Invalid employment contract

An employment contract is evidence proving the labor relationship between the employee and the employer. In some cases, an employment contract shall be partially or completely invalid due to violations of regulations on contract content, signing authority, and work performance.

According to the provisions of Article 49 of the Labor Code 2019, there are two types of invalid employment contracts, namely, an employment contract shall be completely invalid and an employment contract shall be partially invalid, specifically:

“1. An employment contract is completely invalid in the following cases:

1. a) The entire contents of the employment contract are illegal;
2. b) A person concludes the employment contract ultra vires or against the rules for employment contract conclusion specified in Clause 1 Article 15 of this Labor Code;
3. c) The work described in the employment contract is prohibited by law;
4. An employment contract shall be partially invalid when part of its contents is illegal but does not affect its remaining contents.”

An employment contract shall be completely invalid when the entire contents of the contract are illegal or a person concludes the employment contract ultra vires (for example, an employment contract is signed by a person who is not the legal representative or an authorized person; employees aged full 15 years to under 18 years enter into employment contracts without the written consent of their legal representatives; …) or against the rules for employment contract conclusion (for example, the employer keeping the employee’s original identity documents; forcing the employee to keep performing the employment contract to pay a debt to the employer….) or the work described in the employment contract is prohibited by law (for example, trading of counterfeit and imitation goods; illegally transporting explosives, military weapons, etc.).

In case an employment contract shall be partially invalid when part of its contents is illegal but does not affect its remaining contents, an employment contract will be invalidated for the content that violates the law (for example agreement on overtime work too much 200 hours/year…) without affecting the validity of the remaining contents.

Competence to invalidate employment contracts

When an employment contract contains content that violates the law under Article 50 of the Labor Code 2019 and Article 401 of the Civil Procedure Code 2015 (“CPC”), the Court is the competent authority to handle the employee’s request, the employer, the representative organization of the labor collective, the competent state agency and declare an employment contract invalid.

 Settlements upon invalidation of an employment contract 

“Article 51.  Settlements upon invalidation of an employment contract

1. Where an employment contract is declared as partially invalid, it shall be dealt with as follows:
2. a) The rights, obligations and benefits of the parties shall be settled in accordance with the collective bargaining agreement (or provisions of the law if there is no collective bargaining agreement);
3. b) The parties shall revise the invalidated part of the employment contract in accordance with the collective bargaining agreement or labor laws.
4. In case an employment contract is completely invalidated, the rights, obligations and interests of the employee shall be settled in accordance with the law. In case an employment contract is concluded ultra vires, another contract shall be concluded.”

When the Court declares that an employment contract shall be completely invalid due to improper signing, the employer and the employee shall re-sign an employment contract. When an employment contract shall be completely invalid in other cases, the legal consequences of handling the invalid employment contract will be adjusted by the Civil Code 2015 (for example, not give rise to, change or terminate any civil rights and obligations of the parties as from the time an employment contract is entered into.; the parties shall restore everything to its original state and shall return to each other what they have received, etc.). In case an employment contract shall be partially invalid, the employer and the employee revise and supplement an employment contract to be consistent with the provisions of law.

Thus, when entering into an employment contract, the employee and the employer should pay attention to the following contents: the content of an employment contract must not violate the prohibition of the law; ensure the authority to enter into employment contracts of the employer, the employee and that the work performed by the employee under the employment contract is not prohibited by law.

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