Vietnam Labor Law Highlights - Duane...
Transcript of Vietnam Labor Law Highlights - Duane...
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Giles Cooper - PartnerDuane Morris Vietnam LLC
Vietnam Labor Law HighlightsAsia Employment Law Congress 2017 - Singapore
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© 2017 Duane Morris LLP. All Rights Reserved. Duane Morris is a registered service mark of Duane Morris LLP. Duane Morris – Firm and Affiliate Offices:New York | London | Singapore | Los Angeles | Chicago | Houston | Hanoi | Philadelphia | San Diego | San Francisco | Baltimore | Boston | Silicon Valley | Washington, D.C.Las Vegas | Atlanta | Miami | Pittsburgh | Newark | Oman | Boca Raton | Wilmington | Cherry Hill | Myanmar | Lake Tahoe | Ho Chi Minh City | Shanghai | Yangon | Taipei
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• 750 attorneys in 27 offices• Regularly top-ranked by
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TOPICS
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1. Work Permits & Work Permit Exemption Certificates
2. Internal Trade Unions
3. Social Insurance – Health Insurance –Unemployment Insurance
4. Severance allowances – finally a thing of the past?
5. New Labor Code is coming!
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Work Permits & Work Permit Exemption Certs.
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WORK PERMIT WORK PERMIT EXEMPTION CERTIFICATE
Labor contract
Service provider
Intra-corporate transferee
Contributing Member LLC
Offering services less than 3 months
Board Member of JSC
Interns
NOPAPER WORK
Short-term entry(less than 30 days at a time and no more than 90 days per year)
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Work Permit – Work Permit Exemption Certificates• Validity: max 2 years for both
• Exceptions: 17 work permit-exempt categories, e.g.– Intra-company transferees– Individuals “offering services” for less than 3 months– Individuals working in Vietnam for less than 30 days at a time and
up to 90 days per year in total
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Grey areas: work permit exempt or not?
Capital contributor of an LLC, concurrently acting as CEO: exempt under Art. 172, Labor Code but fall directly into the “manager” category for work permits under Decree 11.
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Conditions forwork permit exemption?
1. The expat must be manager, executive director, specialist or technician;
2. Offshore entities having their Vietnam-based commercial presence;
3. The Vietnam-based commercial presence operates in one of 11 WTO service sectors;
4. The expat transferee recruited by the offshore enterprise in at least 12 months prior to his/her secondment to Vietnam.
Circular 35: Intra-corporate transferees
Do overseas Vietnamese need a work permit to work in Vietnam?
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Circular 40: Work permit for service providers
Requirements: 1. The service provider must be qualified as an expert.
2. The service provider must have worked for the offshore entity at least 24 months prior to his/her entering Vietnam to provide services.
3. The offshore entity has NO commercial presence in Vietnam.
Who will play the role of employer?
The partner entity in Vietnam will apply for work permit.(though there is no employment relationship)
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SUBMISSION RESPONSENormal
applicationOnline
applicationNormal
applicationOnline
Application
In-principleapproval for foreign staff
need
At least 30 days
At least 10 days
Within 15 days
Within 10 Days
in advance of the proposedrecruitment date
from the date of receipt
Work permit issuance
At least 15 working days
At least 10 days
Within 7 working days
Within 5 working days
in advance of the proposedrecruitment date
from the date of receipt
Draft Circular: Online Work Permit Application
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Case Study 1
An expat CEO is appointed to replace the previous CEO and will work in Vietnam as the new legal rep of the Company. There are two procedures, which to conduct first?
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STEP AChange Legal Rep
at Department of Investment
(DPI)
STEP BObtain work permit
at Department of Labor
(DOLISA)
or
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Case Study 2
There is an expat regional manager who needs to visit the affiliate entity in Vietnam on a monthly basis.
What are options for him?
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Option 1:Short-term
Entry
WP: NOWPEC: NO
WP: Work PermitWPEC: Work Permit Exemption Certificate
Option 2:Intra-Company
Transferee
WP: NOWPEC: YES
Option 3:Service Supply
WP: YESWPEC: NO
Option 4:Labor
Contract
WP: YESWPEC: NO
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Case Study 3An offshore investor previously established a representative office (“RO”) in Vietnam. Now the investor plans to ‘upgrade’ its presence in Vietnam to a full fledged entity and close the RO.
Is there any automatic scheme to ‘convert’ the RO’s employees into employees of the new entity?
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STEP 1
RO to terminate relationship
withits employees
STEP 2
Newly-formed Entity to re-hire the
RO’s employees
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TRADE UNION FEES
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Employers are required to contribute 2% of monthly payroll as the Trade Union fee from 01 January 2013 regardless of whether or not the employer has an Internal Trade Union.
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TRADE UNION FEE PAYMENT
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Employers in Vietnam are subject to fines of up to VND75 million (equivalent to US$3,400) for failure to make Trade Union fee contributions (plus back payment and interest)
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TRADE UNION FEE PAYMENT
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The Internal Trade Union is eligible to utilize the contributed TU fee:
Year ITU’s entitlement
2015 backwards 65%2016 66%
2017 - present 67%2018 - 2024 68% - 74%
2025 onwards 75%
How to utilize the Trade Union Fee in the absence of an Internal Trade Union?
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Which activities need involvement ofInternal Trade Union?
• Execution of Collective Labor Agreement
• Registration of Internal Labor Regulations
• Preparation of Employment Usage Plan in case of retrenchment
• Preparation of Criteria to assess level of completion of work (a ground for unilateral termination)
• Implementation of labor discipline
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Compulsory Insurance Contribution Rates as of 1 June 2017
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Insurance Employer Employee Total
Social17.5%
(previously 18%)
8% 25.5%(previously 26%)
Health 3% 1.5% 4.5%
Unemployment 1% 1% 2%
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Will mandatory social insurances apply to expat employees as of Jan 2018?
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Severance allowances – are they finally history?
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SEVERANCE ALLOWANCE
UNEMPLOYMENT INSURANCE
Before 2009 All employers None
From 2009to 2014
Employers withLESS THAN
10 employees
Employers withAT LEAST
10 employees
From 2015 None* All employers
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December 2016: MOLISA released first draft
January 2017: First draft submitted to the Government
April 2017: Draft submitted to the National Assembly for review
September 2017: Prepare final draft based on the National Assembly’s comments
October 2017: Submit final draft to the National Assembly for promulgation
2018: Come into effect
New Labor Code – Schedule for Promulgation
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Labor Code 2012 Proposed Revisions
Automatic conversion
Once
• the labor contract expires;• Employee continues working; and• NO new labor contract signed within
30 of previous expiry date.
Definite-term contract → Indefinite-term contract
Seasonal contract → 24-month definite-term contract
Once:
• the labor contract expires;• Employee continues working; and• NO new labor contract.
Definite-term contract → Indefinite-term contract
Seasonal contract → Indefinite-term contract
New Labor Code – Proposed Changes
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Labor Code 2012 Proposed Revisions
Labor Contract Extension
New Labor Code – Proposed Changes
1st Definite-
termcontract
2ndDefinite-
termcontract
Indefinite-term
contract
Oneextension
ofthe 1st
contract
Oneextension
ofthe 2ndcontract
1st Definite-
termcontract
Extensionof
the 1stcontract
Indefinite-term
contract
2nd Definite-
termcontract
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New Labor Code – Proposed Changes
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Labor Code 2012
Proposed Revisions
Termination by Employer
N/A Employee provides false information which affected the recruitment.
Termination by Employer
once employees:• reach retirement age; and• have fully contributed social
insurance.
once employees: • reach retirement age.
Increase of Retirement Age60 (for male)55 (for female)
62 (for male)60 (for female)
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Labor Code 2012
Proposed Revisions
Definition of
EmployeeRepresentatives
Employee Representatives are:• Internal Trade Union; or• District-level Trade Union
Employee Representatives are:• Internal Trade Union; • District-level Trade Union; or• Labor Organizations (NOT operating under Vietnam Labor Federation)
New Labor Code – Proposed Changes
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Labor Code 2012
Proposed Revisions
Overtime (“OT”) hours
OT hours may not exceed:• 50% of normal working
hours per day;• 30 hours per month; and• 200 hours (or max. 300
hours in some cases) per year.
• Total working hours (including normal and OT hours) may not exceed 12 hours per day nor exceed 5 consecutive days in an OT period;
• Max. 400 hours per year;• The overtime cap can be unlimited
extended in urgent cases.
New Labor Code – Proposed Changes
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Case Study 4
The number of overtime hours of an white collar employee reaches the annual overtime cap.
What can be done?
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Option 1:
IncreaseOT Cap
Option 2:
Increase weekly working
hour
Option 3:
Service contract
with Employer
Option 4:
Service contract
with different entity
Option 5:
NewEmployee
Consideration
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Thank you very much!
Giles T. CooperTel: +844 3946 2210
Duane Morris Vietnam LLC