Digital transformation is reshaping the way the economy operates, impacting sectors ranging from trade and banking to education and human resource management. In the labor market, one significant advancement is the emergence and growing adoption of electronic labor contracts. These fully digital agreements streamline the processes of creation, storage, and management, effectively replacing traditional paper-based methods.

The formation of electronic labor contracts through digital signatures is applied in many businesses in Vietnam today, especially in large corporations, foreign-invested enterprises, and companies in the technology, finance, and banking sectors. Several businesses have implemented the entire e-labor contract signing process, encompassing application receipt, contract drafting, e-signing, and storage and synchronization with the personnel management system. However, digital signing for labor contracts is not yet widely adopted in small- and medium-sized enterprises (SMEs), which represent the majority of Vietnamese businesses. Many enterprises only partially apply an electronic method, for example, signing on paper and scanning the signature as a PDF file or sending it via email. This method is more convenient than simply signing on paper, but it does not comply with the legal standard for e-labor contracts. The reasons include a lack of legal knowledge, the initial investment cost, concerns about the legal value of labor contracts without handwritten signatures, and especially the shortage of personnel with technological management skills. This indicates that, despite an open legal foundation, practical deployment is still in its initial phase and requires motivation from policy and support infrastructure. Legal foundation in Vietnam Article 14 of the 2019 Labor Code allows labor contract formation through electronic means for the first time, in the form of a data message, which has the same value as a written labor contract. Article 36 of the 2023 Electronic Transaction Law, effective as of July 1, 2024, continues to affirm the legal value of e-contracts, even if they are automatically formed by information systems as long as they ensure integrity, accessibility and application. This is the important legal foundation for the extensive deployment of e-labor contracts, although detailed regulations for form, process, and storage still need improvement. Platform for national e-labor contracts The idea of building a platform for national e-labor contracts stems from the requirement to create a unified legal and technical environment and ensure that labor data nationwide are managed in a concentrated, transparent, and safe manner. The Government has recently assigned the Ministry of Home Affairs to lead and coordinate with agencies and localities to urgently complete a decree for building the platform of this system (1). In terms of function, the platform will serve as a centralized portal for businesses to create, sign, store, and manage all e-labor contracts. After the signing, the contract data are automatically synchronized with the national database for population (information verification), the tax management system (personal tax calculation) and the social insurance system (certification of interests and payment process). The platform not only serves state management but also helps businesses eliminate manual report submission and paper contract sending, automatically transferring all data, thereby reducing time and errors. Workers can access the portal to look up contracts, check insurance interests, and download copies as needed. In terms of technology, the system utilizes national security standards, including multi-layer encryption, multi-factor verification, distributed storage, and periodic backup. It also accepts public digital signatures, specialized e-signatures, and advanced authentication, as per the 2023 Electronic Transaction Law. The open API (application programming interface) helps it integrate with the HRM (human resources management), accounting and ERP (enterprise resource planning) systems, preventing “data break”. Over the long term, the platform will develop a unified labor data ecosystem, enabling the Government to draft policies accurately, helping businesses forecast personnel demand, and ensuring transparent interests for workers. The e-labor contract is, in essence, the agreement between the employer and the employee regarding the job, salary, rights, and obligations, but all the processes are executed on a digital platform. The parties sign with digital signatures or lawful e-signatures. Generally, there is participation from a third party, which is the platform provider, responsible for authentication, storage, security, and support, integrated with the personnel management, accounting, or ERP system of businesses. The e-labor contract helps save time and cost with the elimination of printing, sending, and direct signing. The concentrated storage, together with the handling history, enables transparent version management and minimizes the risk of dispute. It also supports distance working and cross-border signing, expanding opportunities for talent recruitment worldwide. Socio-economic impacts The application of e-labor contracts in Vietnam has not only technical significance but also obvious socio-economic impacts. With millions of labor contracts being signed every year, digitization will save hundreds of billions of dong in printing, transportation, and storage. The recruitment time will be shortened, enabling businesses to put personnel in operation, increasing productivity quickly. For workers, the e-labor contract helps to transparentize interests, easily look up terms, and minimize loss or illegal adjustments. On the macro level, labor contract data, when synchronized with social insurance, tax, and labor management systems, will form the foundation for compliance, preventing tax loss and helping to formulate labor policies more accurately. This includes forecasting manpower and industry and trade structure, as well as supervising labor regulation compliance. Major challenges Although e-labor contracts bring many obvious benefits, their application in Vietnam faces several challenges in three key areas: legislation, technology, and personnel. For legislation, the greatest challenge is the lack of clear guidance for lawful e-signatures in labor contracts. The 2023 Electronic Transaction Law recognizes various forms of e-signatures, including the public digital signature, which is issued by a digital signature certification agency, as having the clearest legal value. However, in reality, many businesses and workers use other forms of e-signatures, such as simple e-signatures (scanned handwritten signatures and signatures on touch screens), OTP (one-time password) via email/SMS, and biometric authentication (fingerprint and face recognition). The issue is that the law does not clearly state whether these forms are accepted for labor contracts or not, and if accepted, what technical and security standards they must meet to be recognized as legal evidence in court. Furthermore, there are still legal loopholes regarding the time the labor contract takes effect, particularly in cases where the parties sign at different times or on different platforms. These include the process of certifying and authenticating the signatory’s identity, the technical standards, and the storage duration of the e-labor contract. These shortcomings may make e-labor contracts vulnerable to disputes, and when disputes occur, the protection of a party’s interests may be difficult due to the lack of strong e-legal evidence. For technology, data security and cybersecurity are the foremost challenges. E-labor contracts contain a lot of sensitive personal information, such as ID numbers, bank accounts, salaries, and benefit terms. If the platform for signing and storage does not meet high security standards, the risk of leakage or cyberattack is very significant. Furthermore, the dependence on the service provider exposes businesses to risk if this unit faces technical problems, changes its policy, or ceases operation. The assurance of data integrity, which ensures that the labor contract is not revised after signing, requires the application of advanced certification technologies such as blockchain, multi-layer encryption, and distributed storage. However, these technologies are not yet widely adopted and can sometimes exceed the financial capacity of SMEs. For personnel, the greatest challenge is habit and perception. Many small businesses and workers are still accustomed to hand-signing and conventional paper storage. Their concern generally stems from the lack of a clear understanding of the legal value of e-labor contracts, the fear that it is difficult to protect interests with labor contracts “without hand signatures”, or simply unfamiliarity with working on digital platforms. Many businesses lack the necessary legal department or IT personnel to operate the electronic signing process methodically. In addition, data connectivity is a notable issue. When management agencies (such as social insurance, tax, and labor) and businesses use different platforms with no common technical standards, data sharing and exchange become complicated, and disparities easily occur. This reduces the effectiveness of e-labor contracts and leaves the digitization process uncoordinated nationwide. Therefore, the Government should issue detailed guidelines for the electronic signing process, including the type of lawful signature, the authentication mechanism, and the storage standard. Additionally, it should be obligatory to build a mechanism for certification, concentrated storage, and data security. It should provide technical support and digital skills training for SMEs and encourage large businesses and state agencies to adopt the application. An inevitable new trend Businesses should review their process for labor contract signing and storage, and identify the phases that can be digitized and those that require adjustment. Then, they should select a prestigious platform to integrate the personnel management and accounting systems, prepare the technical infrastructure, including digital signatures, a stable transmission line, and suitable equipment, and organize training for the personnel, legislation, and management departments to operate the new process. Along with this, they should trial the platform with a group or section first, assess its performance, and make adjustments before complete deployment. Additionally, they should clearly communicate the legality and safety of e-labor contracts to workers to foster confidence and collaboration. In sum, the e-labor contract is an inevitable trend in the digital age, helping to enhance personnel management efficiency, reduce costs, expand recruitment opportunities, and increase transparency. When the legal framework, technical infrastructure, and the perception of the parties are in sync, the e-labor contract will become the new benchmark for the labor market in Vietnam, contributing to the promotion of the Government’s national digital transformation target. (*) Phuoc & Partners Law Company