Exemption Of Work Permit By Internal Corporate Transfer

Under the applicable labor laws of Vietnam, in order to work in this country, the foreign nationals must, besides satisfying with other conditions, obtain a work permit issued by the competent authority in Vietnam. Having a work permit is likely to be the biggest hindrance to the foreign nationals. However, the foreign nationals must avoid the need for work permit through the exemption case: internal transfer within an enterprise.

According to Decree No. 102/2013/ND-CP of the Government dated 5 September 2013 implementing the Labour Code on foreigners working in Vietnam, foreigner internally transferring within an enterprise 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 recruited [or employed] by the foreign enterprise at least twelve (12) months prior to such transfer. The foreign nationals who are subject to this definition will be exempted from work permit.

Health check-up for work permit: HIV testing result is required?

In Vietnam’s practice, when guiding the foreign employee to have health check, the medical centers often require for the blood test and the HIV testing result is also shown on the health check certificate. That certificate is submitted to the provincial department of Labor, War Invalids and Social Affairs for work permit application. However, that practice does not comply with the laws of Vietnam.

Under the applicable laws, the HIV testing is conducted on the basis of voluntariness of the person to be tested and the compulsory HIV testing in the specific cases required by the laws. The employee has the right to refuse this test. The employer may not request a job applicant to have an HIV test or produce an HIV test result, or refuse to recruit a person on the ground that such person is infected with HIV, except for the case specified by this Law.

The benefits of a definite-term labor contract employee

Under the Labor Code of Vietnam, when the employer signs a definite-term labor contract with a 12 month fixed term with an employee and this employee will be entitled to the benefits in accordance with this type of labor contract as follows:
Firstly, the laws of Vietnam require the employer and the employee to participate in compulsory social insurance, health insurance and unemployment insurance. The employer and the employee must together contribute 32.5 % of the employee’s gross salary to the social insurance funds.

The responsibility of the Employer for PIT payment

Under the applicable laws on Personal Income Tax (“PIT”), the Employer as the income-paying organization who pays income subject to PIT, must conduct tax declaration and tax finalization in accordance with the guidelines on procedures and documentation in the documents providing guidelines on tax management.

The principles of tax declaration are notably as follows:

i.              The Employer withholds PIT make tax declaration on a monthly or quarterly basis. No tax declaration is required if no PIT is withheld in the month or quarter by the income-paying organization or individual.

The responsibility of the Employer for the staff’s PIT payment

Under the applicable laws on Personal Income Tax (“PIT”), the Employer as the income-paying organization who pays income subject to PIT, must conduct tax declaration and tax finalization in accordance with the guidelines on procedures and documentation in the documents providing guidelines on tax management.

The principles of tax declaration are notably as follows:

i.              The Employer withholds PIT make tax declaration on a monthly or quarterly basis. No tax declaration is required if no PIT is withheld in the month or quarter by the income-paying organization or individual.

The regulations on occupational accident and disease in Vietnam

Under the Law on Social Insurance, the regime of compulsory social insurance and health insurance covers occupational accident and disease and when the employer pays the compulsory social insurance and health insurance for the employees, the employee will be entitled to the regime of occupational accident and disease.

The employer who is subject to the regime of compulsory social insurance, must pay the social insurance for its’ employee and in the case the employee is suffered occupational accident and disease, the social insurance fund will be responsible for payment of the medical expenses in accordance with the laws on the health insurance. Under the current Law on Social Insurance, the regime of health insurance covers occupational accident and disease and the employees participating in compulsory social insurance are entitled to enjoy this regime.

Regulations on work permits in Vietnam: What you need to know!

1.                 Written approval of the President of the provincial people’s committee (PC) to the employer for the employment of foreign employees:

Under the applicable regulations, the employer has to report only to the Department of Labor, War Invalid and Social Affairs (DOLISA) about the labor use situation in the next year. That is only informing procedure, not really affected to the employer.

However, the new requirement on written approval of the PC president may be a huge obstacle and more paperwork for the employer who wants to recruit foreign employee. This can be considered as a new “baby license”.

Obligation for payment of severance allowance

Under the regime of unemployment insurance, the employer is not subject to this regime if the employer has less than 10 employees. Many employers who has never contributed to unemployment insurance regime for any of its’ employee question whether they still have to have to pay severance for its’ employees or not?

According to Article 48 of the Labor Code, the employer is responsible to pay a severance allowance to any employee who has regularly worked for a full twelve months or more and is a subject as specified under the Article 36 of Labor Code. The severance allowance shall be one half of one month’s wage for each year of employment.

How to dismiss a foreign employee when he/she has been back his/her home country

1.                  Right to terminate labor contract of the employer:

For the case of a foreign employee who has not come to work for months and is now back to his/her home country, the employer is allowed to terminate his/her labor contract since under the labor law of Vietnam, if the employee abandons his/her job at his own will for an aggregate number of five days in a month or an aggregate number of 20 days in a year with plausible reasons (According to Article 126.3 of Labor Code 2012), the employer shall be entitled to dismiss that employee. Actually such employee has abandoned his job for more than 20 working days as from the signing date of his contract so legally speaking, the employer can dismiss such employee.

The conditions for the foreigner to be issued a work permit

Under the new legal regulations on work permit in Vietnam, the conditions for the foreigner to be issued a work permit are the following:

1. Have full legal capacity for civil acts as prescribed by law.

2. Be in good health as necessary to satisfy the job requirements.

3. Be a manager, executive director, expert or technician.