EMPLOYMENT MANUAL1
This Employment Manual is intended to be an easy desk-top reference for the Chief Representative, the General Director, the Human Resources Manager, In-house Counsel, or any person who wants a good understanding of Vietnam's labor law. It is designed to orient management to issues with which it must be familiar. Even though the law on each subject is treated with considerably more depth in the Labor Code and its accompanying laws, decrees and circulars, this Manual should provide the reader with a good basic understanding of the Labor Code which took effect on January 1, 2021 and its accompanying decrees. However, this Manual is not a substitute for a comprehensive understanding of the labor laws.
1. Sources of employment and industrial relations laws
Sources of employment and industrial relations laws include:
- Constitution 2013, effective from November 28, 2013 ("Constitution 2013")
- Labor Code, effective from January 1, 2021 ("Labor Code")
2. Statutes
Statutes that are relevant to labor and industrial relations include:
- Civil Code 2015
- Civil Procedures Code 2015
- Penal Code 2015
- Law on Enterprises 2020
- See also Schedule 1 (List of Labor Regulations)
3. Relevant government labor bodies, authorities
3.1 Ministry of Labor, War Invalids and Social Affairs ("MOLISA")
MOLISA discharges the State's administration of labor, employment, and occupational safety and health responsibilities. One of its major tasks is to assist the Government to draft and issue legal documents, including those that relate to labor and employment issues. It can also issue its own legal documents, like circulars, decisions, or rules that affect the employment relationship.
MOLISA has the power to implement national policies on employment, provide guidance concerning these policies, and ensure compliance.
3.2 Provincial Departments of Labor, War Invalids and Social Affairs ("DOLISA")
DOLISA, a subset of MOLISA, is under the People's Committee of a province or centrallyrun city. It administers employment issues within its locality. A company is subject to the DOLISA of the province or city in which it is located. A company's Internal Labor Rules are registered with DOLISA. DOLISA reviews applications for work permits for expatriates and reports on termination of employment, as discussed throughout this Manual.
3.3 The Vietnam General Confederation of Labor
The Vietnam General Confederation of Labor, in conjunction with trade unions at all levels, supervises compliance with labor laws.
Trade unions represent collective labor in Vietnam. In addition to the trade union, employees have the right to establish their own representative organization which is not a member of the Vietnam General Confederation of Labor. The Government intends to issue a new decree to provide guidance on procedures to establish employees' representative organizations.
3.4 People's Courts
The district level People's Court has jurisdiction to settle labor disputes that relate to an entity located within the district and do not involve a foreign element. Generally, these are disputes in which neither party is a foreigner. In particular, the district level People's Court has jurisdiction in cases where the employee is not an expatriate or the employer is not a representative office or branch of a foreign company.2
The People's Court in a province or centrally-run city, on the other hand, has jurisdiction to settle labor disputes that involve a foreign element (eg, a party is a foreign person/entity or the contract is performed outside of Vietnam) and that relate to an entity located within that province or city.
4. Employee and Employer
4.1 Employer
The Labor Code defines an employer as an enterprise, agency, organization, a cooperative, a household or an individual who hires or employs employee under a labor contract. This definition is silent on whether a foreign entity located outside of Vietnam--say, a company licensed and headquartered abroad--can be an employer under Vietnamese labor law. In reality, there is no legal obligation for a foreign employer to comply with Vietnamese law on compulsory insurance, personal income tax withholding, filing, annual employment reports, etc.3 A foreign entity cannot employ a Vietnamese person in Vietnam under Vietnamese labor law. It can engage such a person as an independent contractor. If the foreign entity has a presence in Vietnam (ie, a representative office, or a branch), its presence is entitled to employ a person and must fulfill its employer obligations, sponsor a work permit/visa for a foreign employee.
4.2. Employee
The labor law covers Vietnamese and foreign individuals who work for employers.
According to the Law on Enterprises 2020, a company may have one or many legal representatives. These legal representatives are appointed as specified in the company's charter.4 The employment relationship of a legal representative is set out in their labor contract and is governed by the labor law. However, unlike other employees, the rights and duties of legal representatives are not only specified in their labor contract, but also in the Law on Enterprises 2020, the company's charter (articles of association) and resolutions.
According to the Labor Code, a chief representative or the head of a branch represents the employer in the representative office's or the branch's employment relationship with its employees. In these circumstances, there is some ambiguity as an individual can be in the position of both an employee and a representative of the employer, as chief representative or branch head as set out, in a labor contract. There is no attempt to resolve this under labor regulations. In practice, and to avoid doubt, the labor contract of a chief representative or a branch manager is often signed by the parent company.
A foreign employee who is internally transferred from the foreign parent company to a Vietnamese subsidiary is subject to the law of Vietnam. However, if there is no local labor contract to be signed between the foreign employee and the Vietnamese subsidiary, Vietnamese labor law will not apply except for the rules on work permits, visas and personal income tax. In such a case, the foreign employee is employed by the foreign parent company but is seconded to work in Vietnam, the foreign parties are permitted to choose a foreign law to govern the labor contract.
5. Work permits for foreign employees
Most foreigners who work in Vietnam are required to have a work permit. To obtain it, the foreign employee must be in good health, full 18 years of age, not subject to prosecution and must work as a manager (eg, general director ("GD"), Chief Representative ("CR") of a Representative Office of a foreign organization in Vietnam ("RO")), executive director or an expert or a technician.5 Work permits are issued by the provincial DOLISA and remain valid for two years6.
However, in any one of the following circumstances, a foreign employee may work without a work permit:
a. She is a member or owner of a limited liability company established in Vietnam and has contributed at least VND 3 billion in capital;
b. She is a chairman or a member of the Management Board of a joint stock company established in Vietnam and has contributed at least VND 3 billion in capital;
c. She is the head of either a RO or a project of an international organization or a foreign Non-Governmental Organization ("NGO") in Vietnam. A chief representative of a commercial RO is not included in this category; such a person is required to have a work permit;
d. She enters and stays in Vietnam for fewer than three consecutive months to sell services. A work permit is required if a foreign service-sales-person stays in Vietnam for three or more consecutive months;
e. She enters Vietnam and stays for fewer than three consecutive months, to handle an emergency matter or one that involves complicated technical or technological problems that affect production/business and the problems cannot be adequately addressed within Vietnam. However, if the situation requires the expatriate to stay in Vietnam for over three months, a work permit is necessary after the initial three months period;
f. She is a foreign lawyer with a Certificate of Law Practice in Vietnam granted by the Ministry of Justice;
g. She is seconded to Vietnam as permitted under Vietnam's WTO Commitments, to perform business services (such as: professional services, computer and related services, research and development services, rental services without an operator), communications services, construction and related engineering services, distribution services, educational services, environmental services, financial services, medical and social services, tourism and related travel services, recreational, cultural and sporting services, and transport services;
h. She provides advisory services and technical expertise or performs other tasks in respect of research, construction, appraisal, monitoring and evaluation, management and implementation of programs/projects funded with official development assistance agreements ("ODA");
i. She has a journalism practicing certificate issued by the Ministry of Foreign Affairs;
j. She is appointed by a competent authority in a foreign country to teach or work as manager, executive director, head of school, deputy head of school at an international school that is managed by a foreign diplomatic office or by the United Nations or at a facility or organization established under a treaty to which Vietnam is a signatory;
k. She is a volunteer certified by a foreign diplomatic mission or an international organization in Vietnam;
l. She works as an expert, manager, executive director or technical employee for a period of less than 30 days, and no more than three times in one year;
m. She implements international agreements to which central and/or a provincial authority is a signatory;
n. She is a student studying in a foreign school or institution that has an agreement for internships in agencies, organizations and enterprises in Vietnam; or a student who is a trainee or apprentice on a Vietnamese oceangoing ship;
o. She is a relative7 of a member of a foreign representative agency in Vietnam who is permitted to work in Vietnam under an international treaty of which Vietnam is a party;
p. She has an official passport to work for state agencies, social organizations and sociopolitical organizations;
q. She is a foreign individual in charge of establishing a commercial presence in Vietnam;8
r. She is married to a Vietnamese and living in Vietnam.
s. She is certified by the Education and Training Department to teach, research or work as manager, executive director, head of school, deputy head of school at an international school that is managed by a foreign diplomatic office or by the United Nations.
In order for an expatriate to be exempt from a work permit, the employer must file an application with the DOLISA to confirm the exemption, except in circumstances a, b, d, f, l, o above.
The Labor Code also provides guidelines to permit an employer to recruit a foreigner as (i) a manager, (ii) an executive director; (iii) an expert or (iv) a technician:
A foreigner is considered to be a manager when she satisfies one of the following circumstances:
- An executive of an enterprise9, or
- A head or deputy head of an office or organization.
A foreigner is considered to be an executive director if she meets one of the following conditions:
- A head of branch, representative or business location of the enterprise; or
- A person who directly manages at least one sector of the enterprise and she is managed and supervised by the head of the enterprise.
A foreigner is an expert when she satisfies one of the following conditions:
- She has at least five years of working experience in her trained area and a diploma which is aligned with the job she will perform in Vietnam; or
- She possesses a university or higher degree and has at least three years of working experience in her trained area which area is aligned with the job she will perform in Vietnam.
A foreigner is a technician if she satisfies the following requirements:
- She has been trained in a technical or other specific area for at least one year and has worked for at least three years in her trained area; or
- She has worked for at least five years in her trained area which area is aligned with the job she will perform in Vietnam.
The documents required to apply for a work permit include standard forms and documents which prove that the expatriate is qualified. Since September 18, 2023, the foreigner can use her previous work permit issued by DOLISA to prove her work experience.
The employer and the employee are specifically named and the work permit is not transferable. The work permit can be renewed one time only for a two year term. For renewal, some documents and procedures are waived. A new application must be filed after the renewed work permit expires.
Prior to obtaining a work permit for an expatriate, the employer must obtain an affirmation from the People's Committee that there is sufficient demand which necessitates recruitment of an expatriate. Some exemptions can be applied.
From January 1, 2024, an employer has been required to post a recruitment notice on MOLISA/DOLISA's website or official Job Centre websites. This is a condition to receive the approval needed to hire a foreigner. If, after publication, the employer cannot find a qualified Vietnamese candidate, it can request approval to hire a foreigner issued by the People's Committee.
Footnotes
1 This Employment Manual has been written by lawyers in the Vietnam offices of Russin & Vecchi and is current as of October 2024. In various places, we refer to amounts in Vietnamese dong. The approximate current exchange rate is US$1.00 = VND 24,800.
2 According to the Civil Code 2015, a representative office or a branch does not have legal status. The parent is liable before the law for the activities of the representative office or branch. In practice, a representative office of an offshore company can be considered as a defendant or plaintiff if there is a signed labor contract between the representative office and employee.
3 See Art. 6 of Labor Code.
4 See Art. 13.2 of Law on Enterprises 2020.
5 See Art 2 of Decree 152/2020/ND-CP dated December 20, 2020 as amended by Decree No.70/2023 dated September 18, 2023 ("Decree 152").
6 See Art. 155 of Labor Code.
7 There is no clear definition of "relative", such as whether a relative means parents, spouse, children only or whether it includes parents in-law, cousins, nephews and nieces, etc.
8 See Article 5 of Decree 152.
9 According to Article 4.24 of the Law on Enterprises 2020, an executive of a company can be the Chairman, President, a member of the Board of Management or Members Council, GD and any other person who is authorized to conclude transactions on behalf of the company in accordance with its charter.
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