Many employees agree to work based only on verbal agreements, especially for temporary jobs or at small businesses, without signing an employment contract (Labor Contract). So, what are the risks of working without an employment contract? This article examines the specific legal consequences and suggests ways to protect your rights under current regulations

– Under the 2019 Labor Code, employment contracts must, in principle, be made in writing.

– Without an employment contract, employees may lose access to insurance benefits and allowances and may have difficulty proving the employment relationship in a dispute.

– Employers may face administrative penalties and be required to pay outstanding social insurance contributions.

– Keeping evidence of the employment relationship and seeking advice from the relevant authorities are important steps to protect one’s rights.

1. Current Regulations on the Form of Employment Contracts

Under the 2019 Labor Code (No. 45/2019/QH14), an employment contract is an agreement between an employee and an employer concerning paid work, working conditions, and the rights and obligations of both parties. The law sets clear requirements regarding the form of employment contracts rather than allowing both parties to rely on verbal agreements in all situations.

Specifically, Article 14 of the 2019 Labor Code stipulates that employment contracts must, in principle, be made in writing and prepared in two copies, with each party retaining one. Verbal agreements are only permitted for employment lasting less than one month, except in certain specific cases where a written contract is still required by law. Employment contracts made electronically in the form of data messages also have the same validity as written contracts.

Therefore, if a person works continuously for several months based only on a verbal agreement, this is essentially contrary to the intent of the law. Establishing the correct form of employment contract from the beginning helps both parties clearly understand their legal position.

2. Risks for Employees Working Without an Employment Contract

When considering the risks of working without an employment contract, most of the consequences tend to fall on employees, who are generally the more vulnerable party. Without a written agreement, many basic rights are more difficult to guarantee, and employees may be placed at a disadvantage when disputes arise.

You can also explore legal and law-related jobs on CareerLink to better understand current market demands and employer requirements.

1. Loss of Insurance Benefits and Allowances

Without a formal employment contract, employees may easily be excluded from social insurance (SI), health insurance (HI), and unemployment insurance (UI). These are important social security benefits that provide long-term protection. Common disadvantages include:

– Employees may not accumulate social insurance contribution periods to qualify for retirement, sickness, or maternity benefits.

– Employees may lose the opportunity to receive unemployment benefits when their employment ends.

– Employees may have difficulty receiving medical treatment costs covered under health insurance.

These benefits may seem insignificant in the short term but can have a considerable impact on financial security when employees face unexpected difficulties or reach retirement age.

2. Difficulty Proving the Employment Relationship in a Dispute

One hidden but common risk is the difficulty of proving that an employment relationship exists when a dispute arises. Without a contract, employees must collect indirect evidence to prove that they actually worked for the company. This can make the process of filing a complaint, mediation, or legal action much more complicated and time-consuming.

– Warning: Without an employment contract, employees may be at greater risk of unpaid wages or wage withholding and have less clear legal grounds for demanding payment.

– In the event of a workplace accident, employees may have difficulty receiving appropriate compensation if the employment relationship has not been formally recognized.

3. Risks Related to Salary and Working Conditions

Verbal agreements make terms such as salary, payment dates, working hours, leave, and overtime arrangements more vulnerable to unfavorable changes. Without written documentation, employees may find it difficult to rely on the original agreement to require the employer to fulfill its commitments. This is why many wage and compensation disputes can become prolonged, with the weaker party often suffering the greater loss.

3. Risks for Employers

Many businesses mistakenly believe that not signing employment contracts will help them reduce insurance costs and provide greater flexibility in managing employees. In reality, this approach carries significant risks. Employers who avoid their obligation to enter into written contracts may face administrative penalties and other disadvantages.

To learn more, you can also explore Key Changes in the Labor Code in CareerLink’s Career Guide.

Under regulations on administrative penalties in the labor sector, particularly Decree No. 12/2022/ND-CP, employers who fail to enter into written contracts for jobs where written contracts are mandatory may face fines, with the amount increasing according to the number of employees involved. Social insurance authorities may also recover unpaid contributions together with late-payment interest. In the event of a dispute, the absence of a written contract can make it more difficult for the company to defend its position before the relevant authorities.

The following comparison illustrates the potential impact on both parties.

Aspect	Risks for Employees	Risks for Employers
Insurance	No SI, HI, or UI contributions	Recovery of unpaid insurance contributions and late-payment interest
Legal	Difficulty proving the employment relationship	Possible administrative penalties
Financial	Risk of unpaid or withheld wages	Additional costs for remediation and compensation
Disputes	Disadvantaged and lacking clear evidence	Disadvantaged when reviewed by authorities

As can be seen, avoiding an employment contract does not provide sustainable benefits for either party. The short-term flexibility gained by an employer may ultimately come at the cost of greater legal and reputational risks.

4. How to Protect Your Rights and Handle Disputes

The positive point is that employees are not completely helpless when they do not have an employment contract. The law still seeks to protect actual employment relationships, provided their existence can be demonstrated. Therefore, taking preventive measures and keeping evidence is the most practical approach.

Before starting work, employees should request a written employment contract from the employer as a legitimate right. At the same time, preserving evidence of the employment relationship can become important if a dispute arises later.

– Advice: Keep payslips, salary transfer records, work-related messages, and attendance records.

– Emails assigning work, employee ID cards, or uniforms bearing the company logo can also serve as useful supporting evidence.

– When a dispute arises, contact the workplace trade union, a labor mediator, or the local labor authority.

If a dispute cannot be resolved through negotiation, employees may request assistance from a labor mediator and then pursue other legally prescribed dispute-resolution mechanisms. For complex cases or disputes involving significant amounts of money, consulting a lawyer or legal aid center can help assess the situation and determine the most appropriate course of action.

A complete set of evidence can sometimes protect an employee more effectively than even the most convincing verbal promises.

Regarding employment opportunities in this field, CareerLink’s Legal / Law category currently features 306 job postings, with common salaries ranging from VND 12 million to VND 40 million per month depending on position and experience. This may be useful for those interested in labor law or careers related to legal consulting, human resources, and corporate compliance.

5. Frequently Asked Questions

1. Is a written contract required for work lasting less than one month?

Under the 2019 Labor Code, employment lasting less than one month may be agreed upon verbally, except in certain specific cases where a written contract is still required by law. However, to minimize risks, employees should still have written documentation or clear evidence of the agreed terms.

2. Can I demand unpaid wages if I do not have an employment contract?

Employees still have the right to claim unpaid wages if they can prove that an actual employment relationship existed. Evidence such as salary transfers, messages, and attendance records can support a complaint or mediation request, although the process may be more complicated than when a formal contract exists.

3. Who should I contact if my rights are violated without an employment contract?

Employees can contact their workplace trade union, a labor mediator, or the local labor authority for guidance. For complicated cases, consulting a lawyer or legal aid center is also worth considering.

In summary, the answer to what are the risks of working without an employment contract shows that both employees and employers can face disadvantages when this document is overlooked. Both parties should proactively enter into contracts in accordance with the law, keep relevant evidence, and seek assistance from the appropriate authorities when necessary to maintain a healthy, transparent, and legally compliant employment relationship.

This content is for reference only and does not replace official legal advice. Please contact the relevant labor authority or a lawyer regarding specific cases.

 

Minh An

Source: CareerLink