In this article, we review the implementation of the Governmental decrees on recruitment and administration of foreign employment in Vietnam and the recent actions of the Vietnamese authorities ostensibly demonstrating the adoption of a more stringent approach to the application of the decrees.
The promulgation of Decree 34 of 2008 (“Decree 34”) and Decree 46 of 2011 (“Decree 46”) amending and replacing some articles of Decree 34 and implementing Circular 31 of 2011 (“Circular 31”), brought with them a series of flexible provisions distinctly advantageous to those enterprises and organizations recruiting foreign workers in Vietnam, and to those foreigners looking to relocate to Vietnam to work. This is particularly so relative to the regulations that preceded it. Nevertheless, issues remain, and Decree 46 has not, in practice, resolved a number of foreign-employment issues for employers, particularly concerning foreign invested enterprises, which are, statistically, the largest employers of foreign staff.
Advantageous provisions, effects and objectives of the Decrees
- Creation of a competitive environment between local Vietnamese and foreign-invested enterprises by removing percentage-based caps/upper-limits and facilitating the hiring of foreign staff on an equal basis across all economic sectors;
- Increase in the number of exemptions from the requirement to apply for and be issued work permits, as part of Vietnam’s commitment to international organizations and treaties;
- Relaxation of some requirements relating specifically to the documentary burdens imposed on foreign recruits by the work permit application process, including a relaxation of the previous requirement that documents proving prior work-experience be certified by an official body in the country where the work experience occurred;
- Simplification of procedures for the issuance of an additional work permit(s) to an employee working concurrently with two employers or more.
Disadvantageous or unclear provisions and effects of the Decrees
- Provisions requiring the advertisement of the hiring demand/open position in at least one national and one local media publication significantly lengthens the process of recruitment;
- Whilst Decree 46 categorizes the internal transfer of a foreign employee within a company group engaging in the services sectors contained in the Vietnam’s WTO commitments as exempt from the work permit requirement, the provision’s apparent benefit is undermined by a practical requirement that the Ministry of Industry and Trade will be responsible for providing the guidelines and bases upon which a permit will be exempt, in circumstances where the Ministry has not provided any such guidelines;
- Whilst Decree 46 is silent as to the requirement of consularization of documents in general, in practice, both employers and foreign employees are required to conduct relevant consularization formalities when preparing the documents that must form part of a work permit application;
- The requirement of Decree 46 that employers must submit a copy of a training agreement signed with Vietnamese employees for the replacement of the foreign employee would seem impractical given the nature of certain positions, including positions based on experience or further education, such as high-ranking management positions.
Generally speaking, in practice it seems the implementation of Decree 34, Decree 46 and Circular 31, particularly in terms of the issuance and extension of work permits by the local competent authorities, differs amongst localities and certainly the statistics demonstrate that the actual number of foreign employees working in Vietnam exceeds the number of work permits that, pursuant to the regulations, should have been granted.
Practical issues now and in future
The Ministry of Labour, War Invalids and Social Affairs (“MOLISA”) promotes compliance with the regulations concerning the employment of foreigners by issuing official letters addressing the chairpersons of the local People’s Committees, notably, official letter No. 3178, dated 23 September 2011 (“Letter 3178”) concerning the reinforcement of such compliance and newly issued official letter No. 2761 dated 9 August 2012 (“Letter 2761”) on the same matters as addressed in Letter 3178.
The purpose of recent letter 2761 is to assess the level of compliance with Decree 34, Decree 46 and Circular 31 by enterprises, organizations and foreign employees working in Vietnam through the implementation of the following actions by the relevant competent authorities:
(i) Conducting a review of the implementation of Decree 34 and Decree 46 and Letter 3178 in the provinces and cities under the authority of central management;
(ii) Conducting an investigation into the status of all foreign employees working in the relevant localities, focusing on foreign employees who are working in such sectors as private medical practice/clinics, education and aquaculture;
(iii) Surveying and understanding the demand for foreign staff of enterprises and organizations in the relevant localities and relaying the survey data gathered to the MOLISA; and
(iv) Conducting spot-checks and working to ensure the cooperation of employers with the regulations, in the relevant localities.
Letter 2761 requires the provincial People’s Committees to send a complete report on the above requested actions to the Department of Employment of MOLISA before 30 September 2012.
In order to respond to the requests of Letter 2761, most provincial Departments of Labour, War Invalids and Social Affairs (“DOLISA”) have already issued official letters of their own requesting enterprises and organizations to submit reports on foreign employment in their organizations within timeframes facilitating the DOLISAs own compliance with the deadline as set by MOLISA.
Notably, by way of example, the DOLISA of Ho Chi Minh City issued official letter No. 7824 on the 6th of August 2012, requesting enterprises and organizations to submit a report on their use of foreign employment by the 15th of August, 2012, and advising that failure to submit the requested report by that date shall warrant an administrative penalty of between 20 and 30 million Vietnam Dong (approx. US$960 – US$1,440) in accordance with the relevant administrative sanctioning regulations.
In respect of surveying the demand and use of foreign employment, enterprises and organizations are requested to register by 15 September 2012 and 15 December 2012 for 2012 and 2013 hiring-plans respectively. Enterprises and organizations that fail to meet these deadlines will be deemed to have no need for the recruitment or use of foreign employment in accordance with official letter No. 9006-LDTBXH-LD of DOLISA of Ho Chi Minh City on 10 August 2012.
Site visits from the provincial DOLISA representatives to enterprises and organizations are likely to take place in the following month(s) leading up to the 15th of December deadline, as part of a drive to ensure compliance with MOLISA’s Letter 2761.
For any further advice o
n the specific situation of your enterprise or organization, please contact:
Mr. Jerome Buzenet
Partner, Managing Director, Vietnam
Tel.: +84 8 3910 0072
Ms. Thi Oanh Nguyen
Tel.: +84 9 8906 2019
Ms. Tran Thanh Nguyen
Tel.: +84 8 3910 0072
Mr. Matt Matheson
Tel.: +84 8 3910 0072
 Decree 34-2008-ND-CP of the Government, on the Employment and Administration of Foreigners Working in Vietnam dated 25 March 2008;
 Decree 46-2011-ND-CP of the Government, on the Recruitment and Administration of Foreigners Working in Vietnam dated 17 June 2011;
 Circular 31-2011-TT-BLDTBXH of the Ministry of Labour, War Invalids and Social Affairs, dated 3 November 2011;
 According to the statistic of the Ministry of Public Security, there are 78,440 foreign employees working in Vietnam, increasing 6% in comparison with 2011. In which, 41,529 cases of granted work permit, 5,581 cases of exemption from work permit requirement, and 31,330 cases of working without work permits as required (39,9%) (Source of VOV dated 21 August 2012);
 Official letter No. 3178-LDTBXH-VL of the Ministry of Labour War Invalids and Social Affairs, dated 23 September 2011;
 Official letter No. 2761-LDTBXH-VL of the Ministry of Labour War Invalids and Social Affairs, dated 9 August 2012;
 Official letter No. 7824-SLDTBXH-LD of the Department of Labour War Invalids and Social Affairs, on the 6th of August 2012;
 More than 4,000 enterprises employing more than 10,000 foreign employees in Ho Chi Minh City have not submitted their mandatory foreign employment declarations (Source of Tuoi Tre News).