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January 26, 2021

New Labor Rules for Foreigners Working in Vietnam

Vietnam has been an attractive destination for foreign workers in recent years. According to the Ministry of Labor, Invalids, and Social Affairs, a state authority managing labor-related matters, 91,200 foreigners worked in Vietnam at the end of July 2019. By March 18, 2020, the number increased to 94,000. Although these numbers are still low if compared with some other ASEAN countries, they show the growing trend of foreigners moving to Vietnam for work and living. Further, as a result of the trade conflict between the U.S. and China and Vietnam’s success during the COVID-19 pandemic, many foreign investors have shifted or intend to move their investments into Vietnam. This rise in investment will bring about a further increase in the number of foreign workers.

In line with the new 2019 Labor Code, which replaced the 2012 Labor Code on January 1, 2021, the government of Vietnam issued Decree No. 152/2020/ND-CP dated December 30, 2020, providing guidance concerning foreigners working in Vietnam (Decree 152). Decree 152 will replace the current applicable regulations on the same matter under Decree No. 11/2016/ND-CP, as amended by Decree No. 140/2018/ND-CP (together, Decree 11), on February 15, 2021.

Foreign investors and expatriates should be aware of the notable new points of Decree 152 below.

Additional Work Permit Exemptions

Generally, a foreigner working in Vietnam is required to obtain a work permit prior to the commencement of work, except in exempted cases. Decree 152 retains substantially the same exemptions stipulated under Decree 11, but adds the following two new categories of foreign employees who are exempt from work permit requirements:

  1. An expatriate who marries a Vietnamese citizen and resides in Vietnam; and
  2. An expatriate who enters Vietnam for the purpose of teaching or research which is permitted by the Ministry of Education and Training.

It is worth noting, however, that even if an expatriate falls under one of the statutory cases of work permit exemption, it does not mean he/she can freely work without satisfying any local procedures. In fact, the expatriate and his/her employer are still legally required to notify the local labor authority of the exemption.

Reduction in Cases Requiring Labor Usage Plan Approval

Before hiring an expatriate to work in Vietnam, an employer is generally required to formulate and submit to the local labor authority, for its approval, a “labor usage plan” explaining the demand for the use of foreign labor. However, under Decree 152, this requirement is exempted for the following cases:

  1. An expatriate who is an owner or member (i.e., shareholder) of a limited liability company whose capital contribution (paid-up share) to the charter capital of the company is VND 3 billion (approximately USD 130,000) or more;
  2. An expatriate who is a member or the chairman of the board of management and also a shareholder of a joint-stock company whose capital contribution to the company’s charter capital is VND 3 billion or more;
  3. An expatriate who is a manager of a representative office, project, or NGO office;
  4. An expatriate who enters Vietnam for a period of less than three months to do marketing for a service;
  5. An expatriate who enters for a period of less than three months to resolve a complicated technical or technological issue which (i) affects or threatens to affect business operations and (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam;
  6. An expatriate who enters Vietnam to hold the position of a manager, executive, expert, or technician for a period of work of less than 30 days per entry and no more than three entries a year;
  7. An expatriate who enters Vietnam to implement an international agreement to which a central or provincial authority is a signatory;
  8. An expatriate who is a student at a foreign school or training institution which has a probation agreement with an agency, organization, or enterprise in Vietnam, or is a probationer or apprentice on a Vietnamese seagoing ship;
  9. An expatriate who is a relative of a member of a foreign representative body authorized to work in Vietnam under an international treaty to which Vietnam is a signatory;
  10. An expatriate who obtains an official passport to work for a regulatory agency, political organization, or socio-political organization; and
  11. An expatriate who takes charge of establishing a commercial presence (i.e., a foreign-invested business entity, representative office, branch of foreign trader in Vietnam, or executive office of a foreign investor in a business cooperation contract).
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