On 29 April 2020, the Ministry of Labour-Invalids and Social Affairs of Vietnam (MOLISA) published the draft decree on foreign employees in Vietnam (Draft Decree) to call for feedback until 29 June 2020. This decree will replace Decree 11/2016/ND-CP (Decree 11). It also provides guidance with regard to the implementation of the 2019 Labour Code, which shall go into effect on 1 January 2021.
In this update, we will present the most remarkable changes of the Draft Decree in comparison with Decree 11 which might directly relate to the employment of expats in Vietnam.
Currently, regulations on the expulsion of a foreign employee working in Vietnam without a work permit are covered by Decree 11. However, these are no longer included in the Draft Decree and shall be handled by the Ministry of Public Security. This means that likely in future relevant regulations will be issued by this Ministry.
Under the Draft Decree, a document issued by an oversea organisation or enterprise certifying that a foreigner is an expert, is no longer sufficient to evidence he or she is an expert. A training certificate appropriate to his or her expected position in Vietnam is also required.
Notably, in case a foreigner has obtained a Ph.D. degree or a professor or associate professor title suitable for his or her expected position in Vietnam, he or she can be eligible to be recognised as an expert in Vietnam following the Draft Decree. This is a new criterion.
As per Decree 11, a foreigner who is a CEO is eligible for a work permit, regardless of his or her number of years of managerial experience. This will change as pursuant to the Draft Decree, a CEO must have at least 12 months of managerial experience.
2.3 Tourist Visa Holder
Tourist visa holders shall not be eligible for a work permit unless otherwise approved by the MOLISA. Such restriction does not exist currently. However, per the amended Law on Entry, Exit, Transit and Residence of Foreigners, a visa can be changed into a different visa in case a job offer has been received and a work permit is successfully obtained. More changes or guidance might follow in this regard as not all seems to be clear yet.
In accordance with both Decree 11 and the Draft Decree, when a contractor wishes to recruit foreign employees, it has to submit to the authority a pro-forma form to declare its demand of foreign employees and request to recruit Vietnamese employees as an alternative to foreign employees. If the labour broker designated by the competent authority is not able to deliver Vietnamese employees to the contractor within statutory timelines, the contractor can recruit foreign employees. In the below table we have set out the difference between the Draft Decree and Decree 11:
Under Decree 11, a foreigner who owns or is a member of a limited liability company or who is member of the Board of Management of a joint-stock company shall be exempt from a work permit, regardless the capital contribution value. Pursuant to the Draft Decree, such a foreigner can be exempt from a work permit only if his or her capital contribution is at least VND 1 billion ( USD 43,000).
4.2. Exemption Period
Under the Draft Decree, in case foreign experts, managers, CEOs or technicians enter Vietnam to work less than 20 days, they can be exempted from obtaining a work permit. Under Decree 11, the threshold is 30 consecutive days and 90 accumulative days per year.
4.3. Additional Administrative Obligations
Currently there is no need to obtain a work permit if a foreign employee is in Vietnam for less than 3 months to work on a fee proposal or to handle unexpected technical problems having a large impact on the business or manufacturing. The employer does not have to perform any administrative procedure either. However, the Draft Decree requires the employer to inform the DOLISA of the foreign employee’s information and employment at least 3 days before his or her expected first working day in Vietnam.
4.4. Additional Documents
The application dossier for a work permit exemption currently requires less documents than the file to obtain a work permit. This might change as the Draft Decree requires more documents to be included in the application dossier for work permit exemption. This would mean that documents currently already included in the application for work permit issuance, such as health check result, approval to recruit a foreign employee and copy of passport will also need to be included in case of an exemption request.
Furthermore, foreign documents evidencing exemption must follow consular legalisation procedures, except for cases of consular legalisation exemption under international treaties or reciprocity principle prescribed by law. Currently, consular legalisation is not compulsory.
The Draft Decree adds some specific documents to evidence the professional or technical expertise of a foreign employee who is an artist, a sports coach or a teacher that need to be included in the application file. These documents are for example permits or certifications from the Ministry of Culture, Sports and Tourism of Vietnam for artists and sports coaches, and professional and or education certificates showing someone is suitable to perform a teaching job.
5.2. Labour Contract
Under Decree 11, an employer has to submit a copy of a labour contract to the relevant authority within 5 working days from the execution date of a labour contract with a foreign employee. As per the Draft Decree, an employer only needs to submit a copy of the labour contract upon the authorities’ request.
Under the current regulations, a work permit cannot be renewed, but only be re‑issued (i) when it is lost, damaged or there are changes to its contents, and (ii) when its remaining term is from 5 to 45 days. The 2019 Labour Code allows for one renewal without further guidance and the Draft Decree provides details on the procedure of work permit renewal. However, it seems like the renewal procedure is separated from the re-issuance procedure in the current regulations (i.e. re-issuance for what has been set out under (i) above and renewal for what has been set out under (ii)). There is no material change between the current regulations and the new ones in respect of work permit renewal.
Should you have any questions, please feel free to contact our lawyers at the below email addresses.
Mark Oakley / Managing Partner
Phuong Huynh / Senior Associate
This legal update is not an advice and should not be treated as such.
Download pdf: Draft decree on recruiting foreign employees in Vietnam
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