Vietnam Issues New Labor Outsourcing Regulations

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Jun. 13 – The Vietnamese government recently issued Decree No. 55/2013/ND-CP (hereinafter referred to as ‘Decree 55′) on May 22, 2013. The decree was released to further clarify Article 54.3 of Vietnam’s 2012 Labor Code regarding the conditions for licensing labor outsourcing activities. Information regarding the key changes of Decree 55 can be found below.

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– Upon its establishment, a company that provides labor outsourcing services must pay an escrow deposit of two billion Vietnamese Dong (to be held with a commercial bank) and also obtain a corresponding license from the Ministry of Labor, War Invalids and Social Affairs;

– The maximum term for supplying a worker is 12 months. Once that term expires, the worker can no longer be supplied to that same company;

– Labor outsourcing is permitted when an employer needs to:

  • Temporarily meet a sudden increase in the requirements for labor for a definite  period of time; or
  • Temporarily replace employees that fall under the following circumstances:
      1. On maternity leave;
      2. Affected by labor accidents/work-related diseases;
      3. Those who must carry out civic obligations;
      4. Employees who must reduce their working hours; or
      5. To source highly skilled workers.

– Only the following 17 jobs can be outsourced:

      1. Interpreter/translator/stenographer;
      2. Secretary/administrative assistant;
      3. Receptionist;
      4. Tour guide;
      5. Sales assistant;
      6. Project assistant;
      7. Programmer for the manufacture of machinery systems;
      8. Technician for the manufacture or installation of television and telecommunications;
      9. Technician for operating, testing or repairing construction machinery and equipment, or for the manufacture of electrical systems;
      10. Sanitation worker for buildings and factories;
      11. Document editor;
      12. Security guard/bodyguard;
      13. Telemarketer/customer service worker via telephone;
      14. Financial and tax issue processor;
      15.  Repairing/testing technician for automobiles;
      16. Scanning and industrial drawing artist/interior designer; and
      17. Driver.

– Labor outsourcing activities are prohibited when:

  • The outsourcing is to replace employees that are on strike or currently in a labor dispute;
  • The outsourced workers are to replace employees who have been retrenched; or
  • The outsourced workers are to work at locations with harsh living conditions.

– Companies that provide labor outsourcing services are prohibited from:

  • Paying salaries and other benefits to an outsourced worker at rates lower than those agreed upon with the company using the labor outsourcing services;
  • Lending the labor outsourcing license to other enterprises or borrowing a labor outsourcing license to outsource workers;
  • Collecting fees from outsourced workers or outsourcing workers without their consent;
  • Outsourcing workers to perform jobs that are not on the list of the 17 permitted jobs listed above or for terms that exceed the 12-month limit; or
  • Providing labor outsourcing activities to a related company within the same group.

– Companies that use outsourced workers are prohibited from:

  • Collecting fees from the outsourced workers;
  • Outsourcing the outsourced workers to other employers; or
  • Using the outsourced workers to perform jobs that are not on the list of the 17 permitted jobs listed above, or for a term that exceeds the 12-month limit.

Decree 55 will come into force July 15, 2013.

Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.

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