1.Case 1: Foreign Employees’ work permits are issued at the Employer’s request, but Employers do not sign LCs with them
If foreign Employees fall into the subjects who Employers must sign LCs with after their work permits are issued[1], Employers and Employees must sign LCs in writing prior to the first working date, and within 5 working days from the signing date, Employers must send the copies of LCs to the DOLISA which has issued work permits to these foreign Employees. If Employers do not sign LCs for the jobs with terms of over 3 months, they may be subject to a fine up to VND20,000,000 for individuals and VND40,000,000 for organisations, depending on the number of Employees who Employers have not signed LCs with[2]. Please be noted that these employment relationships are still recognised by the Vietnamese labour law in case of disputes, despite the fact that LCs are entered into or not.
2. Case 2: Foreign Employees do not have work permits but do sign LCs with Employers
As prescribed by the Labor Code[3], work permits are one of the preconditions for foreign Employees to work in Vietnam. If foreign Employees are not eligible to be granted work permits, they must obtain letters verifying that they are not the subjects required to have work permits, instead of being automatically exempt from work permits. If foreign Employees work in Vietnam but do not have work permits or letters verifying that they are not the subjects required to have work permits[4], Employers and Employees will be subject to the following administrative sanctions:
- Foreign Employees will be expelled; and
- Employers hiring foreign Employees who do not have work permits or letters verifying that they are not the subjects required to have work permits will be subject to a fine up to VND75,000,000 for individuals and VND150,000,000 for organisations, depending on the number of Employees who do not have work permits or letters verifying that they are not the subjects required to have work permits. In addition, Employers’ business operations may be suspended from 1-3 months.
The employment relationship in this case will not be recognised by local labour management authorities and competent courts in case of disputes though Employers and Employees have signed LCs in reality.
3. Case 3: Foreign Employees neither have work permits nor sign LCs with Employers
It is a violation against the Vietnamese labour law for foreign Employees to work in Vietnam without work permits and LCs. In this case, if Employees are not eligible to be granted work permits and do not have letters verifying that they are not the subjects required to have work permits, their Employers will be administratively sanctioned as analysed in Case 1 and Case 2 above. Also, this employment relationship will not be recognised by local labour management agencies and competent courts in case of disputes.
4. Case 4: Foreign Employees’ work permits have expired but labour contracts have not. These foreign Employees have actually worked for and received salaries from Employers.
If work permits are going to expire, Employers must conduct the procedure for renewing work permits[5] at least 5 days prior to the expiry date but not over 45 days. If Employers do not conduct the procedure for renewing work permits and continue to use Employees whose work permits have expired, Employers and Employees will be subject to administrative sanctions as follows:
- Foreign Employees will be expelled; and
- Employers hiring foreign Employees whose work permits have expired will be subject to a fine up to VND75,000,000 for individuals and VND150,000,000 for organisations, depending on the number of Employees whose work permits have expired. In addition, Employers’ business operations may be suspended from 1-3 months.
The employment relationship in this case will not be recognised by local labour management authorities and competent courts in case of disputes.
5. Case 5: Foreign Employees’ work permits have not expired but LCs have.
Expiration of LCs is one of the cases of termination LCs as prescribed by labour law[6]. Pursuant to Article 174.2 of the Labor Code, the termination of the LCs will also terminate the effect of work permits.
On the other hand, the term of work permits will, as prescribed by law, be granted according to the term of LCs if foreign Employees plan to work in Vietnam under the form of LC[7]. Accordingly, the term of work permits must match the term of LCs. It is contrary to labour law if the terms of these documents do not match each other. If there is a case where foreign Employees’ work permits have not expired but their labour contracts have expired, and these Employees actually work and receive salaries from Employers, the two parties must sign LCs for the remaining time of the term specified in work permits.
Otherwise, Employers
may be subject to administrative sanctions as with Case 1[8] where they do not sign LCs
with Employees. The employment relationship during the time when foreign Employees’
work permits are still valid but their LCs have expired will be recognised and
protected by law in case of disputes.
[1]Article 12.3 Decree 11/2016/NĐ-CP dated 03/02/2016
[2]Articles 3.1 and 5.1 Decree 95/2013/NĐ-CP dated 22/08/2013 as amended and supplemented by Decree 88/2015/NĐ-CP dated 07/10/2015
[3]Article 169.1 Labor Code
[4]Articles 3.1 and 22.2 Decree 95/2013/NĐ-CP dated 22/08/2013 as amended and supplemented by Decree 88/2015/NĐ-CP dated 07/10/2015
[5]Articles 13.2 and 14 Decree 11/2016/NĐ-CP dated 03/02/2016 and Articles 8 and 10 Circular 40/2016/TT-BLĐTBXH dated 25/10/2016
[6]Article 36.1 Labor Code
[7]Article 11.1 Decree 11/2016/NĐ-CP dated 03/02/2016
[8]Article 5.1 Decree 95/2013/NĐ-CP dated 22/08/2013 as amended and supplemented by Decree 88/2015/NĐ-CP dated 07/10/2015