Vietnam - Tough work for foreign working pool

Notwithstanding the positive attempts made by the government in order to establish the appropriate legal framework in this field, a number of provisions of Decree 46 have been recently criticised for being unclear, or impracticable or inappropriate.

Foreign workers are an integral part of boosting the skill sets of local labourers.

Foreign labour, a key feature of the nation’s business landscape, is set to get a new face.

It follows Decree No. 46/2011/ND-CP, supplementing and amending some articles of Decree No. 34/2008/ND-CP on the recruitment and management of foreign labour (“Decree 46”), taking effect on August 1, 2011.

To date, Decree 46 has faced great foreign and local business community criticism, while the draft circular guiding the implementation of the Decree, prepared by the Ministry of Labour, War Invalids and Social Affairs (“the Circular”), seems to be far from responsive to the expectations of the general business community.

This paper serves to outline the controversial issues pertaining to the new Decree and suggests certain points that should be taken into account when finalising the Circular. Firstly, a number of positive points introduced by Decree 46 will be discussed.

An open approach to the recruitment of foreign labour

Decree 46 gives Vietnamese business households (i.e. not just incorporated entities) and individuals the opportunity to access labour with high qualifications by conferring on them the right to employ foreigners.

The expansion of the business entities who are allowed to employ foreigners reflects the government’s commitment to the equal development of all economic participants, helping the business households and individuals enhance their competitive ability in terms of manpower.

In comparison with the Decree No. 34/2008/ND-CP (“Decree 34”), Decree 46 provides the grounds for certifying the technical qualifications of foreigners are tailor-made in a more flexible way which allows the foreigner without specialist certificates or highly technical qualifications to be able to substitute such certificates with some common documents such as a list of football clubs that the foreigner may have played for, or perhaps an air transport licence certified by a Vietnamese authorised agency.

In addition, Decree 46 expresses what was implied under Decree 34 on the provision regarding the certification of the foreigner’s work experience. Decree 34 required that the foreigner’s work experience must be certified by the foreign state authorities. The wording employed in this provision of Decree 34 might lead to the general understanding that the foreign state authorities of the foreigner’s nationality need to certify that he or she has at least five years’ experience in an occupation or trade, in operating production or in managerial work.

With this way of understanding, the requirement under Decree 34 would be infeasible in certain circumstances because not in almost countries, the employee’s work experience can be certified by the state authorities. Nonetheless, the Vietnamese authorities have not interpreted the Decree 34’s provision in that way.

According to the document guiding the dossier for recruitment and management of foreigner working in Vietnam issued by the Department of Labour, War Invalids and Social Affairs of Ho Chi Minh City, the foreigner’s work experience must firstly be certified by the organisation where foreigner has actually worked, the foreign competent state authority then certifies the signature and seal of such organisation, in other word, certifies the legal status of such organisation.

In line with this practical interpretation, Decree 46 lifts up the veil of Decree 34’s provision by providing certification of foreigner’s work experience by the enterprises, agencies, and organisations where foreigner has actually worked.

Another positive sign from the procedural perspective is that Decree 46 reduces the time limit for issuance/extension of a work permit (WP) from 15 days to 10 working days, and three working days for re-issuance of a WP calculated from the date of receipt of a complete and valid application dossier.

The newcomers on the block

In order to prevent foreign contractors from bringing unskilled or unsuitable foreign labour to Vietnam to serve on their projects, Decree 46 introduces, for the first time, regulations regarding labour for foreigners entering Vietnam to perform projects.

The supplement provided for in Article 6(a) of the Decree 46 requires both the investors and the contractors to procure the manpower planning for their project from the beginning of bidding stage. The manpower planning must be prepared in accordance with the relevant laws of Vietnam, taking into account the use of Vietnamese labour as a priority.

During the performance of the projects, the Department of Labour, War Invalids and Social Affairs is responsible for coordinating with security agencies and relevant authorities to investigate, on a quarterly basis, the implementation of the manpower planning to ensure compliance by the investors/contractors.

Decree 46 also clearly outlines the responsibility of the Ministry of Public Security (MPS) in managing foreign labour. Accordingly, the MPS now takes charge of directing and providing guidelines for authorised security agencies in order (i) to grant visas for foreigners after they receive a WP, extending a WP, or reissuing a WP and (ii) not to grant visas for foreigners working in Vietnam without a WP, or if the WP is invalid and annulled. 

Consistent with the new circumstances of a WP exemption mentioned in Article 9(1)(i), whereby a foreigner who undergoes an internal transfer within an enterprise operating in the services covered by the Vietnam’s commitments to the World Trade Organization can be exempted from a WP requirement, the Ministry of Industry and Trade is responsible for providing guidelines on the grounds, processes, and procedures for defining if the foreigners can claim such internal transfer.

Controversial issues on the boil

Notwithstanding the positive attempts made by the government in order to establish the appropriate legal framework in this field, a number of provisions of Decree 46 have been recently criticised for being unclear, or impracticable or inappropriate.

Who is eligible for a WP exemption?

In particular, the situation of the chief of representative office of a foreign legal entity in general, or of a foreign non-governmental organisation (NGO) is unclear.

Article 9(1)(h) provides a new circumstance whereby a foreigner is not required to obtain a WP when working in Vietnam if he or she is “Head of a Representative Office, Head of a Project Office, or a foreigner assigned to represent all activities in Vietnam by a foreign NGO”.

The wording used in this provision can be interpreted in two different ways. The first way is that one may understand that the provision allows the head of representative office or project office of a foreign company or of a legal entity of similar nature to be exempted from WP requirement. Another way is that one may narrowly understand that only the head of the representative office or project office of a foreign NGO can benefit from this exemption.

By the virtue of the ambiguity of this provision, it remains unclear whether or not a foreigner working as head of a representative/project office of a foreign company falls under the scope of application of the Article 9(1)(h).

Vocational contract: an appropriate interpretation of the Labour Code’s provisions?

Decree 46 requires the employer who wishes to apply for an extension of a WP for his foreign employee to include, inter alia, a copy of a vocational contract signed between the employer and a Vietnamese worker in order to replace the position of the foreign employee. This new provision has become the heart of debate in various circles and is criticised as being illogical and impracticable, and yes it is. Even some officials, when being questioned about this issue, responded that even though this new requirement was an appropriate interpretation of the Article 132 of the Labour Code, it remained impracticable and illogical for an enterprise that wished to extend a WP for its employee in a high-profile position such as a CEO or CFO.

Grace period: an obsolete heritage

According to Article 9(1)(a) of Decree 46, “a foreigner entering Vietnam to work for a period of less than three months” is not required to obtain a WP. This is not a new provision introduced by Decree 46, it has been in place since Decree 34. Nonetheless, no concern has been raised from the business community in regard to this provision, since it represents no conflict to the interests of the business community.

However, in view of the overall rationale of the new Vietnamese regulations on the foreigners working in Vietnam, this grace period is not found to be fully compatible with the spirit of the new regulations. It is said that the grace period of three months without a WP requirement is in line with the Article 133(1) of the current Labour Code, which only imposes the WP requirement on a foreigner who works in Vietnam for a period of three months and more.

At the same time, the draft amendment clause (Article 194(6) of the second draft of the new Labour Code) provides that a foreigner entering Vietnam to work for a period of less than three months to ‘fix the complicated technical issues that adversely affect or potentially affect the business and that the Vietnamese experts and foreign experts in Vietnam have failed to fix’ is not required to obtain a WP. The draft amendment aims at preventing a foreigner from making use the grace period of three months free from the requirement to obtain a WP for doing ordinary jobs in Vietnam.

Although the new Labour Code should be passed in the first part of 2012, the draft amendment itself expresses the lawmakers’ knowledge of the inherent defect of the provision on the grace period. From this point of view, the provision stated in Article 9(1)(a) is likely an obsolete carryover from an earlier 2002 version of the Labour Code, and thus, a further supplement to this provision by way of detailed interpretation under a circular is encouraged.

Process and procedure for recruitment of a foreign worker

Numerous enterprises and associations have raised their concerns about the requirement for the publishing of their recruitment information in a central and a local newspaper at least 30 days in advance of each recruitment. They have strongly criticised this requirement, saying it unnecessarily prolongs the recruitment process, and that they may face legal proceedings brought by a Vietnamese candidate in the event they may have failed to comply with this requirement.

Nonetheless, as mentioned by some officials, this requirement has been introduced since the Decree 34. The slight difference between the Decree 34 and the Decree 46 in this respect is that while the former required the publishing of the recruitment information in either a central newspaper or a local newspaper, the latter requires the publishing being made in both a central and a local newspaper. Logically, while the enterprises can comply with the requirement of the Decree 34, it is unjustifiable that they find themselves in difficulty in order to comply with the provision relating to the publishing of recruitment information under the Decree 46.

With respect to the process of the recruitment of a foreign worker, the provision that should be deemed unreasonable, in the author’s opinion, is the requirement for the annual registration of an employers’ demand for foreign labour as set forth in Article 19(7). Accordingly, employers must annually register their demands on recruiting and employing foreign employees with the Department of Labour, War Invalids and Social Affairs.

In the case that employers want to change the demand on using foreign employees, they must register for supplementing the demand for recruiting and using foreign employees within time limit of 30 days prior to the publishing of recruitment information. This requirement creates an unnecessary burden on the employers while it does not make the administrative management of foreign labour any simpler. It is recommended that, except for the case of the foreign contractors performing their projects in Vietnam, the enterprises should be free in manage their manpower planning without any registration requirement with any administrative authorities.

So there you have it. It is undeniable that new regulations on foreigners working in Vietnam represent various positive signs reflecting the evolvement to the perfection of the regulations in this field. It is, however, hard to have a perfectly delicious cake after your first time making it. But, if you have the second chance to make it, you will make it better.

Tony Nguyen

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