One of the major issues for all foreigners setting up business in Vietnam have to face is the topic of Vietnamese work permit.
Frequent questions concerning this subject are for example, in which situations one has to obtain a work permit, what are the requirements for the issuance of a work permit, or even exempt from a work permit, as well as which consequences one will encounter in case of breach with the set procedures.
The latest changes in Vietnamese law regarding the employment of foreigners have been introduced by Decree 34 (referred to as "Decree 34") providing guidelines for implementation of Labour Code regarding foreign employees in Vietnam. Circular 08 dated 10 June 2008 was issued to guide the implementation of Decree 34 (referred to as "Circular 08").
This newsletter aims at providing at a glance a general overview on these matters by addressing the questions raised above in the light of the current legislation and its implementation on a day-to-day basis.
1. Exemption from a Work Permit
According to Vietnamese law, a foreigner working for a legal entity in Vietnam for a period of three months or more must obtain a work permit from the local Department of Labour, War Invalids, and Social Affairs ("DOLISA").
However, Vietnamese law also provides for some exemptions as follows:
- A foreigner working in Vietnam less than three (3) months.
- A foreigner being a member or an owner of a limited liability company .
- A foreigner being a member of the Board of Management of a shareholding company.
- A foreign lawyer licensed to practice in Vietnam.
- A foreigner entering Vietnam to offer services. Foreigner offering services means a person who does not live in Vietnam and who does not receive remuneration from any source in Vietnam, and who participates in activities relating to representation of a service supplier in order to negotiate the sale (or consumption) of services of such supplier, on condition that he or she does not directly sell such services to the public and does not directly participate in the provision of services.
- A foreigner who enters Vietnam to resolve an emergency case.
In all cases where there is no work permit required, the employer has to inform the local DOLISA at least seven days in advance on the name, age, nationality, passport number, dates of commencement and termination of work and the nature of the work, criminal record check, standard form curriculum vita, health certificate and proof of specialist or highly technical qualifications, or documents from an authorized body in the employee's home country certifying their minimum five years specialized experience if such foreigners have no proof of qualifications.
2. Appropriate Employer
Enterprises of all economic sectors, Vietnamese as well as foreign or international organizations, are entitled to employ non- Vietnamese employees. However, the employer must have a training plan to train Vietnamese to replace their foreign employees.
3. Employee's Requirements
A foreigner wishing to work for an enterprise or organization in Vietnam must meet all of the following conditions:
- Minimum age of 18 years
- Good health suitable to the requirements of the job
- Manager, executive director or an expert with high professional or technical qualifications, experience in one's career or in management that Vietnamese employees do not yet possess
- No criminal convictions or civil record in respect of a breach of national security or any other crime as well as no current criminal prosecutions or criminal sentences not yet been discharged in accordance with Vietnamese and foreign laws.
- A work permit issued by the Vietnamese competent authority, except where stipulated in No 1 above.
4. Procedure to Apply for a Work Permit
A foreigner wishing to work in Vietnam has, to submit two copies of his/her application to the prospective employer including the following documents:
- Application form;
- Copy of his/her criminal record;
- Copies of qualifications;
- A recent health certificate issued by a public hospital (not older than 6 months) by foreign hospital or competent Vietnamese hospital;
- Curriculum vitae;
- Valid visa;
- 3 passport-size colour photographs
After receipt of the aforementioned documents, the employer, who is responsible for applying for the work permit on behalf of its prospective foreign employees, depending on which category a foreign employee belongs to, the following document must include in the application file:
- A foreigner working under employment contract must provide an application form for registration of recruitment signed by the future employee himself.
- A foreigner transferred internally within the same company group must provide a letter from the employer explaining her/his employment with the company (Appointment Letter).
- A foreigner entering into Vietnam to perform a contract rather than an employment contract must provide a contract signed between the Vietnamese party and foreign party.
- A foreigner entering into Vietnam to perform a service contract must furnish that service contract itself.
- A foreigner working for a Non–government Organisation ("NGO") must provide a certificate showing that such NGO is allowed to operate in Vietnam.
Within 15 days, the DOLISA will notify the employer of its respective decision.
Labour contracts are only signed between the employer and employee after obtaining work permit. A copy of the signed labour agreement is then sent to DOLISA.
III. Term of Work Permit
The term of a work permit is tied to the term of the labour contract up to a maximum of 36 months. And, it may be renewed for another 36 months if no Vietnamese employee is able to replace the foreign employee at that time.
If the employer's training plan has not yet been completed after the first extension, a second extension may be allowed, but such a second extension is subject to approval by the Chairman of the provincial level People's Committee.
IV. Limit on the Number of Foreign Employees
An important change compared to former legislation is that the new acts introduce a limit on the number of foreign employees working within an organisation/enterprise.
According to Decree 34, a Vietnamese enterprise, irrespective of its size, must employ east twenty (20) per cent Vietnamese citizens of the total number of the managers, executive directors and experts. However, each foreign enterprise shall be permitted to have a minimum of three managers, executive directors and experts who are not Vietnamese.
V. Consequences of Breach
Working in Vietnam without a work permit is still an administrative violation. Such violation is subject to administrative sanctions, but not criminal liability. Correspondingly, a foreigner may not be imprisoned but deported. An employer whose foreign employees do not have a work permit may be fined. Working in Vietnam without a work permit becomes more complicated in solving disputes (if any) in front of the Vietnamese Courts. Vietnamese legislation lacks regulations on this matter. Labour Law is one-sided to protect workers and it is a duty of employer to apply for a work permit for the employee. As a result, the employer must bear burden of proofs and discharges obligations and compensation to his employee. It is particularly recommended that foreign employee working in Vietnam must obtain a work permit.
The legal framework regulating the working requirements for foreigners in Vietnam is an example for the rapid development of Vietnamese law in many areas, however, not always clarifying existing issues.
In many areas, the advantages of setting up and expanding business in Vietnam certainly outweigh such drawbacks by far and the recent developments in growing direct investments reflect the Government's efforts to provide for a liberal, attractive business environment for foreign investors.
Since the legal situation in Vietnam is still developing at a rapid pace and, as mentioned above, the most recent developments have not been free from criticism, it is strongly recommended to obtain legal advice to avoid the risks of not adhering to statutory requirements, even if the potential consequences are limited.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.