Issues around labor contract; Wages, bonuses, severance allowances; Work permit, and Insurance in Vietnam

1.Labour contract:

A labor contract is an agreement between an employee and an employer on a paid job, working conditions, and the rights and obligations of each party in industrial relations must be established in writing and made in two copies, one to be kept by the employee and the other by the employer.

For temporary jobs with a duration of under 3 months, the parties may enter into a verbal labor contract.

2.Wages, bonuses, severance allowances:

Wage is a monetary amount that is paid by an employer to an employee to do a job as agreed by the two parties. Wage includes a wage amount that is based on the work or title, wage allowance(s), and other additional payments.

Bonus is a sum of money paid by an employer to his/her employees based on annual business results and the level of work performance of employees.

In case a labor contract terminates, the employer shall pay a severance allowance to the employee who has worked regularly for full 12 months or longer at the rate of half of a month’s wage for each working year, except the employee entires.

3.Work permit for country people in addition to working in Vietnam and case of exemption from Work permit

Foreign employees in Vietnam for more than 3 months have to apply for a Work permit, except they are exempt from Work permits. Foreigners working in Vietnam without a Work permit will be expelled from Vietnam, besides, the employers of the company that foreigner’s working for will face charging up to 75 million VND.

The cases in which the foreign workers are exempt from applying for the work permits:

a, Capital-contributing members or owners of limited liability companies.

b, Members of the Board of Directors of joint-stock companies.

c, Chiefs of representative offices and directors of projects of international organizations or non-governmental organizations in Vietnam.

d, Those who stay in Vietnam for under 3 months to offer services for sale.

e, Those who stay in Vietnam for under 3 months to deal with complicated technical or technological problems that adversely impact or are at risk of exerting adverse impacts on production and business activities and these problems cannot be handled by Vietnamese and foreign experts who are currently in Vietnam.

f, Foreign lawyers possessing a professional practice license in Vietnam under the Law on Lawyers.

g, It is following a treaty to which Vietnam is a contracting party.

h, Those who are studying and working in Vietnam, provided that the employer shall notify their employment to the provincial-level state management agency of labor 7 days in advance.

I, The workers are internally reassigned in the companies which engage in 11 service industries in Vietnam’s WTO commitments on services, including business, communication, construction, distribution, education, environment, finance, health, tourism, culture, entertainment, and transportation;

k, The workers enter Vietnam to provide professional and technical advisory services or perform other tasks serving the research, construction, appraisal, assessment, management, and execution of programs and projects funded by ODA according to the International Treaties on ODA between the competent authorities of Vietnam and other countries;

l, The workers are issued with the licenses for the practice of communications or journalism in Vietnam by the Ministry of Foreign Affairs;

m, The workers are appointed by foreign agencies or organizations to teach or do research in international schools under the management of foreign diplomatic missions or international organizations in Vietnam, or the workers are permitted to teach or do research in education and training institutions in Vietnam by the Ministry of Education and Training;

n, The workers are volunteers who have obtained the certification of the foreign diplomatic missions or international organizations in Vietnam;

o, The workers enter Vietnam to hold the positions of experts, managers, chief executive officers, or technicians for a period of under 30 days and an accumulated working period of under 90 days per year;

p, The workers enter Vietnam to implement international agreements to which central or provincial agencies and organizations are signatories under the law;

q, Students who are studying in schools or training institutions in foreign countries execute their practicum at agencies, organizations, or companies in Vietnam upon agreements;

r, Relatives of members who are executing their functions in foreign missions in Vietnam upon the approval of the Ministry of Foreign Affairs, unless otherwise stated in the International Treaties to which the Socialist Republic of Vietnam is a signatory;

s, Workers are holders of Official Passports for working in state agencies, political organizations, or sociopolitical organizations;

t, Other cases decided by the Prime Minister at the request of the Ministry of Labor, War Invalids and Social Affairs.

4.Insurance:

Health insurance and Social insurance are compulsory in labor contracts.

The employers must pay social insurance for the employees following the contract. To probation contract, the content may behave an article about social insurance and health insurance or not. However, employees can apply only once for each job with a duration of 60 days. The monthly payment for Social insurance is 8% of their monthly salaries to retirement and 17,5% calculated based on the salary funds.

To Health Insurance, the employees under the indefinite-term labor contract, labor contract with duration more than 3 months; the employee who is also the manager of the enterprise are the insured. The monthly payment for Health insurance is 4,5% of their monthly salaries.

Foreigners who are employees under labor contracts shall be covered by compulsory social insurance, however, the law has no specific article about insurance premiums. Foreigners who are employees following labor contracts have to pay for Health insurance.

Legal ground:

– Labor Code 2020;

– Law on employment 2013;

– Law on social insurance 2014;

– Law on health insurance 2014;

– Decree 152/2020/ND-CP on foreign workers working in Vietnam and recruitment and management of Vietnamese workers working for foreign employers in Vietnam;

– Decree 146/2018/ND-CP elaborating and guiding measures to implement certain articles of the law on health insurance.

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