16 December 2013
On 1 May 2013, the new Labour Code of Vietnam came into force, introducing many significant changes concerning employment matters. To give effect to these changes, the government has issued a number of guiding regulations. This legal update summarises the salient features of the new work permit regulations and new regional salaries provisions.
More Restrictive Provisions on Work Permits
The new Labour Code of Vietnam restricts the employment of expatriate employees in Vietnam. To implement the provisions of the Labour Code on work permits, on 5 September 2013 the government issued Decree No. 102/2013/ND-CP (Decree 102).
As a general rule, in order to work in Vietnam a foreigner must secure a work permit from the labour authority (Work Permit). Exception to the Work Permit requirements is granted to management board members of joint stock companies, lawyers who are licensed by the Ministry of Justice, and those who come to Vietnam to handle emergency incidents. It is also granted to those who are internally transferred in businesses that operate within any of the 11 service sectors identified under Vietnam’s WTO commitments, and to other expatriates as provided for by the Labour Code. The Ministry of Industry and Commerce is authorised to issue a list of businesses within these 11 service sectors; we note, however, that so far the list has not been issued, and in practice the Work Permit is still required.
Decree 102 introduces a new pre-recruitment procedure that must be carried out by employers. Specifically, employers (excluding contractors) must submit for approval an annual report on their requirements for expatriate employees to the chairman of the local Provincial People’s Committee. Any change to these requirements must also be reported.
The term of the Work Permit must not exceed two years (as opposed to three years under the preceding legislation). Upon expiry of his or her existing Work Permit, the Work Permit holder should apply for a new Work Permit (instead of applying for an extension to his or her existing Work Permit, as with the preceding legislation).
An expatriate employee who is subject to Work Permit requirements and who is working in Vietnam without a Work Permit may be expelled from Vietnam.
Decree 102 also provides the procedures for the issuance of and extensions to Work Permits.
New Minimum Salaries Applicable to Foreign Invested Enterprises
On 14 November 2013 the government issued Decree No. 182/2013/ND-CP which provides for new regional minimum salaries of employees, including employees of foreign invested enterprises. Decree 182 replaces Decree No. 103/2012/ND-CP (of 4 December 2012).
Decree 182 provides for four regional minimum salaries: VND 2,700,000, VND 2,400,000, VND 2,100,000 and VND 1,900,000, depending on which region the relevant enterprise is located in.
The new regional minimum salaries provided for in Decree 182 apply from 1 January 2014, and are paid to untrained employees performing the simplest of jobs. As from 1 January 2014, employers are required to adjust the minimum salaries to be paid to their employees if those stated in the relevant contracts are lower than the new minimum salaries. Employers are encouraged to pay their employees higher salaries than the regional minimum salaries.