On June 16, 2017, at the mid-term 2017 Vietnam Business Forum with the subject of “Strengthening the association between foreign investment and domestic investment zones in the new context of the global economy”, several issues relating to expats working in Vietnam were raised by the Human Resources Sub Working Group, specifically:

Opinions regarding the required documents in the application file for work permits under the category of “intra-corporate transferee”

According to Decree No.11/2016/ND-CP and Circular No.40/2016/TT-BLDTBXH, if the expat working in Vietnam is under the category of an intra-corporate transferee, his/her work permit application file shall include “a document proving that the expat has been recruited by the foreign enterprise for at least 12 months before working in Vietnam”. This provision leads to many cases under which expats in a multinational corporation/enterprise do not meet the requirements for work permit issuance under the category of “intra-corporate transferee” if they worked at a subsidiary or at a different branch of the group/enterprise. This is due to the fact that the licensing authorities (the Department of Labor, Invalids and Social Affairs or the Management Board of the Export Processing and Industrial Zones Authority) only accept work experience at the parent company of the commercial presence in Vietnam.

According to other the provisions of Decree No.11/2016/ND-CP and Circular No.40/2016/TT-BLDTBXH regarding cases where the expat is working in Vietnam as an intra-corporate transferee, “a document of the foreign enterprise stating that the expat is appointed to work at the commercial presence in Vietnam” (also known as the appointment letter) is a required document in the application file for a work permit. Accordingly, the licensing authority requires the appointment letter to be signed by the head of the parent company of the commercial presence in Vietnam. However, this is not in compliance with the internal management policies of multinational corporations/enterprises in practice, because (i) the parent company of the commercial presence in Vietnam is only a branch of company groups owned by the multinational corporation/enterprise. Therefore, such parent company has no authority to approve the letter of appointment under the provision of an intra-corporate transferee, or (ii) the letter of appointment is approved by the Global Relocation Manager or the Human Resources Division of the headquarters or group of companies owned by the multinational corporation/enterprise which is not necessarily the parent company of the commercial presence in Vietnam.

Therefore, in such cases, enterprises have no choice but to apply for work permits for these employees with a labor contract (i.e. the employees are required to sign another labor contract with the commercial presence in Vietnam, besides the other labor contracts signed with subsidiaries or other branches of the multinational corporation/enterprise).

Opinions regarding the definition of “manager and executive”

The definition of “manager, executive” in Decree No.11/2016/ND-CP is different from those of Circular No.03/2014/TT-BLDTBXH (guiding the implementation of Decree No.102/2013/ND-CP) by clearly distinguishing the definition of “manager” from “executive”. Accordingly, the “manager” is an individual holding the manager title and is able to sign contracts or engage in transactions on behalf of the company as provided in the company’s charter. By citing the provisions of Enterprise Law, Decree No.11/2016/ND-CP specifies that if an individual is not the legal representative of the company, he/she will not be considered as a manager (this is different from the former definition of “manager, executive” provided by Circular No.03/2014/TT-BLDTBXH, which is collectively defined as “the person who is directly involved in the internal management, including leading the organization, enterprise or affiliate units of such organization or enterprise; supervising and managing the tasks of specialized employees, managing employees or other supervising employees”).

The provision of Decree No.11/2016/ND-CP has made many enterprises unable to obtain work permits for expats holding positions of “Finance Director”, “CEO” and other management under the category of “manager, executive”, because such positions or the name of the expat is not provided within the company’s charter. Meanwhile, it is unlikely for enterprises in Vietnam to state the positions or the names of the expats holding positions under its own charter. Therefore, to overcome such an obstacle, enterprises have to obtain a work permit for the expats under the category of “expert”, which results in many additional documents (degrees, work experience confirmation letter, etc.). More importantly, the job title of the expat must also be changed to comply with the “expert” category. However, the new job title is often not suitable within the corporate structure (e.g. people may mistake those positions with middle managers, such as department/division directors), and impacts the senior managers of these enterprises.

Amending the definition of “manager, executive” also affects expats whose work permits were issued under the prior regulations, as they may no longer qualify for renewing their work permit under the new definitions of “manager” or “executive” provided in Decree No.11/2016/ND-CP. Therefore, when the current work permit expires, they will have to supplement additional documents to continue working in the position they previously were licensed for.

Opinions regarding requirements on professional qualifications applied to categories of “expert”, “technical worker”

On July 8, 2014, Resolution No.47/NQ-CP of the Government’s regular meeting on June, 2014 established an amendment to the requirements and conditions for issuing work permits to expats under the categories of “expert” and “technical worker”. Specifically, the Resolution only required expats to meet the requirements on either professional qualifications or work experience of the expected position.

However, Decree No.11/2016/ND-CP revoked the provisions of Resolution No.47/NQ-CP and required expats applying for a work permit as an “expert” or a “technical worker” to meet the both requirements, which means they are now required to submit documents to prove their professional qualifications as well as work experience. Such a provision is considered “a step backwards” in the context that Vietnam is making efforts to reform administrative procedures and integrate into the world.

If you have any questions or concerns about issuing work permits for expats or any labor regulations in Vietnam, our experienced labor and employment lawyers are always available at info@letranlaw.com.