4 Major Labor Issues in Vietnam

Following Vietnam’s most recent labor law that brings different benefits to employees, this is how those changes will affect business establishments in the country.

Late last year, the Vietnam Business Forum organized a discussion with the Ministry of Labor, Invalids and Social Affairs (MOLISA) to discuss several labor issues that have been plaguing the country’s employment industry during the Annual Vietnam Business Forum in 2016 in Hanoi, Vietnam.

Below are the four major issues tackled during the forum with their impact on doing business in the country:

Minimum Wages

As stated under the MOLISA, minimum salaries in several working regions will be increased to the range of VND180,000 to VND250,000 or about US $8 to US $12 in 2017. Thus, employers were well informed to get prepared for such change.

Working permits for foreign employees

Also, the government will issue a new circular for work permit requirements soon. So far, the idea of managers who are allowed to work in Vietnam is only limited to the barely-defined “managerial positions” under the Enterprise Law of Vietnam (EL). As a result, only a few employees qualify for the position.

Nevertheless, employers can still have the opportunity to expand the definition of managerial position in their license or encourage the MOLISA – the agency issuing work permit, in an aim to accept them as experts with any of the following conditions:

• Acknowledgment by company's headquarters as an expert
• Obtainment of a bachelors degree or equivalent
• Having at least three years' experience in the relevant industry.

Overtime Job

Following a request for additional overtime hours, the MOLISA recently confirmed that the amended Labor Code will address overtime job issue. Particular overtime hours differ by industry and are subject to certain agreements between employees and employers. The modification will bring more benefits to the manufacturing industry such as garments and construction, where huge amounts of overtime are being accumulated during peak seasons.

Social Insurance for Foreign Employee

From January 1, 2018, all employees having a labor term of one month or more, including foreign employees, will be required to pay the mandatory social insurance. However, there is no clear guidance regarding the implementation. The MOLISA claimed that the government is currently negotiating with other countries to let foreign employees to include the contribution period of the Vietnamese social insurance to the overall social insurance contribution time. This is to allow foreign employees to enjoy the benefit in their home countries.

Companies should consider such type of payment when calculating benefits due to foreign employees as well as when developing business plan.

Lei Hoang


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