Long-awaited circular clarifies new regulations for foreign workers

27 Feb 14

VIET NAM

IMPACT – HIGH

What is the change? The government has released a long-overdue guidance circular to clarify work permit procedures under a law that took effect in November 2013.

What does the change mean? The circular clarifies timing related to the requirement that companies make an annual demand and seek approval from the People’s Committee for each foreign employee. The guidance also lists the documentation employers must submit for managers and for the newly-created categories of “specialists” and “technical workers.”

  • Implementation timeframe: March 10.
  • Visas/permits affected: Work permits.
  • Who is affected: Companies employing and assigning foreign nationals.
  • Impact on processing times: Companies must submit their demand at least 30 days before a foreign employee’s start date. Only after the demand is approved will the Labor Department begin to consider work permit applications.
  • Business impact: Companies will be subject to the new annual foreign employee demand reporting and approval process, and strict document requirements.
  • Next steps: Businesses must plan for the new processes when considering foreign employee assignments in Vietnam.

Background: On Sept. 6, 2013, the Ministry of Labor, Invalids and Social Affairs (MOLISA) issued Decree 102, changing the law on employment of foreign nationals in Vietnam. The new law took effect on Nov. 1 without further interpretive guidance from the government, throwing the work permit process into uncertainty, and in some cases putting applications on hold.

On Feb. 24, the government published the guidance circular detailing new procedures for companies using foreign employees. Here are the highlights:

  1. Employers must submit a demand for foreign employees every year (and during the year if demands change) to obtain approval for each position that a Vietnamese worker cannot fill. Employers will submit these demands to the Provisional Labor Department, which will forward them to the People’s Committee in the jurisdiction of the company’s head office. The timeline requires that an employer lodge a demand at least 30 days before a foreign employee’s anticipated start date and the Labor Department will respond with the People’s Committee’s approval or denial within 15 days.
  2. The guidance also lists the documents that employers must submit to support work permit applications for foreign employees in the new categories of “specialists” and “technical workers.”

Specialists must have:

  • a minimum of a university degree and at least five years of work experience in the same field as the job, or
  • a document by an overseas organization, or
  • an overseas employer certifying that the employee is a specialist.

Technical workers must have:

  • a letter from an overseas employer or organization certifying they have trained for at least one year in the technical field matching the job position, and
  • a testimonial by a current or former employer demonstrating a minimum of three years of experience in a related technical field.

For managers and executives:

  • The guidance eliminates a previous requirement of a university degree or five years of work experience.
  • Employers must submit a document to verify the manager or executive’s position. This document may include an expired work permit or labor contract from any country, or an assignment letter.
  • Alternatively, any document from a former employer confirming that the worker was a manager or executive will suffice.

BAL Analysis: Businesses will gain certainty as to the rules, but will have to grapple with new procedures, potentially longer lead times and new scrutiny by the People’s Committee. The guidance circular is silent on what criteria the People’s Committee will apply in making its decisions. An additional guidance circular that is promised in March is expected to lay out procedures for companies in qualified industries to obtain exemptions from work permits for corporate transferees.

This alert has been provided by the BAL Global Practice group and our network provider located in Vietnam. For additional information, please contact your BAL attorney.

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