Vietnam’s New Labor Code: Implications for Expats

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Vietnam’s National Assembly recently updated the country’s labor law, seeking to harmonize the interests of employees and employers. Labor Code 2019, which came into effect on January 1, 2021, changes how employers and employees relate to one another. In a previous article, we outlined the key provisions of the code. In this article, we detail implications for expatriates working in Vietnam.

Work requirements for foreigners

The New Labor Code 2019 revises and supplements requirements related to foreign employees working in Vietnam. Workers must now be 18 years or older, possess full civil capacity, possess professional qualifications, techniques, work skills and work experience, and have good health according to the standards set by the Minister of Health. They should not be serving a sentence, had a crime wiped out, or currently facing criminal prosecution under foreign or Vietnamese law. They must hold a work permit, except where they are subject to exemption.

Exemptions to work permits

All foreigners must hold a work permit before engaging in any employment in Vietnam – unless they are specifically exempted. Exemptions apply for:

  • Capital contributing members or owners of a limited liability company contributing capital equal to or more than government regulatory requirements (currently VND 1 Billion / USD 43,000).
  • Members of the board of directors of joint stock companies making capital contributions according to Government regulations.
  • Heads of representative offices.
  • Those entering Vietnam for less than 3 months to perform marketing services.
  • Those entering Vietnam for less than 3 months to a resolve complicated technical or technological issue which (i) affect business operations (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam. Employers must inform the Vietnamese Government at least 3 days before the expected first working day for these to be available.
  • A foreign lawyer who has been granted a Lawyer’s Practicing Certificate in Vietnam.
  • A foreign individual specified in an international treaty to which Vietnam is a signatory.
  • A foreign employee married to a Vietnamese person and living in Vietnam.

Work permit extensions

Work permits are valid for a maximum of 2 years and can be extended once for a maximum of 2 years.

Labor contracts for foreign employees

  • A Labor Contract for foreign employees in Vietnam cannot exceed the term of the work permit.
  • A foreign employee and employer in Vietnam can enter several definite-term labor contracts.
  • The maximum term of a Labor Contract for foreign employees in Vietnam is 2 years.
  • No indefinite-term contract for foreign employees is available.

New expansive definition of employment

The New Labor Code 2019 extends the scope and object of employment to include those who do not necessarily have a specific labor contract. Therefore, a person will be an employee if they have an agreement to perform a job; are receiving monetary payment; and are working under the supervision of an employer.

Foreigners who previously believed they were outside the Labor Code/employment regulations, and therefore not subject to Work Permit requirements, may now be within the system and subject to its requirements.

Working without a work permit

  • If a foreign employee is not exempt from Work Permit requirements and is working in Vietnam without one, they must either leave or be deported.
  • If they are forced to leave Vietnam, they cannot return for 6 months.
  • If they are deported, they cannot return for 3 years.

Need to hire an expat in Vietnam? GoGlobal can help

The international PEO services model enables companies to hire compliantly, quickly, and affordably almost anywhere, while avoiding the pitfalls and risks of hiring contractors. As an international PEO services company present in 17 APAC countries, we are well placed to help your company adapt to Vietnam’s New Labor Code 2019. Please contact us to discuss how GoGlobal can help you.