Omassmann new regulations on foreign employment

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NEW REGULATIONS

ON FOREIGN EMPLOYMENT OLIVER MASSMANN – PARTNER

DUANE MORRIS VIETNAM LLC

© 2013 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices: New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Silicon Valley | Washington, D.C. | Las Vegas

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AGENDA

• DECREE 102 ON FOREIGN EMPLOYMENT

• NEW CIRCULAR 03 ON WORK PERMIT

• RECOMMENDATIONS

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DECREE 102 ON FOREIGN EMPLOYMENT

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Adopted on 5 September 2013 and effective on 1 November 2013

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What changes have been made?

1. Intra-company transferees

2. Annual plan

3. No more extension of work permit

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Presenter

Presentation Notes

Employees who fit this category are exempted from the work permit requirement in Vietnam. Of course, this must be further considered subject to the guidelines of the MOLISA. Other new categories of foreigners that are not subject to work permits in Vietnam include international volunteers and teachers working at international university. Overall, a wider range of intra-corporate transferees can be permitted to be assigned to Vietnam. New regulations now require approval from the Chairman of the provincial People’s Committee regarding the annual demand for foreign employment. This approval must be submitted with the work permit application. 3. Work permits for foreign employees is for max. of 2 years and can no longer be extended. Re-issuance is required instead since November 2013.

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Intra-company transferees INTRA-COMPANY TRANSFEREES means a manager, executive

director, expert or technician of a foreign enterprise which has established a commercial presence within the territory of Vietnam who temporarily transfers internally within the enterprise to the commercial presence within the territory of Vietnam and who was employed by the foreign enterprise at least twelve (12) months prior to such transfer. Art. 3.1 Decree 102

Employees who fit this category and within the scope of the List of

Commitments on Services of Vietnam with WTO are EXEMPTED from the work permit requirement in Vietnam.

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Presenter

Presentation Notes

Of course, this must be further considered subject to the guidelines of the MOLISA. Overall, a wider range of intra-corporate transferees can be permitted to be assigned to Vietnam. Unfortunately, the long-awaiting detailed guidance on such conditions and the licensing process has not been issued by the Ministry of Trade and Industry of Vietnam yet. This fact practically affects “intra-corporate transfer” programs.

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11 sectors covered under Vietnam’s WTO Commitments are as follows:

1. Business Services; 2. Communications services; 3. Construction and related engineering services; 4. Distribution services; 5. Educational services; 6. Environmental services; 7. Financial services; 8. Health related and social services; 9. Tourism and travel related services; 10. Recreation, cultural and sporting services; and 11. Transport services.

VIETNAM’S WTO SPECIFIC COMMITMENTS

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Please note that Vietnam’s WTO Specific Commitments does not cover all sub-

sectors in each of these general sectors. Under Article 7.2 of Decree 102, work permit exemption shall only be applicable to intra-corporate transferees in sub-sectors listed under these 11 general sectors in the Specific Commitments. Take “construction and related engineering services” for example:

The Specific Commitments only covers services under group 51 (construction

work) of the Provisional Central Product Classification (CPC). Construction and related engineering services under group 52 (Constructions), including civil engineering works (such as construction of highways, bridges, water ways, constructions for mining and manufacture), and group 53 (land) are not covered. Consequently, an intra-corporate transferee working for a construction company wholly specialized in civil engineering works is not exempt from work permit under Decree 102.

However…

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INTRA-CORPORATE TRANSFEREES working for companies operating

in service sectors NOT included in the Vietnam’s WTO Specific Commitments or performing pure production and manufacturing (except for some processing companies) are, in principle, NOT EXEMPT from work permit requirements.

Conclusion

Presenter

Presentation Notes

Other new categories of foreigners that are NOT subject to work permits in Vietnam include international volunteers and teachers working at international university.

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Exception Does a General Manager need to obtain work permit for the General

Manager position itself when CONCURRENTLY holding another position which does NOT require a work permit (“WP”)?

It remains to be seen as unclear language and no practical precedent based on

new laws so far. However, previously MOLISA appeared to flexibly handle this case by indicating

that an expatriate who holds 02 positions at the same time (i.e. – one subjecting to WP and the other not) is NOT required to seek any WPs. Given the languages of the old Labor Code and the new one are the same, it may be possible to approach the MOLISA for the same “indication” on an ad-hoc basis.

MOLISA = Ministry of Labor, Invalids and Social Affairs

Presenter

Presentation Notes

General Manager position does not fall under the list of expatriates who are exempt from work permit (“WP”)! (Art. 172 Labor Code and Art. 7 Decree 102) Another scenario is that if the GM concurrently holds another position which does not require a work permit (i.e. - members of the board of management of a shareholding company), he will still be required to obtain a work permit for the GM position itself. It is however interesting to note that this situation was flexibly handled by the Ministry of Labor, Invalids and Social Affairs (“MOLISA”) previously (i.e. – prior to the adoption of the 2013 Labor Code). Specifically, the Ministry of Labor, Invalids and Social Affairs (“MOLISA”) appeared to indicate that an expatriate who holds 02 positions at the same time (i.e. – one subjecting to WP and the other not) is not required to seek any WPs. Given the languages of the old Labor Code and the new one are the same, it is possible to approach the MOLISA for the same “indication” on an ad-hoc basis.

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• VISA for a foreigner: only issued after work permit or re-issuance of work

permit or after they have LODGED COMPLETE APPLICATION files for issuance or re-issuance of work permits;

• Foreigners working in Vietnam without work permits or applications for

work permits shall be EXPELLED from Vietnam. Namely, WITHIN 15 BUSINESS DAYS after confirming that a foreigner is working in Vietnam without a work permit, DOLISA shall request the public security [police] office to expel such foreigner.

Notes

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Annual plan

New regulations now require APPROVAL from the Chairman of the provincial People’s Committee regarding the ANNUAL demand for foreign employment.

This approval must be submitted with the work permit application.

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Presenter

Presentation Notes

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No more extension of work permit

The maximum term of a work permit is now TWO YEARS (previously three years) depending, among other factors, on the length of the labor contract, letter of appointment, and validity of the passport.

Work permit can NO longer be extended. RE-ISSUANCE is

required instead since November 2013.

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Presenter

Presentation Notes

Comparison table between first time application and re-issuance of work permit comes the following slides

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WORK PERMIT APPLICATION UNDER NEW REGULATIONS

Work permit First time Reissuance

Filing period

At least 15 business days before commencing work in Vietnam

5 to 15 days before current permit expires

Issuance time 10 business days 3 business days

Term Maximum 2 years Maximum 2 years

Presenter

Presentation Notes

Filing period: There is a tight window of only 10 days to apply for reissuance. => Employers and foreigners working in Vietnam are advised to be aware of the number of days remaining on their work permits. Study case: How the authorities view a labor contract with a foreign employee that is longer than two years. Our view is that a fixed-term expat labor contract with a term of more than 24 months and up to 36 months is not in breach of the law and therefore enforceable between the parties. However, if the work permit is not renewed after the two-year term (or less if, e.g., the employee's passport was due to expire earlier) the employee would be working illegally in Vietnam. In addition, employers should note that labor contracts must be converted to indefinite-term contracts after two consecutive fixed-term contracts. The Labor Code does not differentiate between Vietnamese and non-Vietnamese employees in this regard, and options to evade indefinite-term contracts after this period are limited. Plus, the new Immigration Law scheduled to take effect June 2014 is likely to expressly provide for the first time that work permits must be issued before the foreigner obtains a visa and enters Vietnam.

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WORK PERMIT APPLICATION UNDER NEW REGULATIONS Work permit First time Reissuance

Documents

- Issuance request form - 2 photos - Health Certificate - People's Committee approval - Appointment letter - Passport - Criminal record - Documents certifying that the foreigner is a manager, director, technician or specialist - Other supporting documents depending on the form of employment

- Reissuance request form - 2 photos - Health Certificate - People's Committee approval - Appointment letter - (Passport only in case of material changes or if previous permit is lost)

Labor contract

To be submitted after the work permit is issued and within 5 business days after signing

To be submitted after the work permit is issued and within 5 business days after signing

Presenter

Presentation Notes

Reissuance requires almost the same amount of paperwork as an initial application, EXCEPT for a Criminal Record and certain supporting documents. However, compared to extensions in the past, a reissuance does NOT require a training contract with a Vietnamese national – who is supposed to be being trained for replacing the position of the foreign employee.

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NEW CIRCULAR 03 ON WORK PERMIT

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New Circular 03 on work permit for foreign employees has been adopted by the Ministry of Labor, Invalids and Social Affairs on 20 January 2014 and come into effect on 10 March 2014.

Presenter

Presentation Notes

I did contact an officer in charge at Employment Department - under MOLISA. She admited that this Circular has just been recently completed [supposed 20 February 2014] BUT MOLISA had proceeded backdating activity for EARLIER EFFECT (!). She also confirmed that all comments for the Draft until 23 January has been summarized to be considered [Because 23 Jan is deadline for sending comments to VBF].

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Plan for hiring foreign employees

Requires approval from DOLISA

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DOLISA = Department of Labor, Invalids and Social Affairs

New regulations highlights

Presenter

Presentation Notes

NOTES: Circular 03 requires approval by DOLISA, NOT by Chairman of People committee any more, as being requested by Decree 102/2013/ND-CP. However, in several articles new Circular 03 continue to refer to approval from people’s committee itself. Due to such non-consistence, we are not sure there is any possibility where an employer may need to obtain TWO separate approvals! This remains to be seen. Plan for hiring foreigners must be submitted to DOLISA at least 30 days prior to the official employment of foreign nationals. This plan must include: position, number of people, level of qualification and experience, salary rate and duration of the jobs. Art. 3.1 This plan could be changed and/or supplemented by a report to DOLISA 30 days prior to the official employment of foreign nationals. Art. 3.2 Approval by DOLISA will be issued within 15 days from the date of receipt of (i) report in Art. 3.1 or (ii) changed/supplemented report in Art. 3.2

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Criminal record

1. For Employee who has never resided in Vietnam A Criminal Clearance from the foreign competent

authority where the Employee resides within 06 months prior to the application date.

2. For Employee who is residing in Vietnam (i) A Criminal Clearance from the foreign competent

authority; AND (ii) A Criminal Record issued by the provincial

Department of Justice where the Employee is residing.

3. For Employee who had resided in Vietnam before A Criminal Record issued by the National Center of

Criminal Records of Vietnam. 17


Presenter

Presentation Notes

NOTES: The document by foreign competent authority will need to be legalized to be used in Vietnam. For employee who had resided in Vietnam before, wording in new Circular is unclear. Understanding as this slide is much more preferable for the foreigners. However, in comparison with those who is residing in Vietnam, such foreigners are ALSO required a Criminal Clearance from the foreign competent authority, basically.

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Work permits can no longer

be extended (re-issuance is

required)

Employers who employ

foreigners are no longer

obliged to train Vietnamese

citizens to replace the

Foreign employees


Presenter

Presentation Notes

1.There is a tight window of only 10 days to apply for reissuance. => Employers and foreigners working in Vietnam are advised to be aware of the number of days remaining on their work permits. Reissuance requires almost the same amount of paperwork as an initial application, except for a criminal record and certain supporting documents. 2.Compared to extensions in the past, a reissuance does not require a training contract with a Vietnamese national.


Re-issuance in case of change of working location If the foreign employee is transferred, full-time, to a branch,

representative office or other establishment of the employer within the same province or city, an entirely new work permit is required.


Although not absolutely clear, it can be understood that if the foreign employee is transferred, full-time, to a branch, representative office or other establishment of the employer in different province with that stated in his/her work permit, re-issuance is also required.

Presenter

Presentation Notes

Art. 7.2 Circular 03


Work permits are NOW REQUIRED even for SHORT-TERM JOBS (up to 3 months)


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Presentation Notes

Except for Labor code 172.4: Coming to Vietnam with a period of less than 03 months to offer services Labor code 172.5: Coming to Vietnam with a period of less than 03 months to handle the problem, technical situation and complex technology arising that affect or threaten to affect the production and business that the Vietnamese and foreign experts currently in Vietnam can not be handled.


A specialist needs (i) a document proving that he/she is a

foreign engineers/ bachelors that have worked at least 05 years in their fields and suitable for the positions he/she is supposed to hold in Vietnam; or

(ii) a document recognized by the foreign authorities certifying that he/she is a specialist.


Presenter

Presentation Notes

Except for Labor code 172.4: Coming to Vietnam with a period of less than 03 months to offer services Labor code 172.5: Coming to Vietnam with a period of less than 03 months to handle the problem, technical situation and complex technology arising that affect or threaten to affect the production and business that the Vietnamese and foreign experts currently in Vietnam can not be handled.


Certifying that a foreign national is exempt from work permit:

The employer has to request DOLISA to certify that a foreign national is exempt from work permit then DOLISA shall certify or reject to certify this request.


Presenter

Presentation Notes

This looks like another new baby permit for foreign employees who are exempt from work permit. NOTES: Circular has NO timeframe for DOLISA to reject, so that the employer could conduct to obtain work permit for the rejected one(s).

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DOLISA = Department of Labor, Invalids and Social Affairs

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• Demand for hiring foreigners must be submitted to at least 30 days before commencing work

• DOLISA shall issue approval within 15 days

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• Submit work permit application • DOLISA shall “consider” within 10 days

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• Receive work permit (total time required: theoretically, 25 days)

Work Permit Application (First Time)

Presenter

Presentation Notes

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RECOMMENDATIONS

• Thorough understanding of labor law as well as its guiding regulations

• Be aware of different practice of different DOLISAs and labor authorities

• Carefully remember the number of days remaining on your work permits)

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