees seem to want an official job offer which details the terms of a new position before they are willing to give notice (this seems reasonable even for a US employee) however it seems that a formal job offer may have some 'teeth' behind it. Once a job offer is made,  an formal employment contract must be filled out and address:

• Length of Contract
• PERManent contract will require some severe errors by the employee to fire.
• Fixed Length will also require some severe errors to fire,  but will work well for a startup which is unsure of the duration while getting things moving
• Pay Rate - The pay rate and frequency of pay should be documented
• Bonuses -  a 13th month bonus is customary (and possibly mandatory)
• Pension - a pension fund should be calculated at the rate of 1 month salary per year
• Raises - the contract should dictate when reviews and raises are considered (i am not positive if this is required, or just happens to be customary in all of the ones I have seen)
• Job Description - The job description shsould be spelled out closely.  If you have any problems with the employee and need to write them up or let them go,  the Government (or union) authority will use this Job Description in evaluating whether the person was doing their job.

When calculating the Pay Rate,  an interesting conversation has come up that I didn't expect.  It appears that there is term called Gross and Net pay.   Gross is the amount that the employee is paid,  prior to their Government Deductions.  Net is the amount they receive after their deductions.

The interesting thing is that,  when I posted some job descriptions on websites and put a salary / pay rate.  I did not specify whether it was Gross or Net (I did not notice anyone else doing it either), however I received a request from one candidate that when I make a job offer,  that I make the rate a 'Net' rate.  Basically the candidate was just negotiating with me,  which is completely acceptable,  however with out a little research I did not understand what he was really saying.

Here are the basics of it

• An employer / employee contract establishs the Gross Pay Rate
• An employer pays an additional 22% in SMUI Taxes on top of that (Social, Medical and Unemployment Insurance)
• The employee has about 10.5% deducted from their Gross Pay Rate for their portion of SMUI Taxes.  This is the Net Rate (100-10.5 = 89.5% of Gross)
• The employee then has to pay PIT (personal income tax) which is calculated based on a formula that I have not figured out yet.  Most likely it is very complex like the US IRS calc.  I know that it does have some minimum level of income,  possibly a head of household and individual dependendant deductions