“Job referral services have widely developed in recent years due to demand for recruiting professionals by enterprises. Job referral service is currently a bridge between the employees and employers in the market. This service helps enterprises in solving the problem of finding a suitable candidate for recruitment and helps employees in finding a suitable job. Since demand for jobs associates with social security and economic development of a nation, this business field has been under scrutiny by the competent authorities including the Labor authority. Therefore, this article shall provide general insights to enterprises regarding the scope and legal requirements to be met in the course of initial establishment and following common practices while running the business.”
In accordance with the labor regulations, job referral service allows enterprises to perform the following activities:
Advisory including the following activities:
To run a job referral service, enterprises must meet the following conditions regulated by laws:
The enterprise needs to have a lease agreement for a term of more than 36 months with a lessor for establishing the headquarters at the location where the enterprise operates and is registered under the competent state agency. If the lessor sub-leasing the place has a previous lease agreement with the investor or other third parties, the lessor has to give commitment at the time of signing the sub-lease contract that such leasing term with the investor or other third parties is guaranteed for least 36 months (03 years) for leasing the same location to the business.
Please note that the location of job referral service should be at a reasonable lease area to accommodate the internal departments of the business.
Thus, while choosing the location, the enterprise should consider the contract terms, lease area, whether the lessor is complying with the Vietnamese laws in the process granting license.
Escrowing at a commercial bank: Escrowing is one of the requirements which the job referral service should meet. This escrowed amount will be used in case the business does not fulfill the obligations as stated by the competent authorities.
According to labor laws and regulations, enterprises must open an escrowed account worth VND 300,000,000 (300 million VND) at a commercial bank or a branch of foreign bank operating legally in Vietnam. This escrowed amount will be temporarily locked or “frozen” by the commercial bank in accordance with the margin regulations. The enterprise is allowed to withdraw this escrowed amount only when they have written approval from the competent state agencies.
In some cases, foreign bank branches where enterprises previously opened bank accounts may refuse to carry out escrowing procedures. Since this procedure is applicable only to certain businesses and is not a common service provided by foreign bank branches. Therefore, in order to avoid hampering the process of applying for operation licenses, and save time and costs, enterprises should work with the commercial bank in advance on opening an escrowed account to smoothly carry out the licensing activities at the labor management department.
Please also note that after beginning the operations, if there is change in the enterprise name and headquarters address, the enterprise has to contact the commercial bank to update shortly.
Arranging and selecting personnel: When applying for a license to operate job referral service, enterprises should keep in mind the conditions that its legal representatives have to meet. The legal representatives of the enterprise must
Thus, to apply for licenses, the legal representatives should prepare documents such as judicial record, professional qualifications, professional certificates or experience in managing job referral services and/or labor supply to show that they have met the conditions of the law as mentioned above or to prove that they meet the requirements when there is inspection by labor agencies or any other competent state agencies.
For other personnel, businesses need to segregate personnel into different departments (such as consulting department, accounting administration department etc.) to ensure smooth process for licensing and conducting business activities. Enterprises should prepare personnel’s documents on professional qualifications, health examination papers, background check and other related documents to save time and provide an appropriate explanation if there is any inspection at the headquarters performing job referral services by labor competent authorities (if any).
After being granted a license to operate job referral services, enterprises should comply with the following procedures:
Thus, the field of job referral service is strictly governed and managed by state agencies. Thus, when doing business in this field, enterprises need to pay special attention to issues of rental location, term of lease contracts, escrowing with a commercial bank, conditions that legal representatives must meet, obligations on notification, and periodical reporting to ensure best compliance with legal regulations.
Writing time: 17 August 2021
The article is based on applicable law at the time noted above and may no longer be relevant at the time the reader approaches this article due to the change in applicable law and the specific case in which the reader wishes to apply. Therefore, the article has only reference values.