1. Onboarding Procedures for Foreign Employees in Vietnam
Foreign employees wishing to work in Vietnam must satisfy the licensing and permit requirements in accordance with applicable laws and regulations. The employer engaging foreign employees is required to carry out the following procedures:
- Register for Entry into Vietnam for foreign employee not currently in Vietnam;
- Apply for a Work Permit or a Work Permit Exemption;
- Apply for a Temporary Residence Card or Work Visa for foreign employee;
- Execute a labor contract, unless the foreign employee is internally transferred from an overseas parent company;
- Register for compulsory social insurance for the foreign employee;
- Registration for personal income tax (“PIT”) for the foreign employee (if the employee has not yet been issued a PIT code in Vietnam).
Specifically, the procedures that the employer must undertake to ensure that the foreign employee may lawfully work in Vietnam include the following steps:
Step 1:
In cases where the foreign employee is not currently present in Vietnam, the foreign employee must obtain a visa for work purposes. The visa application shall be processed by the Immigration Authority.
Step 2:
Apply for a Work Permit or a Work Permit Exemption with the competent authority (which may be the Provincial People’s Committee, the Department of Home Affairs, or the Management Board of Export Processing Zones and Industrial Parks) determined based on the location the foreign employee expected to work. The following matters should be concerned:
- It is necessary to determine whether the foreign employee is subject to obtain Work Permit or Workk Permit Exemption to conduct the corresponding procedure.
- In cases where the foreign employee is subject to obtain Work Permit, the employer must post a recruitment notice for Vietnamese employees on legitimate recruitment platforms such as https://www.vietnamworks.com or Employment Service Center’s website (excluding unofficial platforms such as Facebook) at least five (05) days prior to submitting the Work Permit application for the foreign employee.
Note: The application for a Work Permit or Work Permit Exemption must be submitted no earlier than sixty (60) days and no later than ten (10) days prior to the foreign employee’s expected commencement date.
Step 3:
The employer shall enter a Labor Contract with the foreign employee who works under a labor contract (if applicable).
Step 4:
Carrying out procedures related to social insurance and personal income tax obligations, specifically:
- Register for compulsory social insurance for foreign employees:
- The social insurance schemes applicable to foreign employees include: Sickness allowance; Maternity allowance; Work accident insurance; Retirement allowance and Death allowance.
- Foreign employees are not required to pay compulsory social insurance in the following cases: intra-corporate transfer in accordance with regulations on foreign employees working in Vietnam; At the time of signing the Labor Contract, the employee has reached the retirement age as prescribed in Clause 2, Article 169 of the Labor Code; International treaties to which the Socialist Republic of Vietnam is a member provide otherwise;
- Register for Personal income tax for foreign employees: Foreign individuals who have taxable income arising within the territory of Vietnam are subject to personal income tax. The Enterprise carries out procedures for registration and issuance of a personal income tax code in Vietnam for foreign individuals in case such individuals have not been issued with the corresponding code.
2. Exit Procedures for Foreign Employees
Upon termination of employment with a foreign employee, the employer is required not only to complete internal procedures but also to comply with a series of important legal obligations toward the competent authorities. Specifically, the employer must complete these following six (06) tasks:
- Terminate the Labor Contract;
- Revoke the Work Permit or Work Permit Exemption;
- Notify termination of Immigration Sponsorship;
- Notify reduction in social insurance participation and finalization of social insurance records;
- Payment of Severance allowance;
- Assist the foreign employee in completion of personal income tax procedures.
The exit process consists of internal steps and administrative procedures (comprising six steps), as detailed below, to ensure that the termination of employment is conducted in compliance with applicable laws and that the foreign employee completes all necessary procedures prior to departure from Vietnam.
Step 1: Terminate the Labor Contract
Termination of a Labor Contract can be done unilaterally or by mutual agreement between the foreign employee and the employer. In the case of unilateral termination, depending on the party making the request, there will be corresponding conditions that must be met:
- The foreign worker is obligated to notify the employer in advance within 03, 30, or 45 days, depending on the type of Labor Contract.
- On the employer’s side, unilateral termination of the contract is only permitted when all conditions stipulated by Vietnamese Labor Code are met, and the employer must also fulfill the obligation to notify the foreign employee in advance within the same timeframes mentioned above, based on the type of signed Labor Contract and the nature of the work.
In the case of termination of the Labor Contract by mutual agreement, the employer and the foreign worker must reach a consensus and sign a written termination agreement.
Step 2: Revoke Work Permit or Work Permit Exemption
Following termination of the Labor Contract, the employer is responsible for revoking the Work Permit or Work Permit Exemption that was issued to the foreign employee.
Within fifteen (15) days from the date on which the Work Permit or Work Permit Exemption expires. The employer must submit the revoked documents together with a written Report on the revocation to the competent State Authority at the locality where the foreign employee worked (the provincial People’s Committee, the Department of Home Affairs, or the Management Board of Export Processing Zones and Industrial Parks).
Step 3: Notify Termination of Immigration Sponsorship
The employer is required to notify the Immigration Department in writing of its decision to cease Immigration Sponsorship for the foreign employee, even in cases where the employee’s work visa or temporary residence card remains valid.
Such notification must clearly state the foreign employee’s identifying information, the date of termination of the labor contract, and the employer’s explicit declaration of Termination of Sponsorship in respect of the previously issued work visa or temporary residence card.
Step 4: Notify Reduction in Social Insurance Participation and Finalization of Social Insurance Records
The employer must carry out procedures to notify the Social Insurance Authority of the reduction in participating employees in accordance with applicable regulations and finalize the foreign employee’s social insurance contribution records in the social insurance system.
Step 5: Pay Severance Allowance
The employer is obligated to pay severance allowance to foreign employees who have worked regularly for a period of twelve (12) months or more. The severance allowance is calculated at the rate of one-half (1/2) month’s salary for each year of working.
Step 6: Assist the foreign employee in Personal Income Tax Finalization
Prior to the foreign employee’s departure from Vietnam following termination of the Labor Contract, the employer may assist the employee in completing Personal income Tax finalization procedures, subject to mutual agreement between the parties. Such assistance is intended to ensure that the foreign employee fully fulfills all tax obligations arising in Vietnam before exit.
