Problems relating to Trade and Investment on Vietnam
16. Employment |
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Issue |
Issue details |
Requests |
Reference |
| (1) Work Permit Made More Stringent for Foreign Workers | - On acquisition of work permit for foreign workers: -- The amended labour law this time has repealed work permit exemption for short-term (less than 3-months) workers, previously exempted. -- This amendment mandates upon foreign workers acquisition of work permit even for a single day, paid or unpaid, -- This amendment fails to address practical needs, such as despatch of an engineer for the sake of emergency repair, etc., as prior approval of the competent authority is required for work permit exemption. - To file application for work permit where the applicant has stayed even for a single day in Vietnam in the past, it is necessary to obtain "certificate for No criminal record in Vietnam (CFNCR)". => This requirement is unrealistic to comply with in the case there is no record of stay kept at hotels, etc. - Where an applicant has a history of stay in Vietnam in the past, GOV requires submission of certificate for No criminal record (CFNCR) in both Japan and Vietnam. It does not stand to reason. |
- GOV has failed to give clear answer on the issues which must have been brought to their attention. It is requested that GOV repeals the legislative scheme in concern. - It is requested that GOV deletes this provision, which is counterproductive to encouraging investment. - It is requested that GOV promulgates additional guidelines to the effect that CFNCR is necessary only when the applicant's stay in Vietnam exceeded 6-months in succession immediately before the filing date of application, etc. |
- Decree No.46/2011/ND-CP - No.102/2013/ND-CP - Circular No.03/2014/TT-BLDTBXH promulgated on 20 January 2014, enforced on 10 March 2014 - necessary for filing Work Permit Application, (unnecessary for renewal) - Resolution No.47/NQ-CP dated July 08, 2014 on "Labour Law" - Amended Labour Law |
| (Action) - With the exception of FIE's there is no compulsory requirement for foreign workers at international enterprises and agencies to hold work permits, provided, however, that, the international enterprises and agencies desiring to employ foreign workers must first obtain approval of the competent authority. - Prime Minister promulgated on 9 August 2007 Decision No. 131/2007/QD/TTg "Issuing regulations on hiring foreign consultants in construction activities in Vietnam". Decision 131 sets forth the terms for foreign organisations and individuals to provide consultancy services in construction activities, comprising formulation of construction master plans, construction surveys, formulation of investment projects for construction of works, design of construction works, management of construction, supervision of execution of works, selection of contractors in construction activities, and a number of other construction consultancy services consistent with the law of Vietnam. Furthermore, on 2 November 2007, Ministry of Construction promulgated Circular 09/2007/TT-BXD (Circular 09) to guide determination and management of hiring foreign consultant cost in construction activity in Vietnam. Circular 09 serves as implementing regulations for Decision 131. Circular 09 applies to employment of foreign organisations and individuals providing consultancy services in construction activities or formulation of construction master plans under state capital (credit lines for state financial institution for investment and development, state bond security credit line, and other state investment capital, such as ODA). - GOV promulgated on 25 March 2008 Decree No. 34/2008/ND-CP (Decree 34) "On employment and administration of foreigners working in Vietnam" that updated the requirement, the measure and the procedure for permitting foreign workers. Decree 34 provides for the terms of employment of foreign workers and the list of documents required to apply for work permits. Decree 34 stipulates extension of work permits in detail, setting forth 36-months as the maximum period of authorised stay (extension of further 36-months is possible under certain conditions). Noteworthy changes from the previous legislation include the repeal of maximum number of foreign workers (less than 3% of the total employees) per enterprise or organisation, and further repeal of exemption for work permits for foreign workers with certain titles and employment form (chief representative, head of foreign branch, employee of foreign contractor). Decree 34 also provides: "at least 20 per cent of the total number of the managers, executive directors and experts of each enterprise with a commercial presence within the territory of Vietnam must be Vietnamese citizens". Decree 34 was enforced on 12 April 2008, repealing two previous Decrees enforced from 2003 and 2005 respectively. - In November 2009, at ASEAN Coordinating Committee on Services (CCS) 59th Meeting, By Country Tasks toward liberalisation of Service Sector as to Vietnam were pointed out as follows: -- More than 20% of the Managerial Class Personnel (Manager, Executive, Specialist) must be Vietnamese, while minimum 3-persons per enterprise of the Managerial Class Personnel must be non-Vietnamese. -- The cap in percentage or number of foreign employees is determined, while certain conditions are imposed on foreign employees to observe. - Decree No. 46/2011/ND-CP of 17 June 2011 stipulates: "At least thirty (30) days prior to recruiting employees, the employer must publish its need to recruit employees in planned positions of foreigners on at least one of the central newspapers and at least of the local newspapers written, oral, pictorial or electronic form that describes: the number of employees, positions, professional knowledge, salary level and other incomes, working conditions and other contents required by employees. It shall not be necessary to publish the above-mentioned notice if the employer recruits employees via a recruitment agency, or..." - Decree No. 46/2011/ND-CP of 17 June 2011, "On Employment and Administration of Foreigners Working in Vietnam", amends and supplements some articles of Decree No 34/2008/ND-CP date 25 March 2008 and is due for enforcement from 1 August 2011. In the following 5-items, Decree No 46 has widened the scope of foreigners exempted from work permit acquisition requirement: (1) A foreigner working as head of representative office, head of project office, or a foreigner assigned to represent all activities in Vietnam by foreign non-government organization. (2) Foreigners transferred internally from the service companies in 11-sectors (management, communication, construction, distribution, education, environment, finance, medical, tourism, cultural/entertainment, and transportation services) included in the commitments between Vietnam and WTO. (3) Foreigners from ODA project, under the agreement between the competent authority of Vietnam and programmes using ODA fund, providing technical consulting service on research, construction, follow-up evaluation, administration and implementation or other duties entering Vietnam. (4) Foreign journalists licensed by Vietnam Ministry of Foreign Affair. (5) Others as specifically stipulated by GOV.) - On 18 June 2012, the Vietnam National Assembly approved a New Labor Code. Pursuant to Article 173 of the New Code, the initial duration of a Work Permit for a Foreign National has been reduced from a maximum of 3-years to a maximum of 2-years. - On 1 May 2013, Amended Labour Law came into force. The validity of foreign workers' work permit has been reduced from three (3) to two (2) years (extendable), while the procedure has become mandatory for the applicant to obtain prior approval of "Ministry of Labour - Invalids and Social Affairs" 30 days prior to assumption of duty in Vietnam on "the document giving the reasons why employment of the foreigner is necessary". - On 5 September 2013, Decree No. 102/2013/ND-CP "Elaborating Some Articles of the Labour Code on Foreign Workers in Vietnam" was promulgated. Among others, it provides for the followings: (1) Obligation to submit foreign workers' employment plan report (FWEPR) to presidents of the people's committees of the province or central-affiliated city where the head office of the employee is situated (the authority) for prior approval, (2) Obligation to submit any change in FWEPR to the authority, (3) The validity of the work permit is for two-years maximum, and (4) Commencement of deportation proceedings on foreign workers working in Vietnam without work permit. |
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| (Improvement) - On 10 March 2014, Circular No. 03/2014/TT-BLDTBXH dated January 20, 2014 of the Ministry of Labor, War Invalids and Social Affairs entered into force, starting its implementation. It provides the guidelines clarifying the requisite documents for attestation of the alien's qualifications relative to acquisition of the alien's work permit and the application documents for prior approval of the aliens' employment plan. |
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| (2) Ambiguous Requisite Terms for Acquisition of Work Permit | - As a result of the new law on foreigners' entry into, exit from, transit through and residence in Vietnam, implemented since 1st January 2015, it has become no longer possible for expatriates to Vietnam to continue the previously accepted practice, namely: after entering Vietnam under visa with 3-months' validity, expatriates obtain work permit, temporary residence card to work, and then continue their stay in Vietnam. Thus, it has become necessary to obtain work permit and work visa before entry into Vietnam. However, as to pre-entry work visa acquisition, in many cases, such applications have been practically denied in the past. It remains unascertained if it has become really possible. |
- Law No. 47/2014/QH13, June 16, 2014 on Foreigners' Entry into, Exit from, Transit through and Residence in Vietnam (Article 7, Paragraph 1) |
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| (Action) - In September 2013 Decree No. 102/2013/ND-CP of September 5, 2013, detailing a number of articles of the Labor Code regarding foreign workers in Vietnam. This Decree among others sets forth the requisite documents for application on foreign workers permit, work permit exemption, validity period of the application procedures permit, re-issuance, and deportation of illegal workers. - On 16 June 2014, national congress promulgated "LAW No. 47_2014QH13 on foreigners' entry into, exit from, transit through and residence in Vietnam" (hereafter 'exit/entry law'), tightening control on issuance of entry visas to foreigners. This LAW has been implemented since 1 January 2015. Under exit/entry law, the visa types are precisely defined by the purpose of entry. While this explanation focuses on business (work) and schooling as the purposes of entry into Vietnam, in general, the proof of entry purposes is prerequisite. If it is for working, the applicant must first acquire the newly added "work visa (Code: LD) with 2-year validity" for which work permit is necessary. If work in the local representative office or the local branch office is the purpose of entry, "expatriate visa" [NN2 (Chief representative) or NN3 (staff)] with 12-months validity is necessary. Article 7 of Law No. 47_2014QH13 "visa's uses and formats", new immigration law provides: "1. A visa may be used one or multiple times and its purpose must not be changed" (unofficial english translation by embassy of Japan in Vietnam). While it is interpreted as follows in general, in the absence of official implementation guidance in detail, there remain practical problems: (1) After entry into Vietnam with the declared purposes of entry, no change is allowable. (2) Change in the purposes of entry visa, or new filing of application is not possible while the applicant remains in Vietnam. In any event, applicant must exit Vietnam once, before filing new visa application. (BTMU (Global Business Insight)) |
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| (3) Delayed Work Permit for Short Term Work | - While work permit acquisition has become mandatory, even for a short term work of less than 3-months, it takes more than 2-months to complete the requisite procedures. It is heavily burdensome, putting the applicant into a great difficulty. | - It is requested that GOV gives due consideration to the requisite step by step lead-time for each requirement to make the rules practicable without forcing undue hardships upon the applicants. | - 03/2014/TT-BLDTBXH |
| (Improvement) - "LAW No. 47_2014QH13 on foreigners' entry into, exit from, transit through and residence in Vietnam ("Law No. 47") has been in force since 1 January 2015. It incorporates as conditions for exclusion of the work permit requirements "specialists, certain managerial staff, and engineers for not more than 30 days stay, and not more than 90 days in total per annum." |
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| (4) Introduction of Visa Acquisition Requirements for Short-Term Exit and Re-Entries | - Since 1 January 2015, even after less than 15-days of the initial stay in Vietnam, it has become necessary to obtain visa for re-entry into Vietnam within 30-days of exiting Vietnam. Previously, re-entry within 30-days did not require new visa. - Under Article 20(1), after less than 15-days of the initial stay in Vietnam, it has become necessary to obtain visa for re-entry into Vietnam within 30-days of exiting Vietnam. |
- Previously, re-entry within 30-days into Vietnam did not trigger new visa acquisition. It is requested that GOV takes step to revert to the previous rules. - It is requested that GOV takes step to repeal Article 20. |
-LAW No. 47_2014QH13 "On Foreigners' Entry into, Exit from, Transit through and Residence in Vietnam", promulgated on 16 June 2014, and enforced on 1 January 2015 |
| (5) Prohibited Change of the Purposes of Visa | - Since 1 January 2015, the previously accepted operational practice has become no longer possible, whereby a person holding visa with 3-months validity, obtains work permit, and temporary residence card and stay in Vietnam without any additional requirements. - Article 7.1 of Law No. 47 prohibits foreigners' entry into, exit from, transit through and residence in Vietnam. => Acquisition of work permit (WP) and work visa is necessary before entering Vietnam. |
- It is requested that GOV takes step to revert to the previous rules. - It is requested that GOV takes step to allow acquisition of work permit and completion of the requisite visa procedures after entry into Vietnam. |
- LAW No. 47_2014QH13 "On Foreigners' Entry into, Exit from, Transit through and Residence in Vietnam", promulgated on 16 June 2014, and enforced on 1 January 2015 |
| (6) Nebulous Expatriates Visa Acquisition Procedures | - Prior information (on requisite documents, the number of days for acquisition, etc.) is unavailable on visa acquisition procedures at Vietnamese Embassy in Japan. - As regards expatriates' visa in Vietnam, details on requisite documents, validity, etc. are ambiguous. (A Member Firm's expatriate received clarification on the requisite documents only after arrival in Vietnam.) - Since January 2015, the new "Law No. 47" has become effective. While visa-free entry continues including Japanese, applicant "must have a passport that is still valid for at least 6-months, and the entry date must be at least 30 days from the previous exit." Moreover, re-exit within one month requires visa acquisition. - While conversion of work visa into work permit is no longer possible, in practical implementation of the revised scheme has not thoroughly reached the concerned parties so that the conventional implementation continues even today, adding fuel to the fire into the confusions. |
- It is requested that GOV: -- provides requisite information on its webpage, and -- responds to telephone enquiries. - It is considered necessary that GOV clarifies rules concerning issuance of Visa, particularly Work Permit. - It is requested that GOV ensures the New Scheme is made known thoroughly to all concerned parties. - It is requested that GOV ensures thorough penetration of implementing the new legislative scheme all the way through. |
- Amended Labour Law - LAW No. 47_2014QH13 "On Foreigners' Entry into, Exit from, Transit through and Residence in Vietnam", promulgated on 16 June 2014, and enforced on 1 January 2015 |
| (Improvement) - Resolution 47/NQ-CP of the Government released in July 2014 has removed the qualification for "university graduate", requiring only "5-years of service experience in the applicable field for minimum 5-years". |
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| (7) Minimum Wage Increase exceeding Commodity Price Indices | - While CPI hike has remained within one digit, the minimum wage has gone up by 15-20% in each year, eroding by large margin the attractive features of Vietnam in terms of quality labour at less expensive labour cost, to the extent of threatening business operators' decision on whether to continue business in Vietnam. - Minimum wage has been going up in the figures far apart from the workers' cost of living and CPI. It has pushed up labour cost, peeling off the competitive edge of Vietnam as manufacturing depot. In 2014, while CPI was up by 4.09%, minimum wage up rate was more or less 15% (with some variances by districts). On the other hand minimum of wage government officers was about half of the private enterprises, without rhyme or reason. |
- Let bygones be bygones into the year 2018. Thereafter, it is requested that GOV endeavours to manage it within the range of CPI + Alpha. - It is requested that GOV conducts a fair survey of the practical workers livelihood and establishes minimum wage based on the rational reasons. |
- Decree No. 103/2012/ND-CP: prescribing the regional minimum salaries for employees working for enterprises, cooperatives, cooperation teams, farms, households, individuals, agencies and organisations (2013) |
| (Action) - GOV promulgated in November 2007 a series of Decrees that raise SMW rates for the year 2008 commensurate with the inflation rate for all enterprises operating in Vietnam. These Decrees stipulate the SMW rates precisely in accordance with the nationality and the location of each enterprise, while maintaining the double layer system, whereby higher SMW is imposed on FIEs vs. domestic enterprises. Slightly different SMW rates are established according to each of the three-geographical-zones. GOV plans to fulfill its WTO commitments to observe the principle of non-discrimination and the national treatment by reducing in stages the double layer system on SMW rates so that it is totally repealed by 2012. These Decrees also compel higher SMW rates for skilled workers and workers with higher academic degrees (at least 7% higher than unskilled workers). These Decrees enforced on 1 January 2008 have repealed all previous legislation on SMW rates. - On 30 October 2009, GOV promulgated Decree No. 97/2009/ND-CP, and Decree No. 98/2009/ND-CP, Prescribing the 2010 raise of the legal minimum wage levels employers both Vietnamese and Non-Vietnamese must pay to employees. Decree No. 97 prescribes the raise of the monthly minimum wage the domestic employers must pay in the range of 12-23% from the current 650,000-800,000 Dong to 730,000-980,000 Dong. Decree No. 98 prescribes the raise of the monthly minimum wage the foreign employers must pay in the range of 9-12% from the current 920,000-1,200,000 Dong to 1,000,000-1,340,000 Dong. The monthly minimum wage varies by the area where the respective employer operates. The GOV's adjustment of the legal minimum wage levels forms a part of the GOV's 2008-2012 reform plan for wages, social insurance and various allowances. It is incumbent upon GOV to resolve the BI-layer legal minimum wages in Vietnam comprising of the domestic and the foreign employers, in order to observe the WTO principle of the non-discriminatory, national treatment. - In September 2010, Ministry of Labour, Invalids and Social Affairs (MOLISA) released its plan to raise the 2011 minimum wage of FFEs by more than 10%. - The National Wage Council has submitted to GOV Draft Amendment for Decree on Minimum Wage Adjustment 2014 for both domestic and foreign affiliated enterprises in private sector. The wage hike percentages have far exceeded the hike in the Consumer Commodity Index: 2.750,000 vnd/month up by 17.0% for enterprises in Region I 2.450,000 vnd/month up by 16.7% for enterprises in Region II 2,100.000 vnd/month up by 16.7% for enterprises in Region III 1.900.000 vnd/month up by 15.2% for enterprises in Region IV. However, due to the downturn in economy and slackening of the inflationary pressure, the minimum wage hike rates were far below the previous numbers of 27%-32% (foreign funded enterprises) in November 2011. - On 1 January 2014, the minimum wage went up from 2,350 to 2,700 thousand VND in Region I. Likewise, the minimum wage in Regions II through IV also went up in the range between 14.3% and 16.7%. - Beginning 1 January 2016, GOV raises legal minimum wage, in the range of 11-13% in 4-regions (region 1: 12.9%, region 2: 12.7%, region 3: 12.5%, and region 4: 11.6%,). |
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| (8) Difficulty in Renewal of Fixed Term Employment Contract | - Employment contract with a fixed term is no longer possible at the third renewal, which must be without term (unlimited). It is difficult for enterprises to adjust flexibly its workforce requirement commensurate with the prevailing circumstances of their business operation. | - It is requested that GOV removes restrictions on fixed term employment contracts. | - New Labour Code нт 10/2012/QH13 (Due for enforcement on 1 May 2013), Article 22 |
| (Action) - Amended Labour Code (ALC) promulgated on 2 July 2012 defines as new form of employment "the Despatched Workers". ALC enters into force on 1 May 2013. |
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| (9) Restrictions on Overtime Hours | - The law prescribes the cap on overtime hours, 4-hours a day, 30-hours a week and 200-hours a year (or with permission 300-hours), depriving employers the freedom of a flexible management of the work hours. - Overtime control is stringent, maximum 30 hours/month, 200 hours/annum (300 hours by application). It is difficult to increase work-hours in the development- technology related industries or process industries that run 24-hours a day. |
- It is requested that GOV takes step to enable fixing the upper limit by voluntary agreement between employers and employees. - Rather than unitalising restrictions, it is requested that GOV diversifies regulations commensurate with the occupational category. |
- Labour Code, Article 69 - New Labour Code нт 10/2012/QH13 (Due for enforcement on 1 May 2013), Article 106 - Labour Code No. 45/2013/ND-CP Article 106.2 - 45/2013/ND-CP |
| (Action) - ALC promulgated in July 2012 retains the cap of 200-hours per year on the overtime work, despite the request for substantial increase that had been filed by the U.S. Chamber of Commerce (in Vietnam), etc. |
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| (10) High Turnover of Human Resources | - High turnover of human resources prevails, (impeding business, while increasing personnel costs all around, including costs of hiring, training, etc.) | - It is requested that GOV endeavours to make available a stable supply of high quality labour market. | |
| (11) Shortage of Training Human Resources | - With deceleration of domestic business climate, since 2012, it has become less difficult to secure the numbers of workers at factories. However, in Vietnam there are no high schools that provide special professional skills required in business, in regard to technical, commercial, agricultural, fisheries fields. Including universities, practical educational programmes are in short supply. - Local human resources are in short supply, necessitating development of human resources with improved occupational skills and human management. |
- It is requested that GOV takes step to organise educational programmes that address to development of human resources responsive to the practical business needs. - It is requested that GOV assures stable supply of high quality labour market. |
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