Newsletter No 44 (EN) Work Permit for Foreigners Employed

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					 Newsletter No 44 (EN)




Work Permit for Foreigners
  Employed in Vietnam
            May 2009




      ! Lorenz & Partners 2009
                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam


         I.             Introduction
         One of the major issues all foreigners setting up business in Vietnam have to face
         is the topic of Vietnamese work permit.

         Frequent questions concerning this subject are for example, in which situations
         one has to obtain a work permit, what are the requirements for the issuance of a
         work permit, are work permits valid for a limited time only or which consequences
         one will encounter in case of breach with the set procedures.

         The latest changes in Vietnamese law regarding the employment of foreigners have
         been introduced by Decree 34 (referred to as “Decree 34”), providing guidelines un
         der the Labour Code for foreign employees in Vietnam. Circular 08 dated 10 June
         2008 was issued to guide the implementation of Decree 34 (referred to as “Circular
         08”).


         This newsletter aims at providing at a glance a general overview on these matters
         by addressing the questions raised above in the light of the current legislation and
         its implementation on a day-to-day basis.



         II.            Requirements
         1.        General Obligation to Obtain a Work Permit
                   According to Vietnamese law, a foreigner working for an enterprise or or-
                   ganisation in Vietnam for a period of three months or more must obtain a
                   work permit from the local Department of Labour, War Invalids, and Social
                   Affairs (“DOLISA”).




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam


                   However, Vietnamese law a regulates some cases in which a foreigner does
                   not need to apply for a work permit, among which are the following:

                  " A foreigner who is a member of a limited liability company with two or

                        more members.

                  " A foreigner who is the owner of a one member limited liability company.

                  "      A foreigner who is a member of the board of management of a share

                        holding company.

                  " A foreigner entering Vietnam to offer services. Foreigner offering services

                        means a person who does not live in Vietnam and who does not receive

                        remuneration from any source in Vietnam, and who participates in active

                        ties relating to representation of a service supplier in order to negotiate the

                        sale (or consumption) of services of such supplier, on condition that he or

                        she does not directly sell such services to the public and does not directly

                        participate in the provision of services.

                  " A foreign lawyer who has been granted a certificate to practice his/her
                    profession in Vietnam.

                  In all cases, where there is no work permit required, the employer has to in-
                  form the local DOLISA at least seven days in advance on the name, age, na-
                  tionality, passport number, dates of commencement and termination of work
                  and the nature of the work, criminal record check, standard form curriculum
                  vita, health certificate and proof of specialist or highly technical qualifications,
                  or documents from an authorised body in the employee's home country certi-




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam


                  fying their minimum five years specialized experience if such foreigners have
                  no proof of qualifications.


         2.        Appropriate Employer
                   Enterprises of all economic sectors, Vietnamese as well as foreign or interna-
                   tional organisations, are entitled to employ foreign persons. The employer
                   must have a training plan to train Vietnamese to replace their foreign em-
                   ployees.

                   In general, the law is silent on whether or not a Vietnamese individual is al-
                   lowed to employ a foreign person. In practice, the following paragraphs refer
                   only to companies and organisations but not to individuals as employers.



         3.        Employee Requirements
                   A foreigner wishing to work for an enterprise or organisation in Vietnam
                   must meet all of the following conditions:

                   "         Minimum age of 18 years

                   "         Good health suitable to the requirements of the job

                   "         Manager, executive director or an expert with high professional or tech-
                             nical qualifications, experience in one’s career or in management that
                             Vietnamese employees do not yet possess

                   "         No criminal convictions or civil record in respect of a breach of na-
                             tional security or any other crime as well as no current criminal prose-
                             cutions or criminal sentences not yet been discharged in accordance
                             with Vietnamese and foreign laws.




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam



                   "         A work permit issued by the Vietnamese competent authority, except
                             where stipulated the cases are exempted from work permit (as stated at
                             point 1. above).

         4.        Procedure to Apply for a Work Permit
                   A foreigner willing to work in Vietnam has, according to Circular 04, to sub-
                   mit two copies of his/her application to the prospective employer including
                   the following documents:

                   "         Application form;

                   "         Copy of his/her criminal record;

                   "         Copies of university diplomas or certificates testifying the skill level of
                             the employee or evidences of five year experience in a specific sector is-
                             sued by the competent authority;

                   "         A recent health certificate issued by a hospital (not older than 6 months)
                             by foreign hospital or competent Vietnamese hospital;

                   "         Curriculum vitae;

                   "         Valid visa;

                   "         3 passport-size colour photographs



                  After receipt of the aforementioned documents, the employer is responsible for
                  applying for the work permit on behalf of its prospective foreign employees.
                  Depending on which category a foreign employee belongs to, the following
                  document must be attached to the application file:




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam



                  " A foreigner working pursuant to employment contract must provide an ap-
                        plication form for registration of recruitment signed by the future employee
                        himself.
                  " A foreigner transferred internally within the same company group must pro-
                        vide a letter from the employer explaining her/his employment with the
                        company.
                  " A foreigner entering into Vietnam to perform a contract rather than an em-
                        ployment contract must provide a contract signed between the Vietnamese
                        party and foreign party.
                  " A foreigner entering into Vietnam to perform a service contract must furnish
                        that service contract itself.
                  " A foreigner working for a Non–government Organisation (“NGO”) must
                        provide a certificate showing that such NGO is allowed to operate in Viet-
                        nam.



                   Within 15 days, the DOLISA will notify the employer of its respective deci-
                   sion. In practice, this time-limit often lasts one month.

                   Labour contracts are only allowed to be entered into after the issuance of a
                   respective work permit. After conclusion of the employment agreement a
                   copy of the signed labour contract (on standard form) then has to be for-
                   warded to the statutory body that has issued the work permit.




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam


         III.           Term of Work Permit
         As a result of the governmental efforts to increase the skill base of local staff,
         work permits for foreigners are issued for a limited time span only and employers
         are asked to train appropriate Vietnamese employees to take on their roles over
         time. In practice, the authority is silent when inspecting and checking.

         Thus, the general term of a work permit is tied to the term of the labour contract
         up to a maximum of 36 months. However, it may be renewed for another 36
         months if no Vietnamese employee is able to replace the foreign employee at that
         time. The maximum period of the first extension is three years. If the employer’s
         training plan has not yet been completed after the first extension, a second exten-
         sion may be allowed, but such a second extension is subject to approval by the
         Chairman of the provincial level People’s Committee.


         IV.            Limit on the Number of Foreign Employees
         An important change compared to former legislation is that the new acts introduce
         a limit on the number of foreign employees working within an organisa-
         tion/enterprise.

         According to Decree 34, a Vietnamese enterprise, irrespective of its size, must em
         ploy, at least twenty (20) per cent Vietnamese citizens of the total number of the
         managers, executive directors and experts. However, each foreign enterprise shall be
         permitted to have a minimum of three managers, executive directors and experts
         who are not Vietnamese.




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                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam


         V.             Consequences of Breach
         Working in Vietnam without a work permit is still solely an administrative viola-
         tion. Such violation is subject to administrative sanctions, but not criminal liability.
         Correspondingly, a foreigner may not be imprisoned but deported. An employer
         whose foreign employees do not have a work permit may be fined. Working in
         Vietnam without a work permit becomes more complicated when it comes to
         solving disputes (if any) in front of the Vietnamese Courts. Vietnamese legislation
         lacks regulations on this matter. Labour Law is one-sided to protect workers and it
         is a duty of the employer to apply for a work permit for the employee. As a result,
         the employer must bear burden of proofs and discharges obligations and compen-
         sation to his employee. It is particularly recommended that foreign employee
         working in Vietnam must obtain a work permit.


         VI.            Outlook
         The legal framework regulating the working requirements for foreigners in Viet-
         nam is an example for the rapid development of Vietnamese law in many areas,
         however, not always clarifying existing issues.

         In many areas, the advantages of setting up and expanding business in Vietnam
         certainly outweigh drawbacks by far and the recent developments in growing direct
         investments reflect the Government’s efforts to provide for a liberal, attractive
         business environment for foreign investors.

         Since the legal situation in Vietnam is still developing at a rapid pace and, as men-
         tioned above, the most recent developments have not been free from criticism, it
         is strongly recommended to obtain legal advice to avoid the risks of not adhering
         to statutory requirements, even if the potential consequences are limited.




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                                           Tel.: +84 (0) 8 2 220 2084 e-mail: vietnam@lorenz.co.th
N044_EN_VT_Work Permit Vietnam_05_09.doc
                                  Newsletter No 44 (EN)
                              Work Permit for Foreigners Employed in Vietnam




                 We hope that the information provided in this brochure was helpful for you. If you have
                                           any further questions please do not hesitate to contact us.


                                       LORENZ & PARTNERS (Vietnam) Co., Ltd.
                                                  Suite 606, Indochina Park Tower
                                              4 Nguyen Dinh Chieu Street, District 1
                                                      Ho Chi Minh City, Vietnam
                                                         Tel.: +84 (0) 8 222 020 84
                                                         Fax: +84 (0) 8 222 020 85
                                                    E-Mail: vietnam@lorenz.co.th




      Although Lorenz & Partners Co., Ltd. always pays greatest attention on updating the information provided in this bro-
      chure we cannot take responsibility for the topicality, completeness or quality of the information provided. None of the
      information contained in this brochure is meant to replace a personal consultation. Liability claims regarding damage
      caused by the use or disuse of any information provided, including any kind of information which is incomplete or incor-
      rect, will therefore be rejected, if not generated deliberately or grossly negligent




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