CAO NHAT LINH, LL.M
Law Faculty
Can Tho University
On March 25, 2008, the Government issued Decree No. 34/2008/ND-CP, on employment and management of foreigners working in Vietnam, in replacement of Decree No. 105/2003/ND-CP of September 17, 2003, detailing and guiding the implementation of a number of articles of the Labor Code regarding the employment and management of foreign workers in Vietnam, and Decree No. 93/2005/ND-CP of July 13, 2005, amending a number of articles of Decree No. 105/2003/ND-CP. The new regulation has been widely applauded as a breakthrough in opening Vietnam’s labor market, changing the way foreign workers are employed and lifting the cap on foreign workers employed by Vietnam-based enterprises.
Under the Labor Code, the State recognizes the right of enterprises to recruit and employ foreign workers. However, this right has been somehow restricted by a cap controlling the number and quality of foreign employees under strict criteria. Accordingly, enterprises operating under the Enterprise Law and the Investment Law and wishing to employ foreigners must abide by the rule that their foreign employees must account for no more than three per cent of the total number of their existing employees. All other enterprises and organizations may employ an unlimited number of foreigners but must obtain permission of provincial-level People’s Committee presidents before conducting the recruitment.
These provisions, aimed at protecting the domestic labor market and retaining jobs for domestic laborers and preventing unemployment caused by an oversupply of immigrant laborers in the country, are no longer practical in the new context as Vietnam joins the World Trade Organization (WTO) and the domestic supply of highly qualified workers is being outpaced by demand. The Vietnamese State needs to permit more foreigners to live and work in Vietnam.
The removal of the three-per-cent cap on foreign employees of Vietnam-based enterprises under the new regulation means that these enterprises can now employ an unlimited number of foreigners, provided these employees satisfy all requirements for working in Vietnam, particularly the requirement of “high professional qualification and technical skills.”
With its willingness to realize its international commitments, the Vietnamese Government has fully translated its WTO commitments related to employment of foreigners to work in Vietnam as “intra-corporate transferees” into specific provisions of the new decree. Subject to these provisions are managers, executive officers and specialists of foreign-based enterprises who are temporarily transferred from parent companies to their Vietnam-based representative offices or branches (commercial presence), provided they have been recruited by foreign companies at least 12 months earlier.
In this way, foreign companies may send their personnel to Vietnam to hold the post of manager, executive officer or specialist in their establishments of commercial presence in Vietnam. However, the new decree still imposes an indirect limit in order to spare room for local laborers to become employed by foreign companies. Under this limit, foreign commercial presences may obviously employ up to three foreigners for the above posts but, in case they wish to employ more than three, they must ensure that at least 20% of the total holders of these posts are Vietnamese citizens. In other words, foreign employers in Vietnam may employ up to 8 foreigners out of every 10 managers, executive officers or specialists.
Apart from intra-corporate transfer of staff, the new regulation also permits foreigners to enter Vietnam to work as “service salespersons” and those representing foreign non-governmental organizations licensed to operate under Vietnamese law. As specified by the new decree, foreign service salespersons mean foreigners who neither live in Vietnam nor receive remuneration from any source in Vietnam and are engaged in representing service providers by negotiating with Vietnamese parties on the marketing of these services. They are not allowed to sell these services directly to the general public or directly take part in service provision.
Together with the removal of the foreign employee ratio limit, the new regulation abolishes the power of People’s Committee presidents to permit the employment of foreigners in excess of the limit and the employment of foreigners by enterprises and organizations not subject to the limit.
Enterprises that wish to employ foreigners in excess of the three-per-cent cap should obtain permits of presidents of People’s Committees of provinces or cities in which these enterprises are headquartered. Other enterprises and organizations, which are allowed to employ foreigners in an unlimited number (except for those with projects that have been approved under decisions of competent Vietnamese authorities or have been granted operating licenses which specify the number of foreign laborers they may employ), should also obtain permits of provincial-level People’s Committee presidents before effecting the employment.
Under the new regulation, these enterprises and organizations no longer have to ask for permits of provincial-level People’s Committee presidents for employment of foreigners. In other words, procedures for recruitment and employment of foreigners become much simpler, requiring employers to apply for work permits only for their foreign employees from provincial-level Labor, War Invalids and Social Affairs Services of localities in which they are headquartered.
Under previous regulations, foreigners who enter Vietnam to perform contracts (except for labor contracts) signed between Vietnamese and foreign enterprises, agencies or organizations are also exempt from work permits and only required to report their presence and work to provincial-level Labor, War Invalids and Social Affairs Services. These persons are now required to obtain work permits before entering to work in Vietnam.
Foreigners who act as chief representatives or heads of branches of foreign companies in
Of the above three new categories of foreign employees, only foreigners entering
Other categories of Vietnam-based foreigners, such as pupils, students, spouses of foreign officials and live-in servants of foreign families who wish to work for Vietnam-based enterprises, organizations or individuals are not required to make dossiers or carry out procedures of application for work permits. Enterprises, organizations or individuals that wish to employ these persons should only report these persons’ full names, ages, nationalities, passport numbers, dates of commencement and termination of work and specific work assignments to provincial-level Labor, War Invalids and Social Affairs Services of localities in which they are intended to work seven days before they start working.
With the new regulation, Vietnamhas made a significant step toward fully opening its labor market to high-quality workers. This is consistent with policies on immigrant laborers currently applied by developed countries in order to attract foreign labor and expertise for accelerating national development and triggering competition among their own workers. Though the new regulation allows more foreigners to work in Vietnam and further simplifies employment procedures, it sets stricter work permit requirements on particular categories of foreign employees. At the same time, Vietnamese enterprises are still required to adopt plans on training of Vietnamese workers to replace their current foreign employees.-