Ho Chi Minh City, 21 July 2026
Within a corporate governance structure, an individual who concurrently serves as an Enterprise manager and an Employee may be subject to two distinct legal relationships: a corporate governance relationship and an employment relationship. Properly distinguishing between these two relationships is particularly important in determining matters such as the authority to enter into an employment contract, the term of the employment contract, salary and remuneration arrangements, and the appropriate course of action when the Enterprise manager’s term of office expires, or is removed from office or not reappointed.
In Part 1, this Weekly Debrief examines the key issues that enterprises should consider when establishing a relationship with an Enterprise manager who concurrently serves as an Employee of the enterprise.
When is an Enterprise manager also an Employee?
Under the Law on Enterprises, an “Enterprise manager” is an individual who holds a managerial or executive position or exercises corporate governance authority within an enterprise. Enterprise managers include the Chairperson of the Members’ Council, members of the Members’ Council, the Company President, the Chairperson of the Board of Directors, members of the Board of Directors, the Director, the General Director, and other managerial positions prescribed in the company’s charter.
By contrast, an individual’s status as an Employee is determined based on the substance of the relationship between that individual and the enterprise. Under the Labour Code, an employment relationship exists where an individual performs work in return for remuneration or salary and is subject to the management, administration and supervision of the enterprise, irrespective of whether the relevant agreement is described as an employment contract, a management agreement or by any other name.
Accordingly, the status of an Enterprise manager and that of an Employee are determined under different legal criteria and may concurrently apply to the same individual. In practice, the following three scenarios may arise:
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Enterprise manager who is not an Employee: The individual performs only corporate governance, management or supervisory functions and receives management remuneration, without directly performing work under the enterprise’s management and administration. In this scenario, the individual is not necessarily regarded as an Employee.
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Enterprise manager who is also an Employee: The individual holds a managerial position while also directly performing work, receiving a salary and being subject to the enterprise’s management, administration and supervision. In this scenario, the individual is simultaneously subject to both a corporate governance relationship and an employment relationship, each of which operates independently under its respective legal framework.
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Employment relationship determined by the substance of the arrangement: The enterprise issues only an appointment decision or enters into a management agreement without signing a formal employment contract. However, in practice, the individual performs work and receives a salary. In this scenario, the arrangement may still be regarded as an employment contract if it contains all the substantive characteristics of an employment relationship under the Labour Code.
When assessing the legal status of an Enterprise manager, enterprises should not rely solely on the individual’s title, the name of the agreement or the manner in which the relevant payment is described. Instead, the substance of the relationship should be assessed comprehensively based on the actual working arrangements, including the factors such as nature of the work, the salary or remuneration mechanism, the degree of management and supervision, working hours, leave entitlements, performance assessment mechanisms, and the application of the enterprise’s internal human resources policies.
Is an enterprise required to enter into an employment contract with an Enterprise manager?
Not every Enterprise manager is required to enter into an employment contract. Whether an employment contract must be entered into depends on whether an employment relationship exists between the individual and the enterprise under the Labour Code. In particular:
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An employment contract must be entered into where the Enterprise manager directly and regularly performs work, receives a periodic salary, and is subject to the enterprise’s assignment, administration and supervision.
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An employment contract is not necessarily required where the individual performs only corporate governance functions and receives remuneration, and their rights and obligations are governed by the company’s charter, an appointment resolution or decision, or a management agreement, without the relationship possessing the characteristics of an employment relationship.
It should be noted that an appointment decision and an employment contract serve different legal purposes and are not interchangeable. An appointment decision establishes the individual’s position, authority and managerial responsibilities under the enterprise’s corporate governance framework, whereas an employment contract governs the work to be performed, salary, working conditions, and the rights and obligations of the parties within the employment relationship.
Accordingly, where an individual concurrently serves as both an Enterprise manager and an Employee, the enterprise should establish and maintain appropriate documentation for each capacity to ensure consistency between its corporate governance records and employment records.
Who has the authority to enter into an employment contract with an Enterprise manager?
When entering into an employment contract with an Enterprise manager, the following two legal aspects should be considered:
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First, the enterprise should determine the internal authority responsible for approving the appointment or recruitment of the Enterprise manager, as well as their salary, benefits and other principal terms of employment. Such authority should be determined by reference to the Law on Enterprises, the company’s charter, its delegation-of-authority rules and other relevant internal regulations. Depending on the enterprise’s governance structure, a resolution or decision of the competent corporate governance body may be required before the employment contract is entered into.
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Second, the enterprise should determine the person authorized to enter into the employment contract on its behalf. Under the Labour Code, the employment contract must be entered into by the enterprise’s legal representative or a person duly authorised by the legal representative.
Where the Enterprise manager is also the enterprise’s legal representative, the enterprise should avoid having that individual enter into an employment contract in both capacities, namely, as the employer’s representative and as the employee. Instead, the competent corporate governance body should appoint or authorise another person to represent the enterprise in entering into the employment contract. This approach helps ensure objectivity, proper authority and the mitigation of potential conflicts of interest.
Properly determining the individual’s legal capacity and the person duly authorised to enter into the employment contract from the outset will help the enterprise ensure consistency between its
corporate governance records and employment records, while mitigating risks that may arise during the performance of the employment relationship or in the event of a dispute.
In Part 2, we will further examine the relationship between an Enterprise manager’s term of office and the term of their employment contract, as well as the measures that an enterprise should take when the Enterprise manager’s term of office expires, or when the Enterprise manager is removed from office or not reappointed.
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See the previous part here: Part 1
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For advice on corporate governance, employment compliance, executive employment arrangements, and other labour law matters in Vietnam, please visit our Labour & Employment or contact our team:
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