#11 Foreign employee: Legal issues to consider for foreign employee in Vietnam (Part 2)

Welcome, everyone, to the podcast today. As mentioned in the previous episode, today we will continue to discuss the important and necessary issues for foreign employees who are granted a work permit in Vietnam. In this episode, we will continue to learn about the rights and obligations of foreign employees when working in Vietnam, how to apply for a visa for them and their families, and whether there are any restrictions on occupations for foreign employees.

As in the previous episode, the guest who will discuss the topic today is Mr. Tran Ngoc Thuyet, a senior lawyer at BLawyers Vietnam. Welcome to the podcast, Mr. Thuyet.

Guest

Greetings to all listeners of the podcast, and hello Thuy Linh. I am Tran Ngoc Thuyet, a senior partner at the law firm BLawyers Vietnam. I am happy to be able to continue discussing this topic related to foreign employees in Vietnam.

Host

Hi, Mr. Thuyet. Many foreign employees want to know about their obligations to participate in social insurance and their tax obligations during their stay in Vietnam. Could you please explain this issue to our listeners?

Guest

Thank you for your question. The obligation to participate in social insurance and the tax obligation by foreign employees is regulated as follows:

First, foreign employees are obliged to participate in social insurance (the “SI”), and health insurance (the “HI”) under the Vietnamese law on labor. The insurance contributions for foreign employees are as follows:

Foreign employees working in Vietnam are subject to compulsory social insurance when they have a work permit or professional certificate or practicing license issued by a competent authority in Vietnam and have an indefinite employment contract, or a fixed-term employment contract of at least one year with an employer in Vietnam.

Accordingly, foreign employees working in Vietnam who are subject to compulsory SI shall pay 8% of their monthly salary used to calculate the SI contribution to the pension and death insurance fund on a monthly basis.

Regarding employers, the proportion of SI payments for foreign employees is as follows:

  1. 3% into the sickness and maternity fund;
  2. 0.5% into the fund on labor accident insurance and occupational disease; and
  3. 14% into the pension and death insurance fund.

Regarding HI, foreign employees shall pay 4.5% of their monthly salary into health insurance each month, with the employer paying 3% and the employee paying 1.5%. The monthly salary used to calculate health insurance contributions cannot exceed 20 times the minimum salary set by the Government which can be set at different times.

Regarding unemployment insurance, foreign employees are currently not subject to unemployment insurance contributions under the provisions of the Law on Employment 2013.

Next, foreign employees are required to pay personal income tax (the “PIT”) when working in Vietnam, especially as follows:

For resident individuals, who are individuals present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the first day of presence in Vietnam, the PIT is levied at progressive rates. For example, a monthly taxable income from 0 to 5 million VND (approximately 220 USD) is subject to a tax rate of 5%, from 5 million to 10 million VND to a tax rate of 10%, from 10 million to 18 million VND to a tax rate of 15%, and from 18 million to 32 million VND to a tax rate of 20%.

For non-resident individuals (individuals who do not meet the conditions of resident individuals as mentioned above), the PIT for income from the salary of non-resident individuals is determined by the taxable income from salary by a tax rate of 20%.

Host

During the period that foreign employees have been granted work permits to work in Vietnam, can visas be granted to their families to enter Vietnam to visit, live, study, etc.?

Guest

Under the law, the visa issued to foreign employees in Vietnam who are confirmed to be not subject to a work permit, except in cases where international treaties to which Vietnam is a member have different regulations, is a type of LD1 visa; and the visa issued to foreign employees in Vietnam who are subject to a work permit is a type of LD2 visa.

Foreign employees in Vietnam may be granted a work visa with the code LD1 or LD2 as mentioned above and may apply for a temporary residence permit with the same type (i.e., type of LD1 or LD2 visa). The validity of LD1 and LD2 visas is not more than 2 years, and the validity of temporary residence permits with the code LD1 or LD2 is not more than 2 years.

According to regulations, foreigners who are spouses, or are children under the age of 18 of foreigners who have been granted a type LD1 and LD2 visa, or are foreigners who are the parent, spouse, or children of a Vietnamese citizen are granted a type of TT visa. Accordingly, the validity of a type of TT visa is not more than 12 months.

In addition, foreigners who enter Vietnam with a type of TT visa will be subject to the cases eligible for a temporary residence permit with the corresponding type of TT.

Host

Mr. Thuyet, can you please discuss the rights and obligations of foreign employees during their time of work in Vietnam? Do foreign employees have the obligation to comply with and ensure the implementation of regulations and collective labor agreements of the employer in Vietnam?

Guest

Under the law on labor, foreign employees who have been granted a work permit in Vietnam have the responsibility and obligation to comply with the collective labor agreement of the employer in Vietnam and are also protected by Vietnamese law, except in international treaties in which the Socialist Republic of Vietnam is a party have different regulations. Accordingly, foreign employees must comply with the following obligations as follows:

  1. Implementing the labor contract, the collective labor agreement, and other legitimate agreements;
  2. Complying with the employer’s labor disciplines, labor regulations, management, execution, and observation; and
  3. Implementing the provisions of the law on labor, employment, occupational education, social insurance, health insurance, unemployment insurance, and labor safety and hygiene.

Similar to Vietnamese employees, foreign employees who commit disciplinary violations of the employer’s labor regulations will be subject to disciplinary violations in accordance with the regulations of Vietnamese labor law. Accordingly, the procedures for disciplinary violation against foreign employees generally include the following 6 steps:

Step 1: When detecting a foreign employee who has violated labor discipline at the time of when the violation occurred, the employer shall make a violation minute towards such an employee.

Step 2: After making the minute, the employer shall notify the employee representative organization in the establishment where the employee is a member.

Step 3: If the employer detects behavior of a labor discipline violation after the time the violation occurred, the employers will collect all evidence to prove the employee’s fault. If the violation case has several complicated details and the employee’s continuing to work will lead to difficulty for verification, the employer has the right to temporarily suspend the employee’s assignment.

Step 4: At least 05 working days before the date of the labor disciplinary meeting, the employer shall notify the labor disciplinary meeting parties of these violations.

Step 5: When receiving the employer’s notification, the parties mentioned above shall confirm their attendance to the employer. In the event that one of the parties cannot attend this meeting under the announced time and location, the employer and the employees will agree to change the meeting time and location; if both parties do not agree, the employer will decide the time and location of the meeting.

Step 6: The employer processes the labor disciplinary meeting according to the announced time and location.

Host

Lawyer Thuyet, are foreign employees restricted from working in any occupation?

Guest

According to the labor law in Vietnam, not all job positions are eligible for foreign worker recruitment. Accordingly, foreign employees may only be recruited for management, execution, expertise, and technical labor positions for which Vietnamese employees are unable to meet the needs of production and business.

Therefore, labor law stipulates that employers have the responsibility to explain the need to use labor before recruiting foreign employees and must have written approval of the competent authority as discussed in the previous section.

In addition, contractors, before recruiting and using foreign employees to work in Vietnam, must declare in detail the positions, professional qualifications, technical skills, work experience, and working time required to use foreign employees to implement the contract and must have this approved in writing by the competent state agency.

Therefore, Vietnamese law does not restrict the occupations in which foreign employees are allowed to be granted a work permit; however, there are limitations on job positions for foreign employees as set out in the regulations above.

Host

Do foreign employees who have been granted a work permit in Vietnam have the right to own houses and other property to meet the needs of living, studying, or working in Vietnam?

Guest

Foreign employees shall comply with regulations on land-use rights and housing ownership for foreigners in Vietnam as follows:

Regarding the property of land-use rights, according to the Law on Land 2013, foreign employees are not subject to land allocation, land lease, recognition of land-use rights, or transfer of land-use rights by the State. Therefore, foreign employees are not allowed to transact and own land-use rights in Vietnam.

Regarding property of a house, under the Law on Housing 2014, if foreign employees meet the conditions for granting temporary residence cards for foreigners entering Vietnam with a visa, foreign employees have the right to own housing in Vietnam through the following forms:

  • First, investing to build a house under a project in Vietnam according to the Law on Housing 2014 and other relevant laws;
  • Second, purchasing, leasing – purchasing, receiving as a gift, or inheriting commercial houses including apartments and private houses in an investment project on constructing houses, except in an area that ensures national defense and security under the regulations of the Government.

In addition, foreign employees shall comply with regulations on the ownership of private houses/apartments in Vietnam as follows :

  • First, regarding the number of private houses/apartment ownerships in Vietnam, foreign employees shall not have ownership of them if they exceed the following assessment proportions:
    • First circumstance: owning no more than 30% of the total number of apartments in a building; if an area having a population equivalent to a ward-level administrative unit that has many apartments for sale or lease-purchase, foreign organizations and individuals can only own no more than 30% of apartments of each building and no more than 30% of the total number of apartments of the total number of such buildings;
    • Second circumstance: if only one project has a number of private houses under 2.500 units, foreign organizations or individuals can only own no more than 10% of the total number of private houses in such a project;
    • Third circumstance: if one project has a number of private houses equivalent to 2.500 units, foreign organizations or individuals can only own no more than 250 units;
    • Fourth circumstance: if there are two or more projects with the total number of private houses in the projects less than or equal to 2,500 units, foreign organizations or individuals can only own no more than 10% of the number of each project.
  • Second, if foreign employees inherit or are given a number of houses that exceed the number of private houses/apartments owned mentioned above, the foreigners are only entitled to the value of the excess number of such houses.
  • Third, if foreign employees are allowed to own housing according to agreements in transactions on a house purchase, lease-purchase, or as a gift or inheritance, and do not exceed the limitation time of 50 years from the date of being granted the Certificate, if requested, it can be extended according to regulations of the Government; the term of house ownership must be clearly stated in the Certificate.
  • Fourth, before the expiration of the house ownership under the law, foreign employees can give as a gift or sell the house to subjects eligible to own a house in Vietnam; if they exceed the time limit for owning a house that they do not sell or give as a gift to the house, such house will be owned by the State.

Accordingly, foreign employees shall satisfy the following conditions to have ownership rights of private houses in Vietnam: (i) being foreigners who are allowed to enter Vietnam, (ii) owning a house through the formality that foreigners are permitted to own as mentioned above, and (iii) complying with regulations on owning a house for foreigners under the laws of Vietnam.

Regarding movable property, foreign employees have the right to own and comply with the relevant regulations on the establishment of ownership, if any.

Host

Thank you very much, Lawyer Thuyet, for taking the time to share with us these particularly important and necessary legal content for foreign employees and employers in Vietnam. We hope the information that Lawyer Thuyet and I have discussed will provide our listeners with a comprehensive overview of the legal regulations related to foreign employees in Vietnam.

Guest

Thank you, Thuy Linh, for joining me to discuss an important topic related to labor in this episode. I hope the information I have shared has provided our listeners with a comprehensive overview of the legal regulations on the use of foreign workers in Vietnam.

Host

Thank you so much, Lawyer Thuyet. The Lawyers Talk Podcast will stop here, and we thank you for your interest in listening. Goodbye, and see you again in the next podcast.

If you have any questions or concerns, please leave a comment below. For more information about BLawyers Vietnam, please see our website below The Lawyers Talk Podcast screen. Goodbye, and see you again.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 20 March 2024

Host

Thanhnguyen
Thanh Nguyen

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Ls Linhnguyen
Linh Nguyen

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Featured Guest

Thuyet Tran
Thuyet Tran

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