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Sunday, September 20, 2020

Work permit regulations need further amendments

Updated: 14:57’ - 29/12/2011

Vu Le Bang
Vietnam Counsel of Nishimura & Asahi HCMC Branch

Despite newly issued Government Decree 46 and Circular 31/2011/TT-BLDTBXH of November 3, 2011 (effective on December 18, 2011), Vietnam needs further amendments and guidelines regarding the current work permit regulations.

Like most other countries, Vietnam prioritizes the labor market for its citizens. Accordingly, a Vietnamese aged 15 or older is entitled to work and freely choose his/her job or trade without being discriminated against because of his/her gender, race, social class, beliefs, or religion.[1] In addition, except for special work requiring a practice certificate or license, a Vietnamese is generally permitted to work without being subject to any licensing requirements. In contrast, a foreigner is restricted when working in Vietnam. To work in Vietnam, a foreigner is, among others, subject to the work permit requirement, which is not imposed on a Vietnamese.

The Labor Code of Vietnam, issued on June 23, 1994, and effective on January 1, 1995, was codified from the previous regulations to govern labor matters in general and foreign employees in particular. Since the issuance of the Labor Code, Vietnam has continuously revised the work permit regulations applied to foreign employees in Vietnam. The first legal instrument governing work permits that was issued by the Government of Vietnam after the effective date of the Labor Code was Decree 58-CP dated October 3, 1996 (Decree 58), and subsequently amended by Decree 169/1999/ND-CP dated December 3, 1999 (Decree 169). Decrees 58 and 169, which were effective from October 3, 1996, to October 7, 2003, were replaced by Decree 105/2003/ND-CP dated September 1, 2003 (Decree 105). Decree 105 and Decree 93/2005/ND-CP dated July 13, 2005, amending Decree 105, were effective from October 7, 2003, to April 12, 2008, when Vietnam was approved to become an official member of the World Trade Organization (WTO), and then replaced by Decree 34/2008/ND-CP dated March 25, 2008 (Decree 34). Together with Decree 46/2011/ND-CP dated June 17, 2011 (Decree 46), which was issued to amend a number of provisions of Decree 34 and came into effect on August 1, 2011, Decree 34 is the prevailing legal instrument governing work permits. Both Decrees 34 and 46 were issued mainly to implement Vietnam’s commitments regarding foreign labor upon its accession to the WTO. While the aforesaid Decrees are the main legal basis governing work permits, many other legal documents have been issued to guide the work permit regulations in the form of circular, decision, directive, or official letter from time to time.

The work permit regulations have been amended to reflect changes in the Labor Code and the development progress of society. In particular, since the prevailing work permit regulations, which are mainly provided for under Decrees 34 and 46, were made in line with Vietnam’s commitments regarding foreign labor in its accession to the WTO, the regulations have somewhat reflected the requirements and expectations from foreigners (through their home countries being the WTO members). Specifically, Decree 46, accommodating most work permit regulations for foreigners in comparison with the previous regulations, provides more cases for foreigners to get exempted from the work permit requirement.[2] In addition, foreigners are satisfied with less administrative work in relation to the work permit application under the current regulations (e.g., a number of foreigners who work in Vietnam by internal transfer within an enterprise do not need to go through the recruitment process in order to be permitted to apply for a work permit).[3]

Nevertheless, it appears from practice that there is still much debate on the reasonableness and enforcement of the current Vietnamese work permit regulations. Regardless of the newly issued work permit regulations provided under Decree 46 and Circular 31/2011/TT-BLDTBXH, it is argued that Vietnam needs further amendments and guidelines regarding the current work permit regulations. Below are a number of grounds for such an argument and some proposals to amend the current work permit regulations accordingly.

Requiring work permits for foreign employees of foreign diplomatic representative agencies in Vietnam under a labor contract

The work permit requirement is determined based on the following two factors under Decrees 34 and 46:

First, foreigners work in Vietnam under a labor contract;[4] and

Second, foreigners, who work in Vietnam under a labor contract, must work for an employer defined in Decrees 34 and 46. They include enterprises established under Vietnamese laws, representative offices of foreign entities, state professional units, offices of foreign or domestic projects in Vietnam, and so forth.[5] However, such employers do not include foreign diplomatic representative agencies in Vietnam, such as foreign embassies or consulates and affiliates of foreign embassies or consulates.[6]

Decrees 34 and 46 also provide certain cases where the work permit requirement is exempted such as where a foreigner enters Vietnam to work for less than three months; a foreigner who is a member of a limited liability company with two or more members; and a foreigner entering Vietnam to offer services, and so on.[7] However, those cases do not include foreigners working in foreign diplomatic representative agencies in Vietnam under a labor contract (diplomatic foreign employees).

As a matter of fact, foreign diplomatic representative agencies in Vietnam, in addition to having diplomats, may employ diplomatic foreign employees. Since the foreign diplomatic representative agency is not categorized as an employer where the work permit requirement is applied under Decrees 34 and 46, diplomatic foreign employees are not governed by these decrees and, consequently, they are not legally required to obtain work permits.

Without prejudice to not being governed by Decrees 34 and 46 and from a practical viewpoint, labor authorities favor the opinion that diplomatic foreign employees should fall into the case subject to the work permit requirement because (i) they work in Vietnam under a labor contract, and (ii) they are not foreign diplomats. For convenience in dealing with administrative procedures, including obtaining temporary resident cards or visas, diplomatic foreign employees prefer obtaining work permits to arguing that they are exempted from the work permit requirement. To fill such gap between law and practice, the work permit requirement for diplomatic foreign employees should be included in Decrees 34 and 46.   

Removing the work permit requirement for foreigners who have Ministry of Health certificates to conduct medical examination and treatment in Vietnam

Under Vietnamese laws, in addition to obtaining a work permit, foreign doctors, assistant doctors, nurses, midwives, technicians, herbalists and owners of family herbal remedies or treatment methods (foreign doctors) are required to obtain a certificate to conduct medical examination and treatment (medical practice certificate) in order to practice in Vietnam.[8] The authority competent to issue work permits is provincial-level labor authorities[9], while the Ministry of Health is competent to issue medical practice certificates.[10]

Unlike foreign doctors, however, a foreign lawyer who has obtained a Ministry of Justice certificate to practice law in Vietnam is exempted from the work permit requirement under Decrees 34 and 46.[11] Of course, the practice of law and the conduct of medical examination and treatment are different in terms of practice areas, but they are likely to be similar in legal nature. For instance, both practices are required to have certificates issued by a line ministry. And they are only permitted for a limited number of foreigners possessing certain professional qualifications and titles in their home countries (e.g., a lawyer for practicing law and a doctor for conducting medical examination and treatment). Therefore, it is unreasonable when foreign lawyers are exempted from the work permit requirement, but foreign doctors are not.    

In addition, the work permit requirement applied to foreign doctors appears to be difficult to enforce. Specifically, under Vietnams commitments regarding specific services in its accession to the WTO, foreign investors are permitted to conduct medical examination and treatment in Vietnam.[12] Since conducting medical examination and treatment requires, among others, a medical practice certificate,[13] foreign investors must submit such certificate together with other statutory documents in order to obtain an investment certificate.[14] Assuming that foreign investors set up a specialized clinic, namely a dentist clinic, in Vietnam and the head of such clinic would be a foreign doctor, the head is required to obtain a medical practice certificate under the Law on Medical Examination and Treatment[15] and this certificate must be submitted together with other statutory documents to obtain an investment certificate for the clinic. To be able to obtain a medical practice certificate, the head should have a work permit as discussed above.[16] Under Decrees 34 and 46, among other legal documents, an application for a work permit duly signed and sealed by the clinic to the head and a copy of the investment certificate of the clinic must be submitted to the labor authority.[17] This means that the clinic must be established (i.e., issued an investment certificate) before the head is able to obtain a work permit and then a medical practice certificate. Unfortunately, in this case, the clinic has not obtained an investment certificate yet. Accordingly, the head would not be able to obtain a medical practice certificate and foreign investors would not consequently be able to obtain an investment certificate. In order to obtain an investment certificate for the clinic, foreign investors would need to appoint a Vietnamese (who has a medical practice certificate) to be the head of the clinic. Indirectly, the work permit requirement applied to a foreign doctor unfortunately restricts him/her from being the head, even though such restriction is not intentionally expected by Vietnamese lawmakers.

In light of the above, the work permit requirement applied to foreigners who has a Ministry of Health certificate to conduct medical examination and treatment in Vietnam should be discarded.  

Further clarification needed

There are a number of current work permit regulations that need to be interpreted. In order to ensure consistency in the practical application of these regulations, further clarification and guidelines for such unclear regulations are required.

1. Internal transfer within an enterprise

Under Decree 34, “foreigner internally transferring within an enterprise” (internal transfer) is interpreted to be either a manager, an executive director or an expert in a foreign enterprise, which has already established a commercial presence within the territory of Vietnam, who temporarily transfers within the enterprise to the commercial presence within the territory of Vietnam and who has been employed by the foreign enterprise for at least 12 months before such a transfer.[18] Considering this definition, a foreigner who falls    under internal transfer should meet the following conditions:

First, such foreigner must be a manager, an executive director or an expert in a foreign enterprise (sending company), which has already established a commercial presence within the territory of Vietnam (receiving company);

Second, he/she is temporarily transferred from the sending company to the receiving company; and

Third, the sending company must have employed the foreigner for at least 12 months before the internal transfer.

The question raised in relation to internal transfer is whether the receiving company must be a company established by the sending company from the outset or whether the receiving company can be a Vietnamese company of which the sending company purchases shares or contributes capital shares at any percentage, for example, 1%. In addition, whether the sending company must be a direct foreign investor with its name appearing on the investment certificate (or the like) of the receiving company or whether the sending company can include an indirect foreign investor who is the parent company of the direct investor of the receiving company. Finally, what period should be interpreted as a temporary transfer from the sending company to the receiving company? Normally, an investment certificate can be granted to the receiving company for up to 50 years or so.[19] Can foreigners who are transferred to work in the receiving company for 50 years qualify to fall under internal transfer?    

2. Exemption from the work permit requirement for foreigners undertaking an internal transfer within an enterprise

Under Decree 46, the following case is added whereby the work permit requirement is exempted - foreigners undertaking an internal transfer within an enterprise in the service scope in Vietnam’s Schedule of Specific  Commitments in Services to the World Trade Organization with 11 services including the following: professional service; communication service; construction service; distribution service; education service; environmental service; financial service; health service; tourism service; entertainment and cultural service; and transportation service (qualified business).[20]

In practice the receiving company may probably engage in a number of business activities concurrently, of which one business activity or more is qualified business, and the others are not. For instance, the receiving company may concurrently engage in distribution services classified as qualified business and in manufacturing business, which is not qualified business. Are foreigners falling under internal transfer in such a receiving company qualified to be exempted from the work permit requirement? If not, can foreigners directly in charge of the qualified business work in the receiving company qualify to be exempted from the work permit requirement?

3. Foreigners concurrently holding several positions of which one is exempted from the work permit requirement

Under Decree 34, a foreigner who is a member of the board of management of a shareholding company is exempted from the work permit requirement.[21] However, it is normal for a foreigner to concurrently hold other positions in the shareholding company, such as the managing director, while such other positions are not exempted from the work permit requirement. A foreigner may also work concurrently for several companies in Vietnam but there is only one position in these companies which is exempted from the work permit requirement. Therefore, can a foreigner who is a member of the board of management of a shareholding company be exempted from the work permit requirement if he/she holds another position that is not exempted from the work permit requirement, such as the managing director? And how about where the foreigner holds a position in another company which is not exempted from the work permit requirement?-



[1] Articles 5.1 and 6 of the Labor Code.

[2] Article 9.1 of Decree 34 and Article 1.8 of Decree 46.

[3] Article 1.9 of Decree 46.

[4] Article 1.1.(a) of Decree 34.

[5] Article 1.2 of Decree 34 and Article 1.1 of Decree 46.

[6] Official Letter No. 395/CVL-PNHTN&QLLD of the Ministry of Labor, War Invalids and Social Affairs dated June 21, 2010.

[7] Article 9.1 of Decree 34 and Article 1.8 of Decree 46.

[8] Articles 2.6 and 19 of the Law on Medical Examination and Treatment.

[9] Article 9.2 of Decree 34

[10] Article 26.1.c of the Law on Medical Examination and Treatment.

[11] Article 9.1.(g) of Decree 34.

[12] Section II.8 of the Commitments of Vietnam on specific services in its accession to the WTO.

[13] Article 46.1.c of the Law on Medical Examination and Treatment.

[14] Articles 47, 48, 49 and 50 of the Law on Investment; Articles 7.2 and 20 of the Law on Enterprise; and Article 9 of Decree 102/2010/ND-CP.

[15] Article 43.2 of the Law on Medical Examination and Treatment.

[16] Article 27.2.g of the Law on Medical Examination and Treatment.

[17] Article 1.9 of Decree 46.

[18] Article 2.4 of Decree 34.

[19] Article 52 of the Law on Investment.

[20] Article 1.8 of Decree 46.

[21] Article 9.1.(d) of Decree 34.

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