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Significant new improvements underpin Work Permit procedures in Vietnam under Decree 70.

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Significant new improvements underpin work permit procedures in vietnam under decree 70

Vietnamese authorities released Decree 70/2023/ND-CP (Decree 70) on 18 September 2023, which went into immediate effect, covering several major updates and practical clarifications relating to employing foreign experts in Vietnam. In this article, we cover the new provisions which amend the previous Decree 152/2020/ND-CP on Work Permits and Work Permit Exemptions in Vietnam, and delve into practical references and critical areas relevant for investors in Vietnam.

The new Decree 70 which regulates the procedures for Work Permit (WP) and Work Permit Exemption (WPE) in Vietnam exhibits a series of important changes and requirements for investors. While the majority of these are meant to simplify current procedures based on feedback received from business chambers and associations in Vietnam, others may still pose challenges when implemented at the local regulatory levels.

Changes to requirements for seeking approval to use foreign labour

The timeline for the initial phase (Step 1) of the WP application process has been shortened from 30 days to 15 days from the anticipated date of foreign labour employment. This adjustment allows for later submissions in Step 1 and an earlier commencement of work for foreign labour. The revised deadline also applies to any necessary modifications or adjustments in Step 1, which now need to be made 15 days prior, down from the previous 30-day requirement.

Significantly, starting from January 1, 2024, employers are required to announce job vacancies for Vietnamese workers in the roles intended for foreigners via the Ministry of Labours, Invalids and Social Affairs (Department of Employment) portal or Provincial Employment Service Centers. This announcement must be made at least 15 days before the expected submission of Step 1 and is a mandatory requirement. If no Vietnamese candidate is selected after this 15-day period, then Step 1 can be submitted. Currently, there are no specific requirements for providing evidence of the job announcement and the inability to hire Vietnamese candidates. However, according to discussions with the authority, in cases where there is a Vietnamese candidate applying, the documentation of the interview process and explanations for failure are required in the application. Simultaneously, some specific management positions, such as members of the Members’ Council or of the Board of Management, do not require recruitment notifications.

Simplified role provisional requirements for Foreign Experts

The recent amendments to the regulations stipulate that for a role to be classified as an “Expert”, the incumbent must possess a minimum of a Bachelor’s degree or higher (potentially having a major related or unrelated to the anticipated scope of title expected), coupled with at least three years of experience relevant to the role. This is a departure from the previous requirement where both the degree and the three-year experience had to be specifically in a field aligning with the job role or assignment.

For instance, under the new regulations, an individual in a “Marketing” role could satisfy the educational requirement with an MBA, rather than needing a specialized “Marketing degree” as was previously required.

Expanded scope for managerial level positions and updated documentation

Previously, the designation of “CEO/MD/ Executive” was confined to the heads of a company’s dependent units, although the term “dependent unit” was not explicitly defined. The revised regulations have expanded and clarified this scope. Under the new guidelines, a CEO is defined as either:

  • The leader of a branch, representative office, or business location; or
  • An individual who directly oversees at least one company domain and reports to the head of the company (primarily Directors or Chairpersons; The act of being under the leadership of deputy-level positions is not classified as a CEO).

This includes roles such as CFO, CLO, CTO, and relevant titles, which were previously categorized as “experts” with specific degrees and experience prerequisites. Now, these roles will be classified as “CEO”, eliminating the need to provide proof of their qualifications or experience.

In contrast to the previously ambiguous requirements for substantiating one’s role as a manager or CEO, the new regulations provide a clear list of documents that can be submitted for these job assignments:

  • The company’s charter or operational policies;
  • The Enterprise Registration Certificate (ERC) or an equivalent document; and
  • A resolution or appointment decision for the respective position.

Specifically, the charter, policies, and the appointment documents must detail the titles and roles of these positions, ERC, and equivalent documents aimed at demonstrating the authority to sign the application forms. These changes may offer a more straightforward and transparent process for verifying one’s professional status.

At the same time, as clarified by the authority, in cases where a company has a sole legal representative who is a foreigner, that individual needs to obtain a WP for their working period at the company. If there are more than one legal representative and there is at least one legal representative (who regularly resides in Vietnam and has a Vietnamese address on the ERC), then other foreign legal representatives do not need a WP.

Requirements for Technical Worker roles

Under the previous regulations, applications for “Technical Worker (TW)” roles appeared to be limited in practice due to extremely specific conditions for these roles. However, the newly introduced conditions for the TW role are more accommodating. The new requirements for a TW role are to have “at least 1 year of training and a minimum of 3 years of relevant work experience”. This is a shift from the earlier stipulation of “having at least 1 year of specialized technical training and 3 years of experience in the trained field”.

While we have yet to validate this increased flexibility, it appears that the TW role is now accessible to foreign employees with specialization in any sector, as opposed to being restricted solely to those specializing in a technical sector.

Work Permit Exemption provisions covering foreign individuals married with Vietnamese citizens

According to the updated regulations, a WPE application for foreign individuals married to a Vietnamese national is no longer subject to Step 1, as was previously the case. Consequently, organisations can directly inform DOLISA about the employment of a foreign individual who is married, without the need for an employment announcement. In theory, there is no standard working duration, which is usually limited by the results of Step 1. However, through discussions with the authority, a maximum period of 2 years is still set in the WPE for that labour.

Changes in the key regulatory bodies involved in Work Permit and WP Exemption approvals

Prior to Decree 70, the authority empowered to issue WP and WPE was shared among several agencies, including the provincial Department of Labours, Invalids and Social Affairs (DOLISA), the Ministry of Labours, Invalids and Social Affairs (MOLISA), and provincial People’s Committees, and Management Boards of Industry/Economic Zones. However, the new regulations have consolidated this authority, assigning it solely to DOLISA and MOLISA.

As an additional note, we have received official notifications from the Provincial Management Boards of Economic Zones in Ho Chi Minh City and Binh Duong which indicate that they will stop accepting applications for WP and WPE from September 18 onwards, transferring this responsibility entirely to DOLISA, but will continue to process applications received prior to this date.

Expanded acceptable documents required for Expert or Technical Worker roles:

The updated regulations stipulate that the following documents are required to verify experience for job assignments:

  • Degrees, certificates, accreditations; and
  • Letters confirming experience or previously issued Work Permits/Work Permit Exemptions

Previous Vietnamese WPs/WPEs have been reinstated as a valid document for evidencing proof of experience in the Work Permit process. This is a departure from the previous regulation, which required a more restrictive “Degrees, certificates, and proof from offshore companies reflecting the years of experience”. The new regulation has broadened the range of acceptable documents for demonstrating experience, aligning with the practice that was followed prior to Decree 152.

Acceptable document formats are expanded

Under the new Decree, which simplifies the documentation format for Work Permit applications in Vietnam, organizations may choose to submit the applicant’s passport as:

  • a notarized copy, or
  • a certified true copy confirmed by the employer

Recording multiple workplaces

In cases where an employee works for an employer at multiple locations (such as the headquarters, branches, business locations, or other sites), the application form for a WP must list all of these locations in full. If these locations span different provinces or cities, within 3 working days from the commencement of the work, the employer is obligated to report to MOLISA and Provincial Department of Labours, Invalids and Social Affairs in the areas where the employee works, as per legal regulations.

As authority’s response, the workplace is a location that meets the conditions for business registration (such as headquarters, branches, representative offices, business locations), and foreign labours regularly work at that location (with some criteria such as working continuously for 30 days, or a total of more than 90 days per year). Cases outside of these criteria are considered as business trips and do not need to be listed in the WP application.

The Work Permit renewal process is simplified

Under the previous regulations, only one extension of the Work Permit was permitted, and subsequent applications were treated as new, necessitating the submission of all documents as if it were a new application. However, the updated regulations have simplified this process somewhat. After one extension, if an employee wishes to continue in the same role, the re-application process is less cumbersome compared to a new application, with the omission of Criminal Records and experience proof documents. This is a significant improvement in the overall renewal process.

Work Permit Adjustment

Vietnamese authorities have introduced a significant change with the new Decree 70, which allows for adjustments to the WP in instances where the company changes its name but retains its company code, without necessitating a complete reissue. Furthermore, there is no need to resubmit Step 1 for WP adjustments.

Closing note

Overall, we perceive the new regulations as progressive and more user-friendly in terms of WP and WPE processes. However, the job posting process may present additional challenges. There is also an element of uncertainty regarding how the authorities might interpret the law differently or introduce other implicit regulations or rules.

We advise investors in Vietnam to peruse the specific provisions of Decree 70 and evaluate their impact on the procedures they put in place for hiring and onboarding foreign experts into their organsiations, to ensure they are aware of all the relevant updates and understand how these related to their specific plans.

 

The information provided above is general in nature and is intended to provide a practical framework for understanding the new regulations on Work Permits and Work Permit Exemptions for foreign experts in Vietnam. As legal regulations are constantly being updated, organisations are advised to seek expert advice on the regulations and conditions before commencing the application processes.

If you need any assistance with these or any other matters in managing Work Permits procedures in Vietnam, to ensure you are compliant and protected in the market, our experts are ready to support.

Vu Tran Xuan Hoang – Associate, Market Entry and Licensing – hoang.vu@acclime.com

Tran Thi Thuy Duong – Senior Associate, Market Entry and Licensing – duong.tran@acclime.com

Rizwan Khan – Managing Partner – r.khan@acclime.com

 

Updated on May 29, 2024

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