Vietnam’s new Labour Code (known as the Labour Law 2019) came into effect on 1 January 2021 and introduced a number of what appeared to be more subtle changes to previous labour laws as applicable to foreign employees. To implement the new Labour Code, the authorities released two Decrees – Decree 145 (145/2020/ND-CP) dealing with most elements of the law, and Decree 152 (152/2020/ND-CP) covering foreign employment matters on the law (inbound and outbound).
However, the implementation of the foreign employment matters through Decree 152, has resulted in significant implications and issues for foreign employees and their employers in Vietnam. Decree 152 came into effect on 15 February 2021, and since this date the business community has raised a growing list of issues in meeting their needs with foreign experts, with both the Ministry and the relevant Provincial Departments
What are the key issues and changes arising from Decree 152?
- The “4 year” rule. Decree 152 introduces a concept that a Work Permit (which is valid for up to 2 years), can be renewed once (ie, maximum of 4 years), and then the foreign employee is required to start the process again to prove they are needed. The implication from the authorities is that 4 years is the maximum period that a foreign employee is needed in a Vietnamese business.
- Work Permits under the old Decree are treated as irrelevant under Decree 152. This results in the inability to renew an expiring Work Permit that was issued under the old Decree, with new Work Permits (and new supporting documents) required to be submitted. As the process for a new Work Permit can take considerable time, and foreign documents may not be easy to obtain due to border closures, this is creating significant issues for those with expiring documents.
- Previous professional experience in Vietnam no longer counts. As a key element of current (and previous) Decrees is “relevant professional experience”. Previously, this could be proven via legalised/notarised letters from previous employers, or by using previously issued Vietnamese Work Permits. Under Decree 152, authorities are no longer accepting previous Vietnamese Work Permits (or other Vietnamese documentation) as evidence of professional experience
- Greater focus on relevant degrees. Although not a significant change from previous laws, the strict interpretation of requiring employees to hold a Bachelor’s Degree specifically relevant to the role being applied for presents a problem for those professionals who changed careers. It is a greater problem for those who hold existing Work Permits for the role, but due to needing to reapply for new Work Permits they no longer meet the education requirements under the current interpretations.
- There is a stricter process as to “why” a foreign employee is needed in Vietnam. This is understandable to ensure that foreign individuals do not take jobs that can be filled by Vietnamese nationals, however the manner in which this is being enforced makes the employment process far more difficult to meet the requirements, and shifts the goal posts considerably.
- The good news is that foreign individuals married to a Vietnamese national can easily access the new exemption from a Work Permit (note: the employer still needs approval that a foreign individual is needed for the role). Further, the labour contracts for individuals exempt via marriage are not restricted to 2 a year contract which all other Work Permits are, which can be a significant benefit to the individual (but, be aware of conflicts in reporting to the relevant department as statistical reports and approvals may no longer match if a contract longer than 2 years is agreed).
The unfortunate impact of the above is that many foreign professional individuals are needing to leave Vietnam, due to expiring Work Permits and the inability to obtain sufficient documents for renewing Work Permits from within the country before their visas/temporary resident cards expire. Although authorities have indicated that they do not require anybody to leave Vietnam during the process, until the global borders return to a more normal state, we will continue to see key foreign individuals and employers impacted – unless we see changes to Decree 152. There is significant pressure being applied to the authorities from foreign business chambers and organisations, and hopefully we see positive changes in the near future.
Our advice to foreign employees and employers at this stage is to plan well in advance, as it may take many months to obtain relevant documents to meet requirements, and not to assume that past practices (ie, renewals) can occur at present – until further updates from the authorities.