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Legal Update

Vietnam: Changes to Work Permit Regime Applicable to Foreign Employees

7 October 2013
Mayer Brown JSM Legal Update

On 5 September 2013, the Government of Vietnam adopted Decree 102/2013 on the employment and management of foreign employees working in Vietnam. Decree 102/2013 takes effect from 1 November 2013 and replaces Decree 34/2008 dated 25 March 2008 (as amended by Decree 46/2011 dated 17 June 2011) on the same subject.

Decree 102/2013 contains some significant changes concerning the employment of foreigners and the requirement for work permits. Most notably, it introduces some additional administrative procedures for employers to follow before recruiting foreign employees, and for obtaining an exemption from the need for obtaining a work permit. It also shortens the duration of work permits from three years to two years.

Before Recruiting Foreign Employees

Every year, the employer must determine its needs for foreign employees for those positions for which Vietnamese employees are not qualified, and submit a plan for employment of foreign employees to the Chairman of the provincial People's Committee for approval. If its needs for foreign employees change, the employer must notify the Chairman of such change. The written approval of the Chairman of the provincial People's Committee is required for the employment of each foreign employee for each position.

Additional requirements also apply to contractors that use foreign employees for their work in Vietnam. For each position for which a foreign employee is required, the contractor must request the Chairman of the provincial People's Committee to try to recruit Vietnamese employees for such positions. The Chairman has from one to two months to recruit suitable candidates; if it is not possible to do so, the Chairman will consider allowing the contractor to recruit foreign employees for such positions.

Exemptions from the Need for a Work Permit

The good news is that Decree 102/2013 expands the list of those foreigners eligible for exemption from the need for a work permit to include an extended list of secondees, volunteers, journalists, and teachers. The bad news is that an employer, prior to employing a person in one of these categories, must request the provincial Department of Labour, Invalids and Social Affairs (DOLISA) to certify in writing that the employee satisfies the conditions for exemption. Supporting documents must be sent to DOLISA at the time of the request. Under the previous regulations, the employer only needed to report to the provincial DOLISA that a foreign employee was eligible for an exemption.

Work Permit Duration and Other Changes

A work permit is now only valid for two years, instead of for three years as under the previous regulations. However, it can be renewed for the same (two-year) duration multiple times.

A foreign employee in charge of establishing a commercial presence is required to obtain a work permit. This requirement seems to suggest that before obtaining a licence to set up a commercial presence (e.g., a branch or a subsidiary), the employer needs to apply for a work permit for each of its officers first. It is not clear how this could be done in practice, as such an employer is unlikely to have had a commercial presence in Vietnam by that time. Further guidance on this matter may be needed from the Government or the Ministry of Labour, Invalids and Social Affairs.

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