VIETNAM – New Labour Code in Practice
Vietnam’s new Labour Code (No. 10/2012/QH13) has come into force, from 1 May 2013, as expected (and as reported in our news alert last year, available here. However, the new decree on the management of foreign national employees in Vietnam which followed the new Labour Code and was also due to be implemented on 1 May, is still under discussion and has not yet been approved.
Work Permit Validity
The major impact of the new Labour Code is that the maximum length of work permit that can now be issued is two years, down from three – this is now in effect.
New Decree – Still in Draft Form
The new decree, expected to be implemented soon, on the management of foreign national employees in Vietnam, is still in draft format. Several important points are under discussion. Peregrine’s partner in Vietnam, Resident Vietnam, attended a meeting between the MOIT (Ministry of Industry and Trade), MOLISA (Ministry of Labour, Invalids and Social Affairs) and the HR committee of Eurocham; the following points were discussed:
Work Permit Exemptions for 11 Service Sectors
Under the commitments made by Vietnam to the World Trade Organisation, and set out in decree 46, several categories of foreign national employees are currently exempt from the need for work permits. However, in practice, obtaining approval for a work permit exemption is very difficult, and requires many of the same supporting documents as a work permit application in any case (e.g. police clearances, medical checks, etc.) and so is very rarely used.
At the meeting, Eurocham was unable to find one member who had successfully applied for a work permit exemption, since the process is so unclear.
MOLISA and MOIT confirmed that they are working to resolve this issue and intend to provide clear guidelines; however, the exemption process will still be a complex route and will not exempt the applicant from the need to meet other criteria for residence in Vietnam – i.e., even if a work permit is not required, the applicant will still need to provide a police clearance certificate, health check, evidence of qualifications and so on.
Annual Reporting on Foreign Employees
The new rule whereby employers must annually (before 15 December of each year) submit a written plan for foreign labour to the local Department of Labour, Invalids and Social Affairs, is set to remain in place. It is intended that a circular containing guidelines for this requirement will follow the issue of the new decree.
Removal of Apprenticeship Contract
Decree No. 46, which was issued in July 2011 (see news alert here, made it mandatory that work permit extensions could only be granted where proof could be submitted that training a local Vietnamese employee, with the intention for that employee to ultimately take over from the foreign national, had been carried out.
A training contract signed by the employer and the Vietnamese employee in question is currently required to be submitted in support of the work permit extension request.
It is anticipated that the new decree will remove this requirement.
Local Labour Market Search
Currently, companies wishing to recruit foreign national employees need to show that they have tested the local labour market first, by advertising positions locally or using professional recruitment agencies.
It is also anticipated that the new decree will offer more flexibility around this requirement, either by removing it entirely or by making the advertising criteria less rigid.
Work Permit Renewals
Currently, renewal applications must be submitted at least five days before expiry of the work permit but no more than 15 days prior to expiry. This small window makes the renewal process administratively difficult and MOLISA is considering a change to the process.
It is possible that renewal applications in general will become more challenging, and that it will be required for the Vietnamese entity to provide more substantial evidence of why a local resident worker has not been able to be found for the position.
- Note that, effective 1 May 2013, work permits for Vietnam are issued with a maximum validity of two years (down from three)
- Note that the decree amending several practical aspects of the work permit application procedure has not yet been issued, but is anticipated shortly and will bring some significant changes; we will keep you updated!