Jan 15 2021

Decree Implements Labor Code Affecting Foreign Workers

Vietnam

At a Glance

  • By way of a new Decree, the Vietnamese government has clarified certain provisions of the new Labor Code, which will impact the issuance of Work Permits, Work Permit Exemption Certificates, Work Permit Extensions and Cancellations. The following changes, among others, will come into effect on February 15, 2021:
    • Experts and specialists applying for Work Permits will need to have at least five years’ work experience and meet other requirements if they do not have at least a bachelor’s degree and at least three years’ work experience in a field relevant to the job position;
    • Foreign nationals entering Vietnam for short-term assignments will not require a Work Permit if the assignment is less than 30 days per trip and does not exceed three times per year;
    • Spouses of Vietnamese nationals will no longer require either a Work Permit or Work Permit Exemption Certificate to work in Vietnam; and
    • Employers/host entities will need to report all foreign nationals who are exempt from work authorization to the government.

The situation

The Ministry of Labor – Invalids and Social Affairs (MOLISA) in Vietnam has issued its Decree implementing the Labor Code, which will result in new guidelines that impact the issuance of Work Permits, Work Permit Exemption Certificates, Work Permit Extensions and Cancellations.

A closer look

The following key changes, among others, will come into effect on February 15, 2021:

CHANGE  DETAILS  IMPACT 

Change in qualification documents for experts/specialists and technicians

  • Experts and specialists applying for Work Permits will need to have at least five years’ work experience and a ‘practicing’ certificate relevant to the job position if they do not have at least a bachelor’s degree and at least three years’ work experience in a field relevant to the job position.
  • Currently, applicants must submit an expert certificate issued by a company overseas if they did not possess the required three years’ work experience and educational qualifications.
  • Technicians applying for a Work Permit will need to have at least five years’ work experience in a field relevant to the job position if they do not have the training certificate required in the previous Decree.
  • Currently, a technician must provide either (a) a training certificate in the targeted technical specialty, or (b) a training certificate in another related specialty of at least one year and have at least three years’ relevant work experience in the trained specialty. 

The longer experience requirement for foreign workers who are lesser educated will make it more difficult for such applicants to work in Vietnam.

Limited short-term assignments 

  • Foreign nationals entering Vietnam for short-term work trips for less than 30 days per trip (who are Work Permit exempt) are limited to three entries per year.
  • This change restricts the “30/90 day” rule, whereby foreign nationals on work trips lasting less than 30 days also benefit from unlimited entries, as long as their cumulative total stay does not exceed 90 days in a year.

Foreign nationals on short-term work trips will face a new entry limit on such trips. Frequent travelers and anyone who will need to work in Vietnam for more than 90 days should consult Fragomen for further assessment.

Work authorization for spouses of Vietnamese nationals

Spouses of Vietnamese nationals will no longer need to obtain either a Work Permit or a Work Permit Exemption Certificate to work in Vietnam.

Instead, employers of spouses of Vietnamese nationals will need to file a report with the Vietnamese government at least three days before the start of the spouse’s work in Vietnam.

Spouses should benefit from this rule as it eliminates the administrative requirements and costs associated with obtaining work authorization.

The Immigration Department is expected to issue policies and clarifications for this category of foreign employee. 

New reporting requirement for foreign nationals exempt from work authorization

  • Employers/host entities should report all foreign nationals who are exempt from work authorization (i.e., those not holding either a Work Permit or Work Permit Exemption Certificate) to the MOLISA or the provincial Department of Labor where the foreign national is expected to work at least three days before the start of the foreign national’s work in Vietnam.
  • Currently, there is no such reporting requirement.

The current Decree does not provide the format or the procedures for submission of these reports. However, MOLISA is expected to issue further clarifying Circulars. 

Limited Work Permit renewals 

  • Work Permit holders will only be allowed to extend a Work Permit once for up to two years (for a total maximum period of four years).
  • Currently, Work Permits can be extended an unlimited number of times.

It remains unclear as to whether foreign nationals who have applied for the maximum number of Work Permit extensions will need to apply for a new Work Permit or a reissuance. Fragomen is monitoring this closely and will report on any developments.

Reporting of Work Permit termination

  • Sponsoring entities will need to report terminations to the Department of Labor within 15 days from the end of the assignment or the expiry of the Work Permit.
  • This is not currently regulated in the Labor Law.

Employers will face yet another reporting requirement, adding to the administrative burden in the work authorization process.

 

Background

The new Labor Code was drafted in 2019, approved in 2020 by the national assembly and took effect on January 1, 2021, with this latest Decree issued to implement the new Code.  These revisions would be in line with the Vietnamese authorities’ typical timeframe for updating its rules on the management of foreign workers, which occurs every three to five years. 

Though some of the new provisions in the Decree may seem restrictive against foreign workers on their face (and more onerous for employers), there are also more positive provisions as well. This may signal the government’s intentions to replace the previous rules with tighter guidelines while continuing to welcome foreign talent.

Looking ahead

It is likely that the MOLISA will continue to issue guidance to further clarify the provisions in the new Decree and in particular the limitation on work permit renewals, as well as the various reporting requirements.   

We worked closely with Resident Vietnam in Vietnam to prepare this alert. This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].