On 30 December 2020, the Government issued Decree No. 152/2020/ND-CP (“Decree 152”) regulating the management of foreign workers working in Vietnam and the recruitment and management of Vietnamese workers working for foreign employers in Vietnam. Decree 152 took effect on 15 February 2021 and replaced Decree No. 11/2016/ND-CP (“Decree 11”).
In this legal briefing, we highlight significant changes introduced by Decree 152 that may affect foreign workers in Vietnam and companies employing them.
1. New requirements to qualify as experts and technicians under Vietnamese laws:
In general, one of the most significant changes introduced by Decree 152 is the new requirements for a foreign worker to qualify as an expert or technician under Vietnamese laws. The new requirements applicable to foreign experts may appear stricter; whereas those for foreign technicians seem to allow more experienced technicians, who do not necessarily have the training requirements under Decree 11, to work in Vietnam.
Nonetheless, as the guiding regulations of Decree 152 have not been issued, in practice it remains to be seen how (or if) the authority may check and confirm the satisfaction of these new requirements.
Specifically:
a. Experts
Under Decree 152, a foreign worker shall be considered an expert in one of the following cases: [1]
i. She or he has a university- or higher-level degree or equivalent and at least 3 years’ work experience in a specialty which is suitable for her/his contemplated working position in Vietnam;
ii. She or he has at least 5 years’ work experience and a practicing license/certificate which is suitable for her/his contemplated working position in Vietnam; or
iii. Special cases as approved by the Prime Minister, following recommendations from the Ministry of Labor, Invalids and Social Affairs.
Compared to Decree 11, requirements (i) and (iii) above essentially remain the same. As for requirement (ii), the equivalent under Decree 11 required the foreign experts to have a certificate from any overseas agency, organization or enterprises confirming their expertise, and did not specify the prerequisite length of work experience. [2]
b. Technicians
Under Decree 152, a foreign worker shall be considered a technician if she or he has: [3]
i. at least 1 year’s training in his or her technical specialty and at least 3 years of experience working in his or her training specialty; or
ii. at least 5 years of experience working in positions which are relevant to her/his contemplated working position in Vietnam.
Item (ii) is a new addition introduced under Decree 152.
2. Foreign workers internally transferring within a company
For foreign workers internally transferring within a company, there is only one (minor) change under Decree 152, being that the foreigners must have been previously employed by the foreign company for at least 12 consecutive months (instead of only 12 months). [4] It is unclear if this change would have any significant impact in practice.
However, it appears that Decree 152 failed to conclusively resolve the practical issue of foreign workers internally transferring within a corporate group, which can be necessary and beneficial to foreign companies with operation in Vietnam. Particularly:
- Under Decree 11, internal transfer within a company means the transfer of a foreign worker from a foreign company to that company’s commercial presence in Vietnam. [5]
- Under the WTO’s GATS and Vietnamese laws, a commercial presence of a foreign company can be either (i) a Vietnam-based company wholly or partly owned by the foreign company, (ii) a Vietnam-based representative office of the foreign company, (iii) a Vietnam-based branch of the foreign company, or (iv) a Vietnam-based management office of the foreign company set up for that company’s business cooperation contract in Vietnam. [6]
- Applying the above, in order for a foreign company to have a case of internal transfer within the meaning of Decree 11, two requirements must be satisfied. First, the foreign worker must be contractually employed by the foreign company in question. Second, the commercial presence in Vietnam must have been at law established by such foreign company.
For example: A Singapore-based company establishes two subsidiaries in Hong Kong and Vietnam. The company then decides to temporarily send one of its employees in the Hong Kong-based subsidiary to its Vietnam-based subsidiary, i.e. internal transfer between subsidiaries within a company group. Here, Vietnamese laws may not recognize this as a case of internal labor transfer because (i) the foreign worker is not contractually employed by the Singapore-based company and (ii) the Vietnam-based subsidiary is not a legally recognized commercial presence of the Hong Kong-based subsidiary.
For large corporations/ company groups, the relationship between the foreign company sending the foreign worker to Vietnam and the Vietnam-based company may be more complicated. In practice, we have encountered cases where the authority has rejected apparent cases of internal transfers within a company group.
Therefore, as Decree 152 does not explicitly allow the transfer of foreign workers within a company group, the somewhat technical and rigid practice under Decree 11 may continue to be applied by the authority.
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LNT & Partners – Bui Ngoc Hong