Hiring and Letting Go of Foreign Employees in Vietnam

1. Hiring Foreign Employees: Building Your International Team

In Vietnam's thriving economy, foreign workers play a crucial role. Whether you're an employer seeking top global talent or a foreign employee considering exciting opportunities in Vietnam, understanding the process of hiring foreign employees is essential. Here's a breakdown of the key steps involved in building your international team:

Work Permit Sponsorship:

• Most foreign employees require work permit sponsorship from their employer. This involves demonstrating a genuine need for a foreign worker by proving that the specific skills or experience required cannot be readily found among Vietnamese citizens. The employee must also meet specific eligibility criteria, such as educational qualifications and relevant work experience.

Recruitment Channels:

Employers have a variety of options for attracting and recruiting foreign talent:

• Online Job Boards: Many international job boards cater specifically to foreign workers seeking opportunities abroad. These platforms allow you to target candidates with the desired skill sets and experience.
• Professional Organizations: Look for professional organizations relevant to the position you're trying to fill. These organizations often have membership directories or job boards where you can post your vacancy.
• Headhunting Firms: Consider partnering with headhunting firms specializing in foreign placements. They can leverage their expertise and networks to identify and attract qualified foreign candidates.

Employment Contracts:

Written employment contracts are mandatory for both Vietnamese and foreign employees. These contracts should clearly outline the following:

• Job Duties and Responsibilities: A detailed description of the employee's role and responsibilities within the company.
• Compensation and Benefits: Specify the salary, benefits package (including health insurance, vacation time, etc.), and any allowances offered.
• Termination Clauses: Outline the grounds and procedures for termination, following Vietnamese labor law. Special considerations might apply to foreign employees, so ensure the contract reflects these.

Work Visa:

Once the work permit is secured, the foreign employee will need a work visa to legally reside and work in Vietnam. Employers typically assist with the visa application process, which may involve additional documentation.

Important Considerations:

• Time Investment: Obtaining work permits and visas can take several weeks. Factor this into your hiring timeline to avoid delays in filling the position.
• Compliance is Key: Failing to comply with regulations regarding work permits and visas can result in penalties for both the employer and the employee. It's crucial to stay updated on the latest regulations and ensure all procedures are followed correctly.
• Embrace Cultural Differences: Understanding and appreciating cultural nuances is essential for attracting and retaining foreign talent. Fostering a welcoming work environment that values diversity can significantly impact employee satisfaction and productivity.

By following these steps and keeping the important considerations in mind, employers can build strong and successful international teams in Vietnam. Foreign employees, in turn, can ensure a smooth and legally compliant employment experience. Remember, regulations can evolve, so consulting official sources or a lawyer specializing in Vietnamese labor law is crucial for the latest information and ensuring compliance

2. Important Considerations for Hiring Foreign Employees

Hiring foreign employees brings a wealth of talent and diverse perspectives to your Vietnamese workforce. However, navigating the process requires careful consideration of several key factors beyond the core steps outlined previously. Here's a closer look at some crucial aspects to keep in mind:

Work Permit Nuances:

• Definite Term Contracts: As of 2021, Vietnamese labor law stipulates that work permits for foreign employees are typically issued for a definite term. This term cannot exceed the validity period of the employment contract. Both parties (employer and employee) can agree to enter into several definite-term contracts if the employment relationship extends beyond the initial period.
• Work Permit Exemptions: There are limited exceptions to the work permit requirement. These exemptions typically apply to highly specialized roles, such as foreign legal representatives of a company under specific conditions (e.g., ownership stake exceeding a certain threshold or residency requirement). Consulting legal counsel can help determine if a work permit exemption applies to your specific situation.

Tax Implications:

• Tax Residency: Understanding the concept of tax residency is crucial. Foreign employees residing in Vietnam for more than 183 days in a calendar year are generally considered tax residents and subject to Vietnamese personal income tax on their worldwide income. This can impact compensation packages and tax filing requirements.
• Double Tax Treaties (DTTs): Many countries have Double Tax Treaties (DTTs) with Vietnam. These treaties aim to eliminate double taxation on income earned in Vietnam. Foreign employees from countries with DTTs in place might benefit from reduced tax rates or exemptions on certain types of income. Consulting a tax advisor can help navigate the complexities of DTTs and ensure proper tax compliance.

Cultural Integration and Support:

• Language and Communication: Language barriers can pose challenges. Consider offering language training or support services to help foreign employees adapt and integrate smoothly.
• Cultural Adjustment: Transitioning to a new country can be complex. Providing support resources or cultural sensitivity workshops can help foreign employees adjust to Vietnamese work culture and daily life.

Immigration and Relocation:

• Visa Applications: The work permit is just one step. Employers typically assist foreign employees with visa applications, which might require additional documentation specific to the visa type (e.g., work visa, temporary residence card).
• Relocation Assistance: Depending on the employee's situation, offering relocation assistance can ease the transition. This might include support with finding housing, registering for utilities, and navigating local customs and regulations.

By carefully considering these additional factors, employers can create a more welcoming and supportive environment for foreign employees. This not only enhances the employee experience but also increases the likelihood of attracting and retaining top international talent in your Vietnamese workforce. Remember, seeking guidance from legal and tax professionals can ensure compliance with regulations and optimize the overall experience for both employers and foreign employees.

3. Letting Go of Foreign Employees: Managing Departures

Even in the most successful workplaces, situations may arise that necessitate the termination of an employment contract with a foreign employee. Following a fair and transparent process that adheres to Vietnamese labor law is crucial to ensure a smooth separation and avoid potential legal issues. Here's what employers need to know about managing departures of foreign employees:

Termination Clauses:

• Employment Contract Review: The first step is to revisit the termination clauses outlined in the employment contract. These clauses should clearly define the grounds for termination (e.g., redundancy, performance issues, misconduct) and the procedures to be followed by both parties (employer and employee) during the termination process.

Severance Pay:

• Legal Entitlement: Foreign employees, similar to Vietnamese employees, are entitled to severance pay under certain circumstances as stipulated by Vietnamese labor law. These circumstances typically include redundancy, termination without cause, or termination due to the employee's health reasons that render them unfit to continue working.
• Calculation of Severance Pay: The amount of severance pay is usually calculated based on the employee's salary and years of service. Consulting legal counsel can ensure the severance pay calculation is accurate and complies with Vietnamese labor law.

Notice Periods:

• Contractual Notice: The employment contract should specify the notice period required from both the employer and the employee in case of termination. This notice period ensures a smooth handover of responsibilities and allows the employee time to seek new employment.
• Legal Minimum Notice: Vietnamese labor law also outlines minimum notice periods depending on the employment contract duration and reason for termination. The employer must provide notice that meets the longer of the two timeframes (contractual or legal minimum).

Visa Cancellation:

• Employer Responsibility: Upon termination, the employer is typically responsible for notifying the relevant authorities and assisting the foreign employee with visa cancellation procedures. This might involve submitting specific documents and ensuring the employee complies with any visa cancellation requirements.

Important Considerations:

• Fairness and Transparency: Throughout the termination process, it's crucial to maintain fairness and transparency. Communicate openly with the employee, follow the procedures outlined in the employment contract and Vietnamese labor law, and provide a written termination notice that clearly explains the reason for termination.
• Conflict Resolution: The employment contract or Vietnamese labor law might outline mechanisms for resolving potential disputes that arise during termination. Exploring these avenues for resolution can help address disagreements constructively.
• Legal Guidance: Consulting a lawyer specializing in Vietnamese labor law is highly recommended for both employers and employees navigating complex termination situations. Legal expertise can ensure compliance with regulations, protect rights, and facilitate a smoother separation process.

By adhering to these guidelines and seeking professional guidance when necessary, Vietnamese employers can manage the departures of foreign employees in a fair and efficient manner. This not only upholds legal requirements but also fosters a culture of professionalism and respect within the workplace. Remember, maintaining a positive reputation for employee relations can be crucial in attracting and retaining top talent, both domestic and international.

4. Important Considerations for Letting Go of Foreign Employees

Letting go of a foreign employee can be a sensitive and complex process compared to terminating a local employee. Here are some additional considerations beyond the core legal framework to ensure a smooth and compliant separation:

Tax Implications:

• Final Tax Clearance: Foreign employees who are considered tax residents in Vietnam might be required to obtain a final tax clearance certificate before leaving the country. This certificate verifies that all outstanding tax liabilities have been settled. Employers can assist employees with understanding and fulfilling this requirement.
• Tax Withholding: Depending on the termination circumstances and the employee's tax residency status, Vietnamese tax regulations might require the employer to withhold a portion of the employee's final salary or severance pay for tax purposes. Consulting a tax advisor can ensure proper handling of tax obligations during termination.

Immigration Considerations:

• Visa Cancellation Timeframes: Visa cancellation procedures can take time. Employers should inform the employee well in advance and collaborate to ensure a timely cancellation within the required timeframe to avoid any visa overstay penalties.
• Work Permit Cancellation: In addition to the visa cancellation, the employer needs to notify the authorities about the termination and initiate the work permit cancellation process.

Repatriation Considerations:

• Relocation Assistance: If the employee received relocation assistance upon joining the company, the employment contract might stipulate repayment obligations in the event of early termination. Review the contract and discuss any applicable repayment terms with the employee.
• Dependents' Status: The termination might also affect the immigration status of the employee's dependents residing in Vietnam with them. Provide clear information and any necessary support to help them understand the implications and navigate the process of changing their visa status or departing Vietnam.

Maintaining Positive Relationships:

• Exit Interview: Conducting an exit interview, even during termination, can be valuable. Gather feedback from the departing employee on their experience and suggest they provide written feedback as well (if comfortable). This can help identify areas for improvement in the company's international employee management practices.
• Reference Letters: Depending on the circumstances of the termination, consider providing the employee with a reference letter that acknowledges their contributions to the company. This can be helpful for their future job search.

By addressing these additional considerations, employers can ensure a more comprehensive and considerate approach to letting go of foreign employees. This demonstrates professionalism and respect for the employee, even during a challenging situation. Ultimately, it contributes to maintaining a positive employer brand for attracting and retaining top international talent in Vietnam.

5. Conclusion