Vietnam’s new labour code: Employment implications for foreign individuals.

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Vietnam’s new labour code: Employment implications for foreign individuals

On November 20, 2019, the National Assembly adopted the Labour Code No. 45/2019/QH14 (“Labour Code 2019”). The Labour Code 2019 will come into effect on 1 January 2021.

This publication provides updates on changes to provisions effecting foreign employees working in Vietnam under the (new) Labour Code 2019, and also compares these provisions with the current Labour Code No. 10/2012/QH13 (“Labour Code 2012”).

1. Requirements for foreign employees to work in Vietnam

The Labour Code 2019 revises and supplements the requirements for foreign employees seeking to work in Vietnam:

Labour Code 2012Labour Code 2019
Having full civil capacity;Be 18 years of age or older and possessing full civil capacity;
Having technical and professional qualifications, skills and health appropriate to the work requirement;Having professional qualifications, techniques, work skills and work experience; with good health as prescribed by the Minister of Health;
Not being a criminal or prosecuted for a criminal according to Vietnamese and foreign laws;Not being a person who is serving a sentence or has not yet had his criminal record wiped out or is currently facing criminal prosecution in accordance with foreign law or Vietnamese law;
Having a Work Permit, except for those subject to exemptionHaving a Work Permit, except for those subject to exemption

2. Who is exempt from a work permit?

The Labour Code 2019 revises and supplements the requirements for foreign employees seeking to work in Vietnam:

All foreign individuals are required to hold a Work Permit before they undertake any employment in Vietnam, unless they are subject to a specific exemption. The table below highlights the similarities and differences with Work Permit Exemptions in the two Labour Codes:

Labour Code 2012Labour Code 2019
Capital-contributing members or owner of limited liability companies. 1Capital-contributing members or owners of a limited liability company with the value of capital contribution under the Government’s regulations.
(having added the criteria of the capital contribution value).2 The Draft Decree released by the Ministry of Labour Invalids and Social Affairs (“MoLISA”) indicates that the prescribed capital contribution for this provision will be VND 1 billion (approx. USD43,000)
Members of the Board of Directors of joint-stock companies. 3Members of the Board of Directors of joint-stock companies with the value of capital contribution under the Government’s regulations. (having added the criteria of the capital contribution value).4
Head of representative offices, projects of international organisations, non-governmental organisations in Vietnam. 5Head of representative office, project or the individual that takes the main responsible for the operation of international organisations and foreign non-governmental organisations in Vietnam. (having added the new criteria: the individual that takes the main responsibility for the operations).6
Foreign individual entering Vietnam for a period of less than 3 months to do marketing of a service.

The Draft Decree released by MoLISA for the new Labour Code 2019 requires that the employer informs the relevant Department of Labour Invalids and Social Affairs (“DoLISA”) office of the foreign employee’s information and employment at least 3 days before his or her expected first working day in Vietnam for this exemption to be available.

Foreign individual enters Vietnam for a period of less than 3 months to a resolve complicated technical or technological issue which (i) affects or threatens to affect business operation and (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam.

The Draft Decree released by MoLISA for the new Labour Code 2019 requires that the employer informs the relevant DoLISA office of the foreign employee’s information and employment at least 3 days before his or her expected first working day in Vietnam for this exemption to be available.

A foreign lawyer who has been granted a Lawyer’s Practicing Certificate in Vietnam in accordance with the Law on Lawyers.
A foreign individual in one of the cases specified in an international treaty to which the Socialist Republic of Vietnam is a signatory.
Foreign students who are studying and working in VietnamThe Labour Code 2019 removes this case
The Labour Code 2019 removes this caseAdding new case that foreign employees who are married to a Vietnamese individual and live in Vietnam. 7

3. Work permit extensions

The maximum validity period of a Work Permit is 2 years, and for extensions, it can be extended only once for a maximum of 2 years. 8

Meanwhile, there is no limit on the number of the extension for work permit according to the Labour Code 2012.

4. Labour contracts for foreign employees in Vietnam

Following the Labour Code 2019, there is a new provision provides that the term of a Labour Contract for foreign employees in Vietnam must not exceed the term of the Work Permit. It also now states that a foreign employee and employer in Vietnam can enter several definite-term Labour contracts. As such, the maximum term of a Labour Contract for foreign employees in Vietnam is 2 years and an indefinite-term contract is not available for foreign employees. Meanwhile the Labour Code 2012 just mentions generally regarding the duration of the Labour Contract and does not specifically address this issue.

5. Revised broader definition of employment

While the Labour Code 2012 stipulates labour standards, rights, obligations, responsibilities of employees and employers engaged in labour relations (and other relations directly related to labour), The New Labour Code 2019 extends the scope and object to individuals who do not necessarily have a specific Labour Contract. In the new Code, an individual will be classified as an employee if they meet the following 3 conditions:

i) the individual has an agreement to perform a job;
ii) the individual is receiving monetary payment; and
iii) the individual is working under the supervision of an employer.

The result of these change broadening the definition of employment is that foreign individuals who previously believed they were outside the Labour Code/employment regulations, and therefore not subject to a Work Permit, may now be within the system and subject to the Labour Code 2019 provisions and the Work Permit requirements.

6. Repercussions of working in Vietnam without a work permit

According to the Labour Code 2012, if a foreign employee does not fall into a case for exemption from a Work Permit, but is working in Vietnam without a Work Permit, he/she will be deported from Vietnam and cannot re-enter Vietnam for the next 3 years.

The new legal frame of the Labour Code 2019 applies two types of sanctions to be considered: forced departure and deportation.

  • If he/she be forced to leave Vietnam, he/she cannot return to Vietnam for the next 6 months.9
  • If he/she is deported from Vietnam, he/she cannot return for the next 3 years.10

Notes:

  1. Clause 1 Article 172 Labour Code 2012
  2. Clause 1 Article 154 Labour Code 2019
  3. Clause 2 Article 172 Labour Code 2012
  4. Clause 2 Article 154 Labour Code 2019
  5. Clause 3 Article 172 Labour Code 2012
  6. Clause 3 Article 154 Labour Code 2019
  7. Clause 8 Article 154 Labour Code 2019
  8. Article 155 Labour Code 2019
  9. Clause 6 Article 21 Law on Entry, exit, transit, and residence of foreigners in Vietnam 2019
  10. Clause 5 Article 21 Law on Entry, exit, transit, and residence of foreigners in Vietnam 2019
Last updated on December 22, 2020

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