How to Set-Up an Employment Services Business?

How to Set-Up an Employment Services Business?
How to Set-Up an Employment Services Business?

With a population ranked 15th globally (2021) and by making it to top 20 economies in the world in FDI attraction (UNCTAD), the labor market in Vietnam is increasingly resourceful, especially in bustling cities like Ho Chi Minh City and Hanoi. Besides employment service centers managed by the Government, many investors have been operating in employment services in Vietnam.

In this article, we analyze the conditions for investing and setting-up a business operating in the field of employment services.

According to Vietnam’s investment law, foreign investors doing business in Vietnam must satisfy at least 2 conditions:

(i) Market access conditions: According to the WTO schedule of commitments, Vietnam is not yet allowing foreign investors to operate in this field in Vietnam. So, investors need obtain approval from authorities in charge of this business.

(ii) Sector conditions: According to the investment law, employment service business (67) is a conditional business line. So, an enterprise can operate in this field only when it is granted a sub-license according to Decree No. 23/2021/ND-CP.

Steps to set-up a company operating in employment services:

Step 1: Obtain an ‘Investment Registration Certificate (IRC)’ specifying the objective of operating in the field of employment services (for direct investment).

Step 2: Establish an employment service business (ERC)

Step 3: Apply for the sub-license to operate in employment service. In fact, before issuing a license, the ‘Department of Labor, War Invalids, and Social Affairs’ goes directly to the operation headquarters to check the conditions that need to be met according to regulations.

Step 4: Announcement of operation:

  • From the date of issuance of the license, the enterprise must publicly announce on the mass media about the license, location, field of operation, and name of the legal representative performing employment service activities, their phone number, e-mail, and website within 20 working days. The announcement can be made on the company website, or published in newspapers or television programs, depending on the needs of the enterprises.
  • From the date of commencement of employment service activities, enterprises are responsible for notifying the ‘Department of Labor Invalids and Social Affairs’ in writing about the location of head office 10 working days prior to beginning operations.

Step 5: According to the regulations, if case an enterprise establishes a posting platform allowing candidates and/or other businesses to post job advertisements on an electronic network/platform, the enterprise must register such e-commerce platform at the Ministry of Industry and Trade.

Conditions for obtaining an employment service business license:

  • The applicant must show a head office or branch to organize employment service activities owned by the enterprise or leased by the enterprise under a contract of 03 years (36 months) or more from the date of submission of application to the ‘Department of Labor, Invalids and Social Affairs’.
  • The enterprise must make a deposit of 300,000,000 VND (Three hundred million VND). The deposit must be made at Vietnamese commercial banks or foreign bank branches legally established and operating in Vietnam.
  • The legal representative of the enterprise providing employment services must ensure the following conditions:
    • Must be an enterprise manager according to the provisions of the enterprise law.
    • Must have a university degree or higher or have directly worked as a professional or managed employment or labor supply services for a period of 02 years (24 months) or more within 05 years preceding the license application. The bachelor’s degree does not require a special major to be approved.
    • Must not fall into one of the following cases: currently being examined for penal liability, being held in temporary detention, serving a prison sentence, serving administrative handling measures at a compulsory detoxification establishment, compulsory educational institution, fleeing the place of residence, having limited or incapacitated civil capacity, having difficulty in cognition or behavior control, banned by the court from holding certain positions or practicing certain professions or doing work related to employment services.

The requirement for a legal representative is an additional requirement compared to the previous regulations. Therefore, FDI companies are forced to hire personnel who meet these conditions in case their internal personnel cannot meet them.

In which cases is the license re-issued?

  • The enterprise changes one of the contents of the issued license, including: company name, or address of the head office (but still located in the province where the license was granted), or the legal representative of the enterprise.
  • License is lost.
  • The license is damaged causing lack of full information on the license.
  • Change of address of the head office to a different province than the place where the license was granted.

Important Rules:

  1. The maximum license term is 60 months (5 years) and can be renewed multiple times. Each extension is up to 60 months (5 years).
  2. The certified copy of the original license or decision to revoke the license must be posted at the enterprise’s head office.
  3. The employment status of employees introduced or supplied by the enterprise must be monitored for at least 03 months or the duration of the labor contract (for labor contracts under 03 months).
  4. The labor data registered for job counseling and introduction must be prepared, updated, and managed. Employers must register to recruit workers and share such details when required by competent state agencies.
  5. Enterprises partly or wholly providing employment services by electronic means connected to the Internet, mobile telecommunication networks or other open networks must comply with regulations of e-commerce.
  6. Employment service prices must be formulated and publicly posted at the enterprise’s headquarters in accordance with the law.
  7. The situation of employment service activities must be reported once every six months or annually to the ‘Department of Labor – Invalids and Social Affairs’ where the enterprise’s head office is located. The 6-month report must be sent before June 20 and the annual report before December 20.
  8. Incidents related to employment service activities must be promptly reported to the competent local state agencies or must be reported at the request of state management agencies in charge of employment services activities.

Employment service activities fall under conditional business lines. Thus, enterprises need to meet these conditions for their establishment and operation. In case of any related questions, please contact PLF for support and solutions.

This article is based on the current laws at the above recorded time and may no longer be relevant at the time readers access this article due to changes in applicable law and specific cases which the readers want to apply. Therefore, this article is for reference only.

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