New Labor Code to come into force in 2021

KEY POINTS/CHANGES FOR FOREIGNERS WORKING IN VIETNAM:

• Foreign nationals working in Vietnam who are exempt from work permit now include:

- Foreign nationals who are the owner or capital-contributing member of a limited liability company with capital contribution amounts that meet designated government requirements.

- Foreign nationals who are the Chairman of the Board of Directors or a member of the Board of Directors of a joint stock company with capital contribution amounts that meet designated government requirements.

- Foreign nationals who are married to a Vietnamese national and live in Vietnam territory.

Comments on the above:

- There are additional restrictions with respect to foreign investors establishing companies in Vietnam since the exemption will only be granted to foreign shareholders of a company with a certain capital amount.  This amount will be determined in upcoming decrees and /or circulars.

- Very positive change to allow spouses of Vietnamese citizens to be Work permit exempt. Terms and conditions are yet to be clarified.

• Term of the labor contract: the term of a labor contract for foreign nationals working in Vietnam must not exceed the validity of the work permit.   The employer and its foreign employee may enter into multiple definite-term labor contracts provided that work permit is granted.  This differs from Vietnamese workers labor contract rules.

• Term of Work Permit: The term of a work permit may not exceed 02 years; in case of extension, the work permit can only be extended once for a maximum period of 02 more years.

Comments:

It is quite unsure at this stage whether this means that a particular foreign employee will not be able to work in Vietnam for more than a total of 4 years or whether after 4 years a fresh new Work Permit application shall be required. The second scenario would mean that the foreigners may be required to meet the qualification requirements at the time of the new work permit application which may be more restrictive than 4 years earlier upon the first WP application.

The new labor code shall take effect on the first day of January 2021. A new decree on the management of foreigners working in Vietnam is therefore expected during the course of 2020 (there is no draft at this stage) which should clarify some of the unclear or undefined areas of the new labor code as it exists today.

Our team will follow up on this very closely and as always participate in consultation meetings with the Ministry of Labor Invalids and Social Affairs on this topics and will keep you informed.

Should you have any question, please contact your immigration coordinator at Resident Vietnam.