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13 Critical Factors in the Employment of Foreign Employee
As globalization accelerates and labor markets become increasingly interconnected, many businesses in Vietnam and beyond are turning to foreign employee to fill skill gaps, enhance competitiveness, and drive innovation. However, employing foreign nationals is not simply a matter of recruitment — it involves navigating a complex landscape of legal requirements, cultural considerations, and administrative procedures. To ensure compliance and maximize the benefits of a diverse workforce, employers must be aware of a range of important issues. The following are 13 key aspects that companies should carefully consider when engaging foreign employee.
Table of Contents
What are the conditions for foreign employee to work in Vietnam?
To work in Vietnam, foreign employee must meet the following conditions:
- Be 18 years of age or older and have full civil capacity
- Have professional qualifications, technical skills, work experience
- Have a work permit issued by a competent state agency of Vietnam
- Other conditions as prescribed by law
Is foreign employee allowed to sign indefinite-term labor contracts with employers?
Foreign employee is not allowed to sign indefinite-term labor contracts because the term of the labor contract for foreign employee working in Vietnam must not exceed the term of the work permit. The term of the work permit is 2 years.
Can Vietnamese law be applied in the case of a foreign employee working in Vietnam but signing a labor contract with an employer abroad?
Vietnamese law can be applied to the labor relationship in the case of a foreign employee working in Vietnam but signing a labor contract with an employer abroad if:
- An international labor treaty to which Vietnam is a member has provisions for the application of Vietnamese law
- If the international treaty does not have provisions different from Vietnamese law, Vietnamese law shall apply
- The international treaty allows the parties to choose the applicable law, and the parties choose Vietnamese law
When unilaterally terminating the labor contract in accordance with the law, what types of allowances and benefits are foreign employee entitled to?
In case foreign employee unilaterally terminate the labor contract in accordance with the law, they will be entitled to the following allowances and benefits:
- Severance allowance
- Wages including actual unpaid wages for working days, wages for annual leave days that the employee has not taken and other allowances
- Obligations to pay compulsory social insurance, health insurance, unemployment insurance and these insurance funds are performed by the employer
- An amount equivalent to the level of social insurance and health insurance contributions paid by the employer in case the employer has not paid this amount in addition to the same period of salary payment to the employee during the working period
In case the employer unilaterally terminates the labor contract in accordance with the law, the foreign employee is still entitled to the above benefits.
What obligations do foreign employee have when unilaterally terminating their labor contracts illegally?
The foreign employee unilaterally terminates the labor contract illegally if employee fails to notify the employer within the prescribed time limit. The foreign employee shall be subject to the following obligations:
- Not entitled to severance allowance
- Compensating the employer with half a month's salary according to the labor contract
- Compensating the employer with an amount equivalent to the salary according to the labor contract for the days without notice
- Reimbursing the employer for training costs (if any)
However, in this case, the foreign employee still has the right to request to receive other benefits belonging to basic rights such as:
- Salary including actual unpaid working day salary, salary for annual leave days that the foreign employee has not taken and other allowances
- An amount equivalent to the level of compulsory social insurance and health insurance contributions by the employer in case the employer has not paid this amount to the foreign employee during the working period
When the employer unilaterally terminates the labor contract illegally, what types of allowances and benefits are the foreign employee entitled to?
The employer unilaterally terminates the labor contract illegally if (i) there is no basis for unilateral termination of the labor contract and/or (ii) the notice period is violated. In that case, the foreign employee will be entitled to the following allowances and benefits:
a. In case the employer agrees to accept the foreign employee back to work, the foreign employee will receive the following benefits:
– Salary for the days the foreign employee is not allowed to work
– Social insurance and health insurance contributions for the days the foreign employee is not allowed to work
– Additional payment of at least 2 months of salary according to the labor contract
– An amount equivalent to the salary according to the labor contract for the days without notice in case of violation of the notice obligation
b. In case the foreign employee does not want to continue working
In addition to the amounts as in item a, the foreign employee will also receive severance allowance.
c. In case the employer does not want to take back the foreign employee and the foreign employee agrees
In addition to the amounts in items a and b above, the foreign employee will also receive additional compensation of at least 2 months’ salary according to the labor contract.
Can foreign employee work for multiple employers at the same time?
According to Vietnamese law, employees can sign multiple labor contracts with multiple employers but must ensure that they fully implement the contents of the contract. Foreign employee must have a work permit corresponding to each employer they work for.
If foreign employee have paid insurance abroad according to the regulations of that country, can this insurance be deducted when settling taxes in Vietnam?
Foreign employee working in Vietnam will have their insurance premiums paid abroad deducted when settling personal income tax on salaries and wages if they meet the following conditions:
- The compulsory insurance premiums paid must be similar to those prescribed by Vietnamese law such as social insurance, health insurance, etc.
- There must be documents proving that they have participated in paying the above insurance premiums.
When the labor contract with the employer is terminated, does the term of the foreign employee’s work permit automatically end?
One of the cases that causes the work permit to expire is the termination of the labor contract. Therefore, when the labor contract is terminated, the foreign employee’s work permit also automatically ends.
Are there any regulations that limit the rights of foreign employee when working in Vietnam?
No. Vietnamese law does not have specific regulations on limiting the rights of foreign employee when working in Vietnam. However, to be able to work in Vietnam, foreign employee must meet the conditions under Vietnamese law to be able to carry out the procedures to apply for a work permit if they are not in a case that is not eligible for a work permit. At the same time, foreign employee is only allowed to work in positions such as managers, executives, experts and technical workers, and Vietnamese workers have not yet met the production and business needs.
What are the procedures for foreign employee to apply for a work permit?
Foreign employee who meets the conditions for working in Vietnam must apply for a work permit with the following procedures:
Step 1
The employer requests approval of the need to use foreign employee. Specifically, at least 30 days before the expected date of work of the foreign employee, the employer must report the need to use foreign employee to the provincial People’s Committee.
Step 2
The employer submits the application for a work permit to the competent authority. At least 15 days before the expected date of work of the foreign employee in Vietnam, the employer submits the application to the Department of Labor, War Invalids and Social Affairs where the foreign employee is expected to work.
For details, read the article “Obtaining a Work Permit In Vietnam“
Noted:
In addition, work permits can be reissued, extended and exempted depending on the specific case.
What tax obligations must foreign employee fulfill before returning home?
In case a foreign employee is a non-resident individual, when returning home, employee does not need to fulfill the tax settlement obligation when employee has paid the tax rate of 20% for each time employee generates income. In case the foreign employee is an individual residing in Vietnam, when returning home, employee must make a tax settlement with the Tax Administration or authorize the income-paying unit to make a tax settlement for the last working year before the end of the labor contract and departure.
Can employers test foreign employee before hiring foreign employee?
Yes. According to the provisions of the labor law, foreign employee must have a work permit before starting to work in Vietnam. After being granted a work permit, they must submit a copy of the signed labor contract to the competent authority that issued the work permit. Based on this provision, it can be seen that the labor contract is the only document that is executed after having a work permit.
In addition, employers and employees can agree on the content of the probationary period recorded in the labor contract. Therefore, employers can test foreign employees by stating the content of the probationary period in the labor contract.
How will using foreign employee without a work permit be punished?
According to regulations, if an individual employer uses foreign employee without a work permit, they will be fined from 30,000,000 VND to 75,000,000 VND depending on the number of workers without a permit. The fine is twice the fine for individuals.
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