Posted 16.01. 2019 by Cekindo / Last update on 15.05. 2020
If you need skills that are in short supply in Vietnam, or when you would like to gain new ideas and technologies, your business can reap the benefits of employing talents from overseas. When it comes to employment in Vietnam, a company would like to recruit foreigners as their employees or partners, they need to follow certain official processes in order to comply with the Vietnamese laws. Most importantly, under the Law of Vietnam, foreigners without work permits are not allowed to work in Vietnam.
In this article, we will outline what you need to know and do about employing a foreigner in Vietnam, including its restrictions, requirements, mandatory documents, process timeline, etc.
Employing foreigners can be an ideal solution when you cannot hire the right local person for a position that requires specific skills.
Of course, you can train the existing employees to acquire the skill set in order to meet the demands of your business — but, it often takes much longer and might not be cost-effective, as training can be expensive too.
As an employer or a foreign employee, it is critical to understand the background of foreign employment in Vietnam before looking into the details.
First of all, unlike other countries, Vietnamese permits such as visa exemptions, business visa, resident card, etc. will not provide foreigners with any automatic rights to work in Vietnam.
Instead, according to the Labour Code of Vietnam, a work permit is required or each foreign individual before they can take on any sort of employment in Vietnam. There is an exception though — foreigners can undertake employment when they fulfill the exemptions and obtain the proper exemption certificates.
As mentioned above, there are some conditions under which it is possible and legal to work in Vietnam without a work permit. Foreigners do not need to hold a work permit if they are:
On the other hand, if a particular job position requires a work permit, not securing one is not an option. Not only that illegal foreign workers will be deported, but their employers will also be subject to penalty. This ranges as follows:
This concerns cases when foreigners work on an outdated or expired work permit.
Foreigners who wish to work in Vietnam must apply for a work permit from the local Labor Department. Work permits are applied by employers for each role or position and are not transferable between roles or between employers.
In other words, a new work permit is required for each role or position.
Also, apart from work permit, foreigners need to have a business visa and residency permit in order to work and stay legally in Vietnam.
A work permit is mandatory if a foreigner’s employment in Vietnam takes over three months. To qualify for a work permit, Vietnam’s government requires higher education and qualified work experience in order to hire well-skilled foreigners only.
The requirements for a work permit and especially an obligatory length of a professional experience vary depending on the position a foreigner is applying for.
Managerial executives require 3 years of experience. However for non-managerial executives, if the required expertise is not enough, you will only need to prove your MBA (Master of Business Administration) or other relevant documents.
Concerning directors, one-year of experience in the field usually suffices. Last but not least, for investors, a work permit is not required under the Vietnamese Law.
The permit is usually valid up to 12 months and is renewable.
Other requirements of foreigners working in Vietnam include the following:
If you plan to work in Vietnam for no more than 3 months, you will have to acquire a business visa — a work permit is then unnecessary. You will just have to obtain an invitation letter from your business partner or organization in Vietnam.
In case you have not found a business partner in Vietnam yet, Cekindo is a legitimate organization in Vietnam that can help issue an invitation letter.
Learn more in our Advanced Guide to a Business Visa in Vietnam.
A residency permit is just as important as a work permit because it allows foreign citizens to stay in Vietnam while working in the country. Therefore both work permit and residency permit have the same validity.
Continue reading our previous post Introduction to a Temporary Residence Card in Vietnam.
The application process of work permit is as follow:
Employers need to register each employee at the tax revenue department once he or she is hired. Foreign residents in Vietnam has a progressive income tax ranging from 5% to 35%.
Currently, both employers and foreign employees are responsible for health insurance tax (3% from the employer and 1.5% of the employee’s salary). In addition, the employer will also need to pay for the social insurance tax (3.5%) and trade union fee (2%).
Employment of companies must be carried out in accordance with the minimum wage set by the Vietnamese government.
The minimum wage in Vietnam increased by 6.5% in 2018, making the minimum wage range from USD 118 (VND 2.76 million) to USD 171 (VND 3.98 million). According to a proposal by Vietnam’s National Wage Council, the minimum wage increased by 5.3% this year, so currently the minimum wage ranges from USD 126 (VND 2.92 million) to USD 180 (VND 4.18 million) in 2019.
The increased rates of monthly minimum wage in Vietnam in 2020 are detailed as follows, based on the cost of living in each region:
Apart from the minimum wage raise, employers need to pay employees who have been in vocational training a salary that is 7% higher than the minimum salary. Employers are not permitted to reduce employees’ allowances of their overtime, hardships and/or night shifts, even with the increase of minimum wage in 2020.
The unemployment insurance’s capped salary will also increase following the hike of minimum wage:
As an employer, be sure to be aware of the minimum wage requirements to avoid a hefty fine or even severe damage to your business. You can always outsource your payroll and accounting to Cekindo as we will always keep you informed of the latest regulations and changes.
If you would like to know more about work permit, business visa application or foreign employment in Vietnam, contact us now, and we will get back to you shortly.