Labor recruitment by a Foreign Invested Enterprise

Under the revised Labor Code, a FOE may either directly recruit Vietnamese employees or recruit via an authorized labor agency. The FOE is then required to register the list of recruited Vietnamese employees with the local labor department, and submit reports on the utilization of and changes to staff to the labor department on a periodic basis.

Registration of expatriate employees

Expatriates working in Vietnam for 03 months or more must obtain a work permit. The term of a work permit is required to correspond with the length of the labour contract, which is capped at 36 months but may be extended at the employer’s request.

Not less than twenty days before an expatriate’s estimated date of commencement of work, an FIC must apply to MOLISA or its authorised agency to obtain a work permit for that expatriate. MOLISA or its authorised agency is obliged to give its decision within 15 days of its receipt of such application. Clear reasons must be provided if the application is refused. In addition, a work permit can be withdrawn in certain circumstances, including for a breach of the laws of Vietnam by the expatriate.

Five groups of foreigners working in Vietnam are exempt from the requirement of obtaining a work permit:

i) Foreigners entering Vietnam to work for less than 03 months;

ii) A member of a limited liability company with two or more members;

iii) The owner of a one member limited liability company;

iv) A member of the board of management of a shareholding company;

v) A foreigner entering Vietnam to offer services;

vi) Foreigners entering Vietnam to work to resolve an emergency situation such as a breakdown or a technically or technologically complex situation arising and affecting, or with the risk of affecting, production and/or business which Vietnamese experts or foreign experts currently in Vietnam are unable to deal with. Such foreigners must carry out procedures for issuance of a work permit if their work extends for more than 03 months

vii)  Foreign lawyer to whom the Ministry of Justice has issued a certificate to practice law in Vietnam.

Not less than seven days prior to the date of commencement of work, foreigners who are exempted from work permit requirements must be registered at DOLISA where the employer’s head office is located. The registration must state the name, age, nationality and passport number of the employee, the dates of commencement and termination of employment, and a description of the work to be done.

Social Insurance (SI), Health Insurance (HI) and Unemployment Insurance (UI) contributions for employees

The Law on Social Insurance (SI) became effective on 1 January 2007  providing guidance of SI and UI. The Law on Health Insurance (HI) became effective on 1 July 2009. SI and UI contributions are applicable to Vietnamese employees only. HI contributions are required for Vietnamese and foreign individuals who are employed under the Vietnam labor contracts.

The SI contributions, 16% by the employer and 6% by the employee, are required with respect to Vietnamese employees. SI contributions will increase to 17% by the employer and 7% by the employee with effect from 1 January 2012.

The UI contributions, 1% by the employer and 1% by the employee, are required with respect to Vietnamese employees. It is only required for the employer that has 10 employees or more.

The HI contributions, which are 3% by the employer and 1.5% by the employee, are also required to be made with respect to Vietnamese employees and also foreign employee (effective from 1 October 2010 onwards).

These contributions are calculated based on the contracted basic salary, but capped at 20 times the common minimum salary. The common minimum salary effective 1st May 2012 is VND 1,050,000/month (approximately USD 50).

Minimum salary

In accordance with Decree 70/2011/ND-CP dated 22 August 2011 of the Government, the regional based minimum wage levels for employees working for enterprises established under the Law on Enterprises, Vietnam-based foreigninvested enterprises, the cooperatives, farms, household, foreign organizations and international Organizations from  01 October 2011 is  divided into four levels depending on the location of the enterprises, detailed as follows:

i) For enterprises located in Area I (urban districts of Hanoi, Ho Chi Minh City, Hai Phong, Dong Nai, Binh Duong, Baria-Vung Tau), the minimum salary is VND 2,000,000 per month.

ii) For enterprises located in Area II (Hanoi and Ho Chi Minh City’s rural districts, and in certain districts of surrounding provinces, such as Hai Phong, Quang Ninh, Vung Tau, Binh Duong, Dong Nai etc), the minimum salary is VND 1,780,000 per month.

iii) For enterprises located in Area III (certain districts of provinces, such as Vinh Phuc, Quang Ninh, Khanh Hoa, Ninh Thuan, etc), the minimum salary is VND 1,550,000 per month.

iv) The minimum salary of VND1,400,000 shall apply for enterprises located in Area IV (the remaining areas).