How Foreigners Could Work in Vietnam Legally

Foreigners working in business set-up in Vietnam are expatriates which are normally required work permit in Vietnam.

As the Vietnam law’s restrictions to encourage employment of local employee over foreign employee, normally, the employment of an expatriate is limited to a managerial position or to a position which Vietnamese employee are not yet qualified.

There are exemption of work permit in Vietnam as following cases:

A capital contributing member or owner of a limited liability company which is registered to operate in Vietnam;

A member of the Board of Management of a shareholding company which is registered to operate in Vietnam;

A chief of a representative office or of a project of an international organization or a non-governmental organization in Vietnam;

The foreigner enters Vietnam for less than three months to offer services;

The foreigner enters Vietnam to work for less than three months or to handle an emergency case and that cannot adequately be addressed within Vietnam;

A lawyer who has received a Certificate for the practice of law firms in Vietnam granted by the Ministry of Justice;

The foreigner is a student studying and working in Vietnam;

An intra-corporate transferee working in Vietnam;

The foreigner provides expert and technical consultancy services or undertakes other tasks with respect to research, formulation, evaluation, monitoring and assessment, management and implementation of a program or project using official development aid (“ODA”);

The foreigner has a media license issued by the MOFA;

The foreigner is appointed by a competent authority of a foreign country to teach at an international school which is managed by a foreign diplomatic office or an international organization in Vietnam;

The foreigner a volunteer;

The foreigner has a master’s degree or higher or similar qualifications and provides consultancy, teaching, or conducts scientific research at a university or vocational college for a period not exceeding thirty (30) days; or

The foreigner implements an international agreement signed by a Vietnamese government authority, a provincial body or a central socio-political organization.

In order for an expatriate to be exempted from a work permit, the employer must file an application with the provincial labor authority. Chairman of the provincial People’s Committee will be consulted and if approved, he/she will issue a written consent to each employer regarding the employment of expatriates.

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How Mediation and Labor Arbitration Councils Work in Settlement of Labor Disputes?

During and after the Covid-19 pandamic, the financial health of enterprises have been negatively impacted leading to management’s decision to reduce cost through termination of labour contract with employee. The illegal termination of labour contract could lead to disputes between employer and employee which sometime would cost the employer more than it gains. It is important for the employer to engage with labour lawyers to consult before taking the decision to consider factors that would involve. After disputes arise, mediator or labour arbitration councils could be used for resolving disputes.

Individual labor disputes shall be settled through mediation by labor mediators before being brought to the Labor arbitration council or the Court, except for the following labor disputes which mediation is not mandatory: disputes over disciplining under dismissal or unilateral termination of employment contracts; disputes over damages and allowances upon termination of employment contracts; disputes between a domestic worker and his/her employer; disputes over social insurance in accordance with social insurance laws, disputes over health insurance in accordance with health insurance laws, disputes over unemployment insurance in accordance with employment laws; disputes over insurance for occupational accidents and occupational disease in accordance with occupational safety and hygiene laws; disputes over damages between an employee and enterprises, organization that dispatches the employee to work overseas under a contract; disputes between the outsourcing employee and the employer using outsourcing employee.

The mediator shall complete the mediation process within 05 working days from the receipt of the request from the requesting parties or the authority. Both disputing parties must be present at the mediation meeting. The disputing parties may authorize another person to attend the mediation meeting.

In case the two parties reach an agreement, the labor mediator shall make a written record of successful mediation which bears the signatures of the disputing parties and the labor mediator. In case the two parties do not reach an agreement, the labor mediator shall recommend a mediation option for the disputing parties to consider. Where the two parties do not agree with the recommended mediation option or where one of the disputing parties is absent for the second time without a valid reason after having been legitimately summoned, the labor mediator shall make a record of unsuccessful mediation which bears the signatures of the present disputing parties and the labor mediator.

The disputing parties shall be entitled to request the settlement from Labor arbitration councils in the following cases: a disputing party fails to perform the agreements specified in the record of successful mediation; mediation is not mandatory; the labor mediator fails to initiate the mediation by the deadline; the mediation is unsuccessful.

After the Labor arbitration council has been requested to settle a dispute, the parties must not simultaneously request the Court to settle the same dispute. If within 07 working days from the receipt of the request, an arbitral tribunal is not established; or within 30 working days from the establishment of the arbitral tribunal, it fails to issue a decision on the settlement of the labor dispute, parties shall be entitled to request the settlement from the Court. In case a disputing party fails to comply with the decision of the arbitral tribunal, the parties are entitled to bring the case to Court.

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How to Send Vietnamese Workers Working Abroad Under Contracts?

Decree No. 38/2020/ND-CP detailing the implementation of a number of articles of the law on Vietnamese workers working abroad under contracts has been signed by the Government on April 3, 2020 takeing effect from May 20, 2020.

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This Decree prescribes the areas and jobs workers must not go to work abroad; licenses, conditions and procedures for the grant or replacement of licenses for provision of services to send workers abroad; deposits of service-providing enterprises sending laborers to work abroad; deposits, management and use of deposits of enterprises performing the intern labor contract. Specifically:

Up to seven jobs are not allowed to for Vietnamese workers to work abroad including: massaging in the restaurants, hotels or entertainment centers; the work must be in constant contact with explosives, toxic substances in the metallurgy of non-ferrous metals (copper, lead, mercury, silver and zinc), regular contact with manganese, mercury dioxide; the work must be in contact with open radioactive sources, exploiting radioactive ores of all kinds; the production and packaging must be in constant contact with the chemicals of nitric acid, sodium sulfate, carbon disulfide, pesticides, herbicides, rat poison, antiseptic, and anti-termite with strong toxicity; hunting for wild animals, crocodiles and sharks; regular work in places where there is lack of air, high pressure (underground, in the ocean); shrouding, burial corpses, cremating corpses, exhuming graves.

In addition, it is prohibited to send workers to war zones or areas at risk of war, areas where radiation is being contaminated, areas contaminated with poison or areas with particularly dangerous epidemics.

For service-providing enterprises sending laborers to work overseas, to set up company, and comply with the law, they must meet the following conditions among others: the legal capital is not lower than VND 5,000,000,000 (five billion Vietnam dong); having owners, all members and shareholders being domestic investors under the provisions of the Law on Investment 2014; having an operation plan to send workers to work abroad; having a specialized apparatus and material foundations to organize the training of necessary knowledge for workers before going to work abroad and activities of sending laborers to work abroad; deposit VND 1,000,000,000 (one billion Vietnam dong) at commercial banks licensed to operate in Vietnam.

The enterprise sending workers to work abroad upon the form of practice for skills improvement makes deposit to account at commercial bank. The level of deposit of an enterprise sending workers to work abroad upon the form of practice for skills improvement is equal to 10% of the ordinary flight ticket of one class at the time the enterprise deposits from the country where the employee works. The number of workers going to work abroad in Vietnam under the Contract of accepting internships has been registered.

In addition, this Decree also stipulates the conditions for activities of sending laborers to work in the territory of Taiwan (China), to practice skills in Japan and to work as domestic servants in the host country of Middle East region.

The interested individuals and organizations should pay attention to implement details of the regulation or seek lawyers in the labour management areas for consultation.

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Can Employer Terminate the Labor Contract with Employee Due To Covid 19 Outbreak?

Due to intricate occurrence of Covid 19, many enterprises are forced themselves to reduce the number of employees for maintaining the operation financially. Specifically, the employer has to make difficult decision to terminate the labor contract with the employee. The termination of the labour contract has to be considered carefully because of potential legal risks brought up which dispute lawyers in labour should be consulted before execution. Within this post, we are not trying to resolve all cases but only aiming to brief some matters of concern for preparation.

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The employer could refer to the regulation in the Labor Code which allows “an employer may unilaterally terminate a labor contract if as a result of natural disaster, fire or another force majeure event as prescribed by law, the employer, though having applied every remedial measure, has to scale down production and cut jobs. Force majeure in this case is understood as (i) Enemy-inflicates destruction, epidemics (ii) Relocation or narrowing of the production and business sites, at the request of competent State agencies.

In particular, after applying corrective measures, over the time, considering enterprise’s financial potential is insufficient as well as the business production is reduced significantly due to epidemic, the employer may consider unilaterally terminate labor contract with employee. However, employer still have to abide by or ensure the rights to employee regarding the interests which employee is entitle to receive when being unilaterally terminated labor contract includes salary, severance allowance, social insurance, payment for untaken leave days, the tax payment which employer must paid for employee. Besides, employer also is subject to pay a compensation if consented by both sides are employer and employee.

Firstly, employer is obliged to pay salary to employee timely and fully as in the agreed labor contract by both parties;

Secondly, employer is responsible for paying the severance allowance to employee whom has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year.

Thirdly, social insurance, employer is responsible for the fulfill payment of social insurance and perform the closing insurance book for employee after terminate the labor contract according to the law of social insurance.

Fourthly, if the income of employee subject to personal income tax, employer must extract from the income of employee to submit the tax to tax agency according to law on personal income tax.

If the client needs any other information or requires for further advice, our lawyers at ANT Lawyers in Vietnam will be available for service.

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How to Resolve Disputes in Employment in Vietnam?

A labor dispute is a dispute over rights, obligations and interests arising between parties in employment relationship. Labor disputes include individual labor disputes between employees and employers, and collective labor disputes between labor collectives and employers. When a labor dispute occurs, the competent agency, organization or individual will settle it on the basis of the measures and principles of labor dispute settlement prescribed in Chapter XIV of the Labor Code 2012.

Measures for resolving labor disputes include: negotiation, grassroots conciliation, settlement of individuals and organizations competent to settle labor disputes.

For individual labor dispute resolution, labor conciliator, People’s Court is an individual or organization competent to resolve disputes. Labor conciliator; Chairman of the district People’s Committee; The People’s Court is competent to resolve collective labor disputes over labor rights and conciliators; The Labor Arbitration Council is competent to settle collective labor disputes about benefits.

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Negotiation is a method of resolving a dispute in which the parties to a dispute deal directly with each other in order to reach an agreement on the settlement of the dispute. In fact, this is the most widely used solution. During the negotiation process, the parties will discuss issues related to the dispute, and propose solutions to resolve that dispute. The decision is made on the basis of agreement between the parties themselves and is not the result of any external pressure.

Unlike negotiation, conciliation is a method of resolving disputes involving third parties but not third parties make decisions but only support and guide the parties to negotiate. Under the provisions of Clause 1, Article 201 of the Labor Code 2012, individual labor disputes must go through the conciliation procedure of a labor conciliator before requesting a court to settle them, except for labor disputes on disciplinary measures in the form of dismissal or disputes over the unilateral termination of the labor contract; compensation for damages, benefits when terminating a labor contract; between domestic servants and employers; on social insurance in accordance with the law on social insurance, on health insurance in accordance with the law on health insurance; on compensation for damages between laborers and enterprises and non-business units that send laborers to work abroad under contracts. If the two parties reach an agreement, the labor conciliator shall make a record of successful conciliation. On the contrary, the two parties cannot reach an agreement, and the labor conciliator issues a conciliation plan for the two parties to consider and if the two parties accept the conciliation plan, the labor conciliator shall make a record of successful conciliation. In case the two parties do not accept the conciliation plan or a disputing party has been duly summoned for the second time but still absent without plausible reasons, the labor conciliator shall make a record of unsuccessful conciliation.

Dispute resolution by the Chairman of the district People’s Committee is the method to be applied when there is a request for resolving a collective labor dispute on rights. Chairpersons of district-level People’s Committees shall base themselves on labor laws, collective labor agreements, registered labor rules and legal regulations and agreements to consider and settle labor disputes. dynamic.

The Labor Arbitration Council is the competent authority to settle collective labor disputes about benefits. At the meeting of the Labor Arbitration Council, there must be representatives of both parties to the dispute. The Labor Arbitration Council has the responsibility to assist the parties in self-negotiation. In case the two parties reach an agreement or accept the mediation plan, the Labor Arbitration Council shall make a record of successful mediation and issue a decision recognizing the agreement of the parties. In case the two parties fail to reach an agreement or one of the disputing parties has been duly summoned for the second time but still absent without plausible reasons, the Labor Arbitration Council shall make a record of unsuccessful mediation and after within 03 days, the labor collective has the right to carry out the procedures to go on strike.

Trial is a mode of resolving individual labor disputes and collective labor disputes over rights, in which the Court will issue a judgment or decision to resolve the case. The settlement of labor disputes in court is generally the final settlement activity after the dispute has been settled at other stages with no results. The settlement of labor disputes at the Court is done by a judicial body with special state power, proceeding according to the strict procedures and procedures prescribed in the Civil Procedure Code 2015. The greatest advantage of this method of dispute resolution is that the court’s decisions on labor disputes are guaranteed to be enforced by state coercive measures.

Employees as well as the labor collective and employers should pay attention to selecting the most appropriate and optimal resolution solution when labor disputes occur. It is also suggested to consult with labour lawyers of law firm speacializing in employment matters for efficiency.

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How Law Regulates Employing People with Disabilities in Vietnam?

Disabled people are those who have one or more body parts or functional impairments which are manifested in the form of disability, which makes it difficult for labor, living and learning. The State sponsors the right to labor and creates jobs for disabled workers, has policies to encourage and give incentives to employers to create jobs and to accept workers with disabilities to work in Vietnam.

The disabled people are inherently disadvantaged compared to other ordinary people, so to compensate for the unfortunate disabled people, the government has established mechanisms and policies for disabled employees and enterprises employing disabled laborers, being regulated in the law as following.

Corporate Income Tax

The company will enjoy corporate income tax exemption for income from goods and services of enterprises with an average number of disabled employees in the year accounts for 30% or more of the total labor of the enterprise.

Financial Support to Improve Work Conditions

Enterprises are provided with financial support to improve working conditions and environment for disabled workers, the support level is based on the proportion of people with stable employment at production and business establishments. The President of the provincial People’s Committee decides the level of funding to support the improvement of working conditions and environment for production and business establishments employing 30% or more of the disabled employees.

Land, Ground, Water Surface Rentals

Enterprises are exempted from land rents, ground and water surface rents for land, ground and water surface in service of production and business activities for production and business establishments employing 70% or more of their disabled employee. Enterprises are entitled to a 50% reduction of land rents, grounds and water surface for production and business activities for production and business establishments employing from 30% to less than 70% of laborers are disabled employees. During the period of exemption or reduction of land rents, premises, water surface, business and production establishments must not convert, transfer, donate, give or lease land use rights, ground and water surface and must not mortgage, pledge, guarantee, contribute capital in, joint venture with land use rights, ground and water surfaces in accordance with the Law on land.

Loan Support

The enterprises which have disabled employees may borrow capital from the national fund for employment when meeting conditions such as: having feasible capital borrowing projects competitions in the locality, in line with business and production lines, attracting more workers to work stably; loan project with certification of the competent agency, organization where the project is implemented; secured loan.

Besides, the enterprises which have disabled employers have to follow a number of requirements. i) do not distinguish between disabled workers and other workers. The violation of such would be sanctioned from 3 – 5 million VND; ii) ensure that the labor conditions are suitable for people with disabilities, specific businesses must ensure the labor conditions, labor tools, occupational safety, hygiene and labor appropriate for people with disabilities and regularly take care of their health by organizing periodic health check at least 06 months/time; must consult with the defective labor when deciding on the policy relating to them. The violations of such activities will be fined from 1 – 15 million VND; iii) do not use disabled workers who have reduced labor capacity from 51% or more to overtime, working at night, doing heavy, malicious, dangerous or exposed work with hazardous substances. In the event of a breach of such regulations, the enterprise will be fined from 1 – 15 million VND; iv) arranged for workers with disabilities who are allowed to take leave for 14 days for disabled workers with full 12 working months.

The above provisions are the basic labour regulations applicable to enterprises employing disabled workers. While there are benefits, there are also challenges in terms of labour regulations compliance. Consulting with labour lawyers would be needed to help the employer complying including drafting labour contract, drafting internal labour regulations, terminating the employment relationship to best manage the work force in the most effective ways. From the management point of view, the employers need to understand, and be aware of the policies that the state offers for their business as well as the obligations that the business needs to do for disabled workers to utilize and follow.

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Regulations on Pay to Employees Working During Lunar New Year Holiday

Under the provisions of Article 106.1 of the Labor Code 2012, overtime is a period of work outside normal working hours prescribed by law or according to a labor agreement or regulation. Depending on the needs and agreement of the two parties, the enterprise may request employees to work overtime during lunar new year (Tet) holiday, but must not exceed 12 hours in a day and must pay overtime as prescribed by law.

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According to Article 25 of Decree No. 05/2015 / ND-CP, the salary for overtime work on lunar new year holiday for employees is prescribed as follows:

An employee who works overtime in the daytime of the lunar new year holiday is entitled to at least 300% of the normal day salary, excluding the salary on that new year holiday if the employee receives wages.

Employees who work overtime at night during lunar new year holiday, apart from enjoying 300% of the normal daily salary, excluding the salary, if the employee receives a daily salary, the employee is also paid at least 30% extra of the average daily wage, and 20% extra of the of the lunar new year holiday pay rate.

In particular, night working hours are calculated from 10:00 p.m to 6:00 a.m of the following day.

For employees who work overtime on the same day as lunar new year holiday, they shall receive overtime pay according to lunar new year holiday; if the lunar new year holiday is the same as a weekly holiday, pay overtime is same as pay for work in weekend.

In addition, when making overtime workers, the enterprise must pay attention to the maximum number of overtime hours a day and must organize compensatory leave for employees as prescribed in Article 106 of the Labor Code and Article 4. Decree 45/2013/ND-CP.

Our lawyers with specialization in labour matters always monitor the changes in law to provide regular update to client.

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How to Protect Business Secrets through Non-Disclosure Agreement (NDA)

In business or production process, individual or organization being may have to share its business secrets with others. Legal solution for this situation is to enter into a Non-Disclosure Agreement agreement (NDA).

Non-Disclosure Agreement (NDA) are often used by inventors or companies when sharing business ideas, sample products which have just been created, patent and many other business secrets. This disclosure’s purpose is to explore the possibilities to cooperate, manufacture; to commercialize a particular product in relation to another company when seeking licensing contracts, financial source to develop a product; to deploy a business secret, to enter into a Merger and Acquisition transactions, or to create binding obligations on employees if they know or are known secrets of the company they are working for.

What does the content of the Non-Disclosure Agreement (NDA) include?

NDA should begin with a clear statement of who the owner’s non-disclosed information is (owner); party who receives non-disclosed information (recipient); identify non-disclosed information and the reason for disclosing such information to the recipient. The most important thing of NDA is to identify the scope of non-disclosed information or confidential information to avoid the parties in dispute if one party discloses certain information. Another thing to keep in mind is that the NDA can achieve the purpose of the parties when stipulating clearly how the recipient has to protect that information and what is allowed or not allowed to do with that information. In particular, it is necessary to detail that the recipient has to take responsibilities if they violate the information security obligations specified in the NDA.

Besides, the parties may agree to a reciprocal NDA. Sometimes, the source of information is two-ways, both parties will then disclose confidential information to each other, for example when the two parties form a joint venture, or have intention of acquiring the target company through M&A. Accordingly, NDA will refer to the agreement of formation a joint venture, M&A which clearly states that which confidential information two parties will share, what are the rights and obligations of the two parties.

Of course, the best way to keep a secret is to not tell anyone. However, this is not always possible in the collaboration world when shared economy is thriving in Vietnam. If the owner needs to share business secrets, they could sign with the recipient an non-disclosure agreement or contract to avoid unfortunate circumstances.

Lawyers at ANT Lawyers could help clients to create NDA in various business transactions in M&A, joint venture, IP commercialization, labour to address the needs of business requirements in Vietnam.

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Work permit for foreign investors?

Vietnam is a country that has been having many policies to attract foreign investors to work in Vietnam. In particular, foreign investors are individuals with foreign nationality, organizations established under foreign laws and carry out business investment activities in Vietnam. When conducting business investment activities in Vietnam, many people wonder if a work permit is required? In this article, we will help you answer the above questions.

Foreign investors carry out business activities in Vietnam in one of the forms such as contributing, purchasing shares or capital contributions of economic organizations. If the investor is a foreign individual who is a capital-contributing member or owner of a limited liability company, he / she will be exempted from work permit under the provisions of Clause 1, Article 7 of Decree 11/2016/ND-CP.

However, this provision does not mean that all of investors are automatically exempted from work permits. Foreign investors who are not required to have a work permit must be certified by the Department of Labor, War Invalids and Social Affairs before coming to work in Vietnam. Specifically, according to Article 8 of Decree 11/2016 / ND-CP, the employer requests the Department of Labor - Invalids and Social Affairs where the foreigner is expected to work to confirm the foreign worker is not required to issue a work permit at least 07 working days in advance from the date the foreign worker starts working.

Dossier of request for certification not subject to issuance of a work permit, including: Written request for certification of foreign workers not subject to work permit and documents proving that the foreign worker is not subject to a work permit. Within 03 working days from the date of receipt of a complete application for certification not subject to a work permit, the Department of Labor - Invalids and Social Affairs shall send a written confirmation to the employer. In case of non-certification, there must be a written reply clearly stating the reason.

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Entering into a labor contract

A Labor contract is an agreement between an employee and an employer on paid employment, working conditions, rights and obligations of each party in the employment relationship.

Before starting to work, the employee and the employer need to sign a full employment contract so that they can know their rights and obligations when working, and carry out immigration-related procedures, temporary residence in compliance with Vietnamese law.

Labor contracts are made on the principles of voluntariness, equality, goodwill, cooperation and honesty, free-of-agreement between the parties but must not contravene the law and collective labor agreements and social ethics. .

There are three main types of Labor contracts: indefinite-term labor contracts, definite-term labor contracts (with term from full 12 months to 36 months), seasonal or specific employment contracts with a term of less than 12 months. The parties to the contract should pay attention to be able to know the time of contract termination according to the provisions and make an extension, sign a new contract according to the agreement of the parties.

The content of the labor contract should contain sufficient information about the parties, the job and the place of work, the contract term, salary, form and deadline of salary payment, wage allowances and additional amounts, the regime of wage increase, working time, rest time, insurance policies, training, ... these are necessary information required in a labor contract, the parties need to consider implementing, to ensure its rights and obligations with respect to employment contracts.

For foreign employee, it is necessary to pay attention to the content and cost of implementing legal procedures to ensure working in Vietnam such as entry visa, temporary residence card, work permit to avoid unqualified labor contract performance as committed with the employer. During the implementation of the labor contract, the parties have the right to agree to terminate the contract ahead of time or unilaterally terminate the labor contract in accordance with the law, but the notice must be given within the time appropriate to the other party.

In addition, during the implementation of the labor contract, the parties may amend and supplement the labor contract in accordance with the current law. Any addition or modification must be agreed by the parties by signing an appendix of the contract or signing a new labor contract.

The labor contract is a very important agreement that directly affects the rights and interests of the parties in their activities, so the parties should pay attention to the terms of the contract to avoid unfortunately disputes. 

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Work permit

According to the labour law in Vietnam, enterprises that need to employ employees working in their organizations must fully meet the provisions on using foreign workers in the Labor Code 2012. Specifically, enterprises are only allowed to recruit foreign citizens to work as managers, executives, experts and technical workers that Vietnamese workers have not yet met the production and business needs. Before recruiting foreign citizens to work in the territory of Vietnam, enterprises must explain their employment needs and be approved in writing by competent state agencies. Therefore, enterprises wishing to recruit foreign workers to work in their company, need approval of competent state agencies, in particular, Department of Labor, War Invalids and Social Affairs in the province / city where the business is located ("DOLISA")

With DOLISA's approval, enterprises need to prove that the recruitment of foreign workers for the required job position is consistent with the needs of the business, the situation of Vietnamese labor recruitment for those positions, the benefits achieved for businesses when recruiting foreign workers instead of Vietnamese employees.

After approval of the demand for foreign labor from DOLISA, the enterprise shall follow the procedures for applying for a work permit for foreigners in accordance with DOLISA's approval. Foreigners who work in Vietnam without a work permit will be expelled from the territory of Vietnam according to the regulations of the Government and employers, who use foreign citizens without a work permit, will be handled in accordance with the law, specifically the administrative fine from VND 30,000,000 to VND 75,000,000 shall be imposed on employers depending on the seriousness of their violations (Article 22 of the Decree 95/2013/ND-CP). Therefore, employers and employees need to comply with the work permit when working in Vietnam or employing foreign workers to work in Vietnam.

For foreign workers, in order to be eligible for a work permit, the following specific conditions are required: (i) Having full civil act capacity as prescribed by law; (ii) Be physically fit to the job requirements; (iii) Be a manager, executive director, specialist or technical worker; (iv) Not be a criminal or subject to criminal prosecution in accordance with the laws of Vietnam and foreign laws; (v) Approved in writing by a competent state authority on the employment of foreign workers.

These are necessary conditions before an employee applies for a work permit in Vietnam. Documents proving the fulfillment of the conditions for granting a work permit, if issued by foreign countries, must be consular legalized and translated into Vietnamese when submitted in Vietnam.

The issuance of a work permit must be made at least 15 days in advance from the date the employee is expected to work in Vietnam.

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Non-Compete Agreement In Labor Contract

The principle “freedom to work” is recognized and respected by the Labor Code 2012. However, this regulation may harm legitimate business interests of employers when employees, during the performance of the labor contract or especially after the termination of the labor contract, reveal the business or technology secrets to compete with the employers. Therefore it is necessary to create the limits on the freedom to work, for the purpose of preventing workers from revealing employers’ business or technology secrets. Law in many countries around the world has recognized “Non-Compete Agreement” as a tool to enforce security programs.

The Labor Code 2012 and sub-law documents do not mention to the definition of “Non Compete Agreement”, but make the provision that: “When an employee performs a job which is directly related to business or technology secrets as prescribed by law, the employer may reach a written agreement with the employees on the content and duration of protection of business or technology secrets, and benefits and compensation in case of violation by the employees”.

The definition of “Non-Compete Agreement” is inferred by explaining the provisions of law and referred to the articles of legal experts. “Non-Compete Agreement” is a legal contract between an employee and an employer, for a purpose of preventing the worker from competing directly or working for a competitor during the performance of the labor contract or especially after the termination of the labor contract. Thereby, we can infer that only when employers have business or technology secrets, they have the right to make Non-Compete Agreement. Moreover, the legitimate business interests that are protected must be legal, unique, influence the maintenance, stability and development of business activities.

Analyzing the provision “Non-Compete Agreement”, we can conclude that, the employees adjusted by the “Non-Compete Agreement” is the worker who is directly involved in business or technology secrets (such as the senior managers, senior technicians and others are obliged to keep business or technology secrets). The Labor Code 2012 has regulated that the “Non-Compete Agreement” must be on text.

The provision of Non-Compete Agreement is necessary for employers to protect business or technology secrets, but it is difficult for workers to find job after the contract terminates. Therefore, Non-Compete Agreement should balance the interests between employers and employees by setting reasonable limits in time, geographic scope and particular industry or activity.

(i) For restriction on time, the Labor Code 2012 does not specify restriction period or the point of starting restriction period. This is entirely upon the parties. However, Non-Compete Agreement can not be enforced unless it specifies a reasonable restriction period. Referring to the law of some European countries (Germany, France) and Asian countries for example in China, the maximum restriction time is 02 years, to ensure that employees have conditions to find new jobs.

Moreover, it provides opportunities for employers to motivate, improve the technology and business secrets to develop. On the other hand, law in some other countries distinguishes between highly skilled workers (group 1) and unqualified employees (group 2). Spanish law is a typical example, the maximum restriction period is two years for workers in group 1 and six months for group 2.

(ii) Restriction on geographic scope is not regulated in Vietnamese law. Meanwhile, most countries such as France, China and Russia all regulate that the restriction is on the whole country. However, due to differences in society, economic and education conditions, Vietnam can hardly regulate like that. On the other hand, when making the provisions of the restrictions on geographic scope, it is necessary to base on the performance of the company, the method of production, the size of and the type of company.

(iii) For restriction on particular industry or activity, most courts tend to consider the work that employees will work in the new labor contract. Normally, if the new job is similar to the old one, it will not be approved by the court. Under the Labor Code 2012, the content of restrictions on particular industry or activity when employees enter into agreement include: (i) obligation to keep trade information confidential (business secrets, technology secrets) ; (ii) not be able to work for the competitor of former employers or to conduct his own business competing with former employers.

Labor Code in our country does not specify the scope of the restriction on particular industry or activity, it depends entirely on the will of the parties. Non-Compete Agreement can not be applied to all jobs, but only to those who hold business and technology secrets. For every type of work there will be a different range of restrictions. The scope of the restriction is not exceeding the employees’ professional capacity and ensuring the opportunity of works in the future.

The benefit that employees receive when signed the Non-compete Agreement can be the opportunity for promotion, high salary, and commendation if the Non-Compete Agreement is made while the labor contract is valid. If the Non-Compete Agreement is applied after the labor contract terminates, employees shall receive the compensation. The amount of compensation is upon the agreement of the parties and must be satisfactory with the restriction of job opportunities. There are some cases that employees may not be entitled compensation are to violate the Non-Compete Agreement or die or prison sentence.

According to the Labor Code 2012, in case of violating the non-compete contract, employees have obligation to compensate, but it does not give specific compensation amount as well as the method of compensation. In order to claim compensation, employers must demonstrate these following factors: (1) the violation of the Non-Compete Agreement; (2) actual damage (the lost revenue and profit of the employer); (3) the causal relationship between the infringement and the damage; (4) fault of the employee. The amount of compensation must correspond to the amount of lost revenue or profit. In addition, employees must return the non-owned assets that are exploited and developed to compete with former employers. Moreover, employees must repay the compensation and other benefits paid by former employers if agreed in the agreement.

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Employee Subject to Unilateral Termination of the Labor Contract Could Claim Unemployment Insurance

Unemployment insurance is a measure to assist workers in a market economy. In addition to providing financial support to stabilize the lives of employees during the period of unemployment, the main purpose of unemployment insurance is to help the unemployed to find a suitable and stable job, through vocational training, counseling and job referral.

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When the labor contract is unilaterally terminated by the employee, the employee does not need to have a certificate from the employer that the legal termination is legal, to be eligible for Unemployment Insurance (UI).

Within 03 months since the date of termination of the labor contract, the employee who doesn’t obtain a new job and wish to receive UI only need to submit an application for unemployment insurance and one of the document following documents:

i) The labor contract or contract has expired or has been completed under a labor contract;

ii) Resignation decision;

iii) Decisive dismissal;

iv) Disciplinary decision on dismissal;

v) Notice or agreement to terminate the labor contract or contract of employment.

The unemployed shall receive a Decision on unemployment insurances within 15 working days from the filing date. From the 16th day, the unemployed shall be entitled to unemployment insurance as requested.

We at ANT Lawyers constantly follow the changes in the labour to provide legal update to clients

Unemployment insurance is a measure to assist workers in a market economy. In addition to providing financial support to stabilize the lives of employees during the period of unemployment, the main purpose of unemployment insurance is to help the unemployed to find a suitable and stable job, through vocational training, counseling and job referral.

When the labor contract is unilaterally terminated by the employee, the employee does not need to have a certificate from the employer that the legal termination is legal, to be eligible for Unemployment Insurance (UI).

Within 03 months since the date of termination of the labor contract, the employee who doesn’t obtain a new job and wish to receive UI only need to submit an application for unemployment insurance and one of the document following documents:

i) The labor contract or contract has expired or has been completed under a labor contract;

ii) Resignation decision;

iii) Decisive dismissal;

iv) Disciplinary decision on dismissal;

v) Notice or agreement to terminate the labor contract or contract of employment.

The unemployed shall receive a Decision on unemployment insurances within 15 working days from the filing date. From the 16th day, the unemployed shall be entitled to unemployment insurance as requested.

We at ANT Lawyers constantly follow the changes in the labour to provide legal update to clients

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Please click here to learn more about ANT Lawyers Civil Matters Practice or contact our Law Firms in Vietnam for advice via email ant@antlawyers.vn or call our office at +84 28 730 86 529

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Handling Labour Matters in Post M&A Transaction

While undertaking M&A transaction, the buyer may face legal risks regarding license, assets, compliance, including labor matters. One of the challenges of the buyer post M&A is the integration of the labour force into the new structure while ensuring rights and interests of their existing employee complying with the laws.

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When negotiating a deal, the buyer and target company may try to retain the advantage combining the strengths of both side. However, it’s challenging to just merely add personnel of the existing of departments with same functions together and group them under i.e. administration departments, sales department, accounting department…Further, one of the benefits of M&A is to improve the effectiveness of the operation through managing the similar scale of the combined business with less resources. Therefore, the re-arrangement of personnel is required and therefore conflicts will have to be managed between employees and employer.

Pursuant to Article 45 of Labor Code: in case of merging, consolidating, splitting or separating an enterprise, the successive employer shall continue employing the existing workforce and modify and supplement their labor contracts; if the existing workforce cannot be fully employed, the successive employer shall prepare a suitable labour plan and implement a labor utilization plan. In case of transferring asset ownership or use rights of an enterprise, the preceding employer shall have to prepare a labor utilization plan.

The labor utilization plan shall have the following contents: the lists and numbers of workforce to be continued employment and workforce to be re-trained for continued employment; the list and number of employees to be retired; the lists and numbers of employees to be assigned part-time jobs and those to terminate their labor contracts; measures and financial sources for implementing the plan. This is responsibility of the employer when the business arise change which greatly affects employee.

Regarding dismissed employee, the employer shall pay a job-loss allowance to the employee who has worked regularly for the employer for 12 months or longer. The job-loss allowance is equal to 1 month of salary for each working year, but must not be lower than 2 months of salary. The working period used for the calculation of job-loss allowance is the total time during which the employee actually works for the employer minus the time during which the employee benefits from unemployment insurance in accordance with the Law of Social Insurance and the working period for which the employer has paid a severance allowance to the employee.

It is important that the seller to retain M&A law firm to assist with the post M&A process to ensure the labour compliance is followed during the integration of labour resources.

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The changes of laws will be monitored by ANT Lawyers. For advice or service request, please contact us via email ant@antlawyers.vn or call +84 28 730 86 529

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