Introduction
Hiring foreign workers has become essential for many Vietnamese companies, especially foreign-affiliated companies such as Japanese firms. In addition to utilizing foreign workers sent by their parent companies, many companies also recruit foreign workers directly in Vietnam. In this case, the foreign worker is referred to as a “foreign worker working in Vietnam in the form of a labor contract.” However, not many employers fully understand the regulations and precautions involved in employing foreign workers in this manner. This article explains the points to be aware of when hiring foreign workers under a labor contract to help employers understand and comply with Vietnamese laws and regulations.
1. Definition of Foreign Workers Working Under a Labor Contract
Under Vietnamese law, foreign workers can work in Vietnam in a variety of forms, including intra-company transfers (foreign workers with more than one year of work experience who are dispatched by their parent company to their Vietnamese subsidiary), performance of labor contracts, and performance of economic contracts (foreign workers working in accordance with the economic contract agreement between a foreign partner company and a Vietnamese company).1
In particular, foreign workers working in Vietnam under the performance of a labor contract are understood to refer to foreign nationals who are employed by an employer in Vietnam, have entered into a labor contract, and are paid a salary under the employer’s control.
2. Conditions for Employment of Foreign Workers in Vietnam
When hiring foreign workers, whether they are internal transfers or local hires, the conditions set out in Article 152 of the 2019 Labor Law must be met. Specifically:
Condition 1: Employers may hire foreign workers only if they cannot secure Vietnamese workers to meet production and business needs. Before hiring foreign workers, employers must notify vacancies for Vietnamese workers for the positions to be filled by foreign workers on the electronic information portal of the Department of Employment or the local employment service center.2 If no qualified Vietnamese workers are available, employers can proceed with the recruitment of foreign workers.
Condition 2: Employers must explain their labor needs to the competent authority and obtain written approval before recruiting foreign workers. Specifically, employers must justify to the Ministry of Labor, War Invalids and Social Affairs why they need foreign workers instead of Vietnamese workers. This step is key in the work permit application process.
In short, employers cannot freely employ foreign workers but must demonstrate genuine need and obtain approval from Vietnamese authorities. These regulations reflect Vietnam’s emphasis on prioritizing employment for Vietnamese workers.
3. Overview of the Process for Employing Foreign Workers Under a Labor Contract
3.1. Application for Work Permit
The application process for a work permit for foreign workers working under a labor contract consists of three steps:
- Notification on recruiting Vietnamese workers for positions expected to be filled by foreign workers.
- Finalize the foreign worker plan.
- Apply for a work permit.
Compared with the application procedures for other forms of employment, the process for work permits for foreign workers under labor contracts requires simpler documentation in Step 3, making it quicker to complete.
3.2. Obligation to Conclude Labor Contracts with Foreign Workers
3.2.1. Obligation to Conclude and Submit a Labor Contract
After obtaining a work permit, employers and foreign workers must enter into a written labor contract before the intended start date of work. Employers must submit the original or a notarized copy of the contract to the work permit issuing authority.3
3.2.2. Contents of the Employment Contract
Employment contracts must comply with Article 3 of Circular No. 10/2020/TT-BLDTBXH and must not exceed the validity period of the work permit (maximum two years). Employers may enter multiple fixed-term contracts with foreign workers within the work permit’s validity period. Unlike Vietnamese workers, foreign workers’ contracts must include information about their work permits, and their wages can be paid in Vietnamese dong or foreign currency.
3.3. Social Insurance and Health Insurance
Foreign workers are eligible to join social insurance if they meet these four conditions:5
- Having a labor contract for one year or more.
- Holding a valid work permit.
- Not working as internal transfers.
- Not reaching the retirement age as per Vietnamese law.
Additionally, foreign workers with contracts of one month or more are exempt from health insurance contributions.6 Employers must check eligibility and enroll foreign workers in social and health insurance with the Vietnamese social insurance agency.
Conclusion
Vietnam’s labor laws stipulate specific conditions and processes for recruiting and employing foreign workers under labor contracts. Employers must fully understand and comply with these provisions to formulate effective human resource plans and respond to business needs efficiently.
References:
- Clause 1, Article 2 of Decree No. 152/2020/ND-CP
- Clause 2, Article 1 of Decree No. 70/2023/ND-CP
- Clause 3, Article 11 of Decree No. 152/2020/ND-CP
- Labor Law Article 151, Paragraph 2
- Clauses 1 and 2, Article 2 of Decree No. 143/2018/ND-CP
- Article 1, Paragraph 6 of the Act amending and supplementing certain provisions of the Health Insurance Act
The above information is provided by Mys Law. For any questions regarding the content of this article, please contact 0969.361.319 or email: [email protected] for further clarification. Best regards!
Compiler: Nguyen Anh Quan
