The Government of Vietnam issued Decree No. 34/2008/ND-CP ("Decree 34") dated 25 March 2008 on the employment and administration of foreign employees working in Vietnam. This Decree significantly changes prior provisions as it replaces Decree No. 105/2003/ND-CP ("Decree 105") of the Government of Vietnam dated 17 September 2003 with regulations on implementation of the Labor Code with respect to employment and administration of foreign employees working in Vietnam, and Decree No. 93/2005/ND-CP ("Decree 93") of the Government dated 13 July 2005 amending Decree 105. Any provision contrary to Decree 34 is repealed.
I. Decree 34 provides some new provisions:
1. Decree 34 clarifies the types of foreign employment in Vietnam. Foreign employees are recruited by an employer in Vietnam in the following forms:
(a) Pursuant to a labor contract;
(c) Through performance of any of the following types of contracts: economic, commercial, financial, banking, insurance, scientific and technical, cultural, sporting, educational or medical health contracts;
(d) Service providers pursuant to a contract;
(e) Individuals offering services;
(f) Foreigners representing a foreign non-governmental organization which is permitted to operate pursuant to Vietnamese law.
Each type of foreign employment must comply with separate specific legal provisions.
2. In regard to recruitment pursuant to a labor contract, Decree 34 removes the 3% cap on foreigners to local employees ratio in an enterprise. Therefore, employers in Vietnam can now hire an unlimited number of foreign employees if such employees meet requirements/criteria as set out by Decree 34 in order to work as managers, executive directors and experts; and where Vietnamese employees are not yet able to satisfy such production and business requirements.
3. In regard to transfers, at least twenty (20) per cent of the total number of the managers, executive directors and experts of each enterprise with a commercial presence within the territory of Vietnam must be Vietnamese citizens. However, each foreign enterprise is permitted to have a minimum of three managers, executive directors and experts who are not Vietnamese.
4. Any foreigner working in Vietnam must have a work permit, except in the following cases:
(a) Entering Vietnam to work for a period of less than three (3) months;
(b) A member of a limited liability company with two (2) or more members;
(c) The owner of a one member limited liability company;
(d) A member of the board of management of a shareholding company;
(e) Entering Vietnam to offer services;
(f) Entering Vietnam to work to resolve an emergency situation;
(g) A foreign lawyer to whom the Ministry of Justice has issued a certificate to practice law in Vietnam in accordance with law.
II. Decree 34 made some significant changes to the labor market:
1. Under Decree 34, the competent authority will not review whether foreign employees recruited under old laws satisfy the criteria set out in Decree 34.
2. The removal of the 3% cap is also a positive development because it allows employers to recruit an unlimited number of foreign employees based on their business demand.
3. Furthermore, Vietnam also shows its willingness to comply with its WTO commitments on labor.
4. The Vietnam market still lacks experts and skilled employees. By way of allowing more foreign experts and skilled employees to work in Vietnam, Decree 34 will also help to enable foreign experts to train and prepare the next generation of Vietnamese experts.
This Decree takes effect as of 12 April 2008.