What should enterprises consider when developing a code of conduct?

As enterprises increasingly focus on creating a strong corporate culture and implementing professional human resource management practices, developing a code of conduct has become an essential tool for guiding employee behavior, standardizing workplace professionalism, and minimizing internal conflicts. In practice, however, many enterprises have issued codes of conduct, they still continue to face non-compliance among employees, indicating that the development and implementation process has not been truly effective. Thus, understanding the concept, significance, and legal considerations relating to a code of conduct is crucial for enterprises to apply it properly and maximize its effectiveness in practice.

I. Why do many enterprises develop and issue codes of conduct but employees still fail to comply?

Many enterprises have adopted codes of conduct but continue to encounter situations where employees do not comply with its provisions. The primary reason is that the code often remains merely a formal document without being effectively communicated, trained, and practically implemented among employees.

In addition, some codes are drafted in overly general terms, lack practical applicability, or are not connected to clear performance evaluation, reward, and disciplinary mechanisms. As a result, employees may not fully recognize the mandatory nature and significance of such rules. 

Thus, to develop an effective code of conduct, an enterprise must not only issue the document but also ensure consistent and comprehensive implementation throughout the organization.

II. The concept of developing a code of conduct

1. What is a code of conduct?

Developing a code of conduct refers to a process by which an enterprise establishes a system of principles, behavioral standards, and general rules of conduct applicable to employees in the performance of their work, communications, and internal interactions.

The code is intended to guide behavior in a manner consistent with the company’s culture, support human resource management, and reduce workplace conflicts, thereby enhancing professionalism and improving the overall operational efficiency of the enterprise.

2. How does a code of conduct differ from internal labor regulations?

Both a code of conduct and internal labor regulations are intended to regulate employee behavior within an enterprise. However, they differ significantly in terms of legal status and scope of application.

• Regarding legal status: Internal labor regulations are mandatory documents under Article 118 of the Labor Code 2019. In particular, enterprises employing ten (10) or more employees are required to issue such regulations in writing and comply with the prescribed procedures. In contrast, a code of conduct is not a legally mandatory document.
• Regarding content: Internal labor regulations govern matters of a legal and disciplinary nature, including working hours, occupational safety, disciplinary violations, material liability, and other matters prescribed under Clause 2, Article 118 of the Labor Code 2019. Conversely, a code of conduct primarily focuses on guiding behavior, attitudes, communication standards, and corporate culture.
• Regarding enforceability: Internal labor regulations may serve as a legal basis for imposing labor disciplinary measures, provided that they have been issued and implemented in compliance with statutory requirements. A code of conduct generally serves a guiding function and is often integrated into internal performance assessments rather than functioning as a direct disciplinary instrument.

3. What benefits does a code of conduct bring to an enterprise?

Developing a code of conduct provides numerous practical benefits in the management and operation of an enterprise.

• First, it helps guide employee behavior and standardize corporate culture, creating a unified, professional working environment while minimizing internal conflicts.
• In addition, a code contributes to more effective human resource management by helping employees clearly understand expected standards of conduct, thereby reducing violations and promoting self-discipline.
• Furthermore, implementing a code of conduct can enhance the company’s image and brand reputation, creating a positive impression on customers, business partners, and prospective candidates.

III. Legal regulations relating to the development of a code of conduct

1. Principles for developing a code of conduct

At present, there is no specific statutory provision that separately regulates a code of conduct. However, when developing a code of conduct, enterprises must comply with the general principles of labor law and other relevant laws, including:

• Compliance with the law and respect for employees’ rights: The contents of the code must not infringe upon the lawful rights and interests of employees as protected under Articles 5 and 8 of the Labor Code 2019, including the right to work, freedom from discrimination, and protection against forced labor.
• Prohibition against requiring unlawful conduct: Enterprises may not include provisions that require or permit conduct prohibited under Article 8 of the Labor Code 2019.
• Respect for the employer’s management rights within legal limits: Pursuant to Article 6 of the Labor Code 2019, employers have the right to promulgate internal regulations for labor management purposes, provided that such regulations are established and controlled by law.
• Transparency and openness in implementation: Internal rules and regulations must be properly communicated to employees to ensure effective implementation, consistent with the labor management principles set out in Article 7 of the Labor Code 2019.

2. Contents of a code of conduct

Current legislation does not prescribe a mandatory list of contents for a code of conduct. Nevertheless, enterprises may formulate such a code based on labor management principles and the employer’s management authority under Article 6 of the Labor Code 2019.

Typically, a code of conduct includes the following main categories:

• Internal communication and conduct rules: Standards governing attitudes, behavior, and communication between employees and between employees and management personnel within the workplace.
• Rules governing interactions with customers and business partners: Standards relating to professional conduct, service attitudes, and external communications on behalf of the enterprise.
• Professional ethics and integrity standards: Requirements for employees to comply with ethical standards, refrain from fraudulent conduct, and avoid actions that may adversely affect the company’s reputation.
• Confidentiality and protection of company assets: Provisions associated with employees’ obligations to protect trade secrets and technological secrets in accordance with Article 21 of the Labor Code 2019 regarding confidentiality obligations.
• Company culture and workplace conduct standards: Rules concerning clothes, professional demeanor, and workplace behavior aimed at fostering a professional working environment.

3. Must amendments and supplements to a code of conduct follow any legal procedure?

A code of conduct is not a mandatory document under the Labor Code 2019. Thus, the law does not prescribe a separate mandatory procedure for its amendment or supplementation.

However, where the code has been issued as an internal policy relating to labor management, any amendment or supplementation should comply with the general principles of labor administration under Articles 6 and 7 of the Labor Code 2019, including:

• Employers have the right to amend and supplement internal regulations to reflect business and operational needs;
• Amendments must be publicly disclosed and communicated to employees to ensure transparency and enforceability;
• The revised provisions must not conflict with applicable laws;
• If the contents directly affect employees’ rights and obligations (similar to internal labor regulations under Article 118 of the Labor Code 2019), the employer should consult the employee representative organization at the grassroots level to ensure consensus and minimize the risk of disputes.

4. Must a code of conduct be registered with a competent state authority?

Current legislation does not require a code of conduct to be registered with or notified to any competent State authority.

Unlike internal labor regulations under Article 118 of the Labor Code 2019, which in certain cases must be registered with the specialized labor authority under the provincial People’s Committee, a code of conduct serves as an internal instrument designed to guide behavior and promote corporate culture. Nevertheless, to ensure practical effectiveness, enterprises should:

• Issue the code in a clear written form;
• Disseminate it to all employees;
• Circulate and apply it consistently throughout the enterprise.

IV.Questions regarding the development of a code of conduct

1. Is an enterprise legally required to develop a code of conduct?

At present, labor laws do not require enterprises to issue a code of conduct. Accordingly, whether to develop such a code depends on the management needs and internal cultural orientation of each enterprise.

However, under Clause 1, Article 6 of the Labor Code 2019, employers have the right to issue internal policies and regulations for labor management purposes, provided that such policies do not contravene the law or infringe upon the lawful rights and interests of employees.

Thus, although not legally mandatory, developing a code of conduct is highly recommended as it assists enterprises in standardizing workplace behavior, enhancing professionalism, and minimizing internal conflicts during business operations.

2. Can a foreign company's code of conduct be applied in Vietnam?

An enterprise may certainly refer to and adopt a foreign company's code of conduct in Vietnam; however, it must be adjusted to ensure compliance with Vietnamese law. 

Specifically, under Clause 2, Article 6 of the Labor Code 2019, employers are obligated to comply with Vietnamese labor laws and respect the lawful rights and interests of employees. Furthermore, any internal regulations applied within an enterprise must not conflict with Vietnamese law. 

Accordingly, when adopting a foreign company's code of conduct, an enterprise should:

• Remove or amend provisions that are inconsistent with the Labor Code 2019 and other applicable laws;
• Adjust the contents to comply with Vietnam’s legal framework, cultural environment, and business practices;
• Ensure transparency and communicate the code to employees before implementation.

3. Can a code of conduct serve as a basis for imposing labor discipline?

As a general principle, a code of conduct does not constitute a direct legal basis for imposing labor disciplinary measures under the Labor Code 2019.

Labor disciplinary actions may only be imposed for violations specified in the internal labor regulations under Clause 2, Article 118 of the Labor Code 2019, particularly those relating to labor discipline violations and the corresponding disciplinary measures. Nevertheless, a code of conduct may still be utilized as:

• A document providing behavioral guidance within the enterprise;
• A supporting reference when assessing the seriousness of a violation, provided that its contents have been incorporated into or referenced by the internal labor regulations;
• An internal management tool that clarifies the standards of conduct expected from employees.

4. Is it necessary to consult employees when developing a code of conduct?

Current laws do not require enterprises to consult employees when developing a code of conduct, as such a document is not classified as internal labor regulations under Article 118 of the Labor Code 2019.

Nevertheless, in accordance with the principle of workplace dialogue stipulated in Article 63 of the Labor Code 2019, enterprises are encouraged to communicate with and seek input from employees or employee representative organizations during the development and refinement of internal policies.

Consulting employees can:

• Increase consensus and willingness to comply;
• Reduce negative reactions during implementation;
• Enhance the practical applicability of the code within the workplace.

5. Does the code of conduct apply to senior executives and managers?

A code of conduct is generally designed to apply throughout the enterprise, including employees, middle management personnel, and senior executives, unless the enterprise expressly provides otherwise.

Pursuant to Point a, Clause 1, Article 6 of the Labor Code 2019, employers have the right to organize, direct, and supervise labor. At the same time, they are responsible for maintaining a working environment that respects the dignity and honor of employees and ensures fairness within the organization.

Accordingly, applying the code of conduct to senior executives and management personnel helps:

• Ensure consistency in corporate culture;
• Promote exemplary conduct among leadership personnel;
• Enhance compliance throughout the organization.

V. Why should you seek legal advice from NPLaw regarding the development of a code of conduct?

Developing a code of conduct involves not only corporate culture considerations but also compliance with applicable laws and practical enforceability. Lawyers at NPLaw can assist enterprises by:

• Reviewing and drafting a code of conduct tailored to the specific characteristics of each business model;
• Ensuring that the contents do not conflict with labor laws or other applicable legal regulations;
• Minimizing risks during implementation, particularly in matters relating to labor discipline and personnel management;
• Assisting in the standardization of internal rules and policies to ensure consistency and ease of application;
• Advising on solutions when disputes or violations arise within the enterprise.

With extensive practical experience in labor and corporate law, NPLaw assists enterprises in developing codes of conduct that not only provide behavioral guidance but also contribute to effective and sustainable human resource management.

The above information is provided for reference purposes only. Should you require detailed advice regarding a specific case, please contact NPLaw for prompt legal consultation.