Common mistakes and solutions for enterprises regarding procedures for foreign workers

1. MISTAKES IN DETERMINING THE FORM OF EMPLOYMENT

Confusion between a parent company and a subsidiary in determining intra-corporate transferee

Problem statement:

Some enterprises mistakenly believe that foreign workers transferring from a subsidiary in another country to a subsidiary in Vietnam fall under “intra-corporate transferee” because both companies are subsidiaries of the same parent company and belong to the same corporate group.

Compliance guidance:

According to current regulations, intra-corporate transfer refers to the temporary transfer of foreign workers within a foreign enterprise that has established a commercial presence in Vietnam^[1]. In this case, the parent company, not the subsidiary, is the entity that has established a commercial presence in Vietnam. Therefore, the transfer from one subsidiary to another subsidiary in Vietnam does not qualify as an intra-corporate transferee.

Currently, many enterprises are confused about the subject of “commercial presence in Vietnam” as referred to in the regulation. Therefore, enterprises must thoroughly verify and identify the entity that has established the commercial presence (usually indicated on the Investment Registration Certificate and Enterprise Registration Certificate). Only foreign workers assigned by the specific entity are eligible to work under the intra-corporate transfer.

 

 

2. MISTAKES IN THE APPLICATION FOR WORK PERMIT IN THE FORM OF INTRA-CORPORATE TRANSFER

2.1. Using documents from a company within the same company group, but not from the investor enterprise, to demonstrate working conditions

Problem statement:

When applying for a work permit for a foreign worker transferring internally, the enterprise used an appointment letter or a document confirming the work process signed by another company in the same company group, instead of being issued by the parent company directly investing in Vietnam.

Compliance guidance:

Foreign workers under the category of intra-corporate transferees must be assigned to work in Vietnam by the foreign enterprise that has established a commercial presence in the territory of Vietnam, which is the investor of the company in Vietnam^[2]. Therefore, documents confirming the work process or appointment letters must be issued by this investor. Documents from other entities in the same group have no legal value in this case.

Therefore, enterprises need to pay attention to clearly distinguish between related entities within the same group and note to only use documents issued by the investor enterprise itself to prove the conditions on working time and appoint foreign workers in the form of intra-corporate transferees.

2.2. Mistaken report form on demand for foreign workers in case the enterprise has used foreign workers exempted from work permit

Problem statement:

Some enterprises have employed foreign workers who are exempt from work permits, such as foreigners who marry Vietnamese people. Then they want to recruit more foreign workers who are not exempt from work permits. At that time, the enterprise believes that there has been a change in the number of foreign workers working, so they use Form 02/PLI to report the demand for employing foreign workers.

Compliance guidance:

Enterprises using foreign workers who were previously exempted from work permits do not have to carry out procedures to determine the need to use labor^[3]. Therefore, the competent authority has never issued a document approving the job position using foreign workers for enterprises. This means that enterprises will not use Form 02/PLI - only applicable when enterprises want to adjust or supplement the need to use foreign workers that was previously approved, but must use Form 01/PLI to carry out procedures to report the demand for employing foreign workers.

2.3 Documents proving the position of manager or executive director in the application for a work permit for foreign workers working at the representative office

Problem statement:

Because representative offices do not have a company charter, some enterprises do not know what documents they need to submit to prove their management or executive positions when applying for a work permit.

Compliance guidance:

Since the representative office does not have a company charter, it is possible to submit the representative office’s operating regulations to prove that the job position meets the requirements of the licensing authority^[4].

3. MISTAKES WHEN PERFORMING PROCEDURES FOR APPLYING FOR WORK PERMIT

3.1. Adjusting working time in the approval document for the demand to employ foreign workers

Problem statement:

The enterprise has been granted an approval document for the demand to employ foreign workers for a maximum period of time, but because it has not recruited immediately, by the time it implements the work, the remaining time is very short. The company is wondering whether it is possible to adjust the working period to extend it.

Compliance guidance:

Enterprises should note that they can only carry out procedures to change the demand for foreign workers according to Form No. 02/PLI if they need to change the position, job title, form of work, work location and number of foreign workers^[5]. The working period is not included in the list of contents that can be adjusted in the approval document. In case the remaining period is not enough to meet the need to use labor, the enterprise needs to prepare the documents again to carry out the procedure to apply for a new issuance from the beginning. This helps ensure legality and avoid rejection in the next steps such as granting a work permit.

3.2. Issuing work permits to foreign workers working remotely

Problem statement:

Enterprises submit applications for work permits for foreign workers even though the foreign workers only work online from abroad and do not enter Vietnam.

Compliance guidance:

In case the employee works completely remotely and does not enter Vietnam, the enterprise does not need to carry out the procedure to apply for a work permit. Therefore, the enterprise should review the scope of work and the actual work location to avoid making unnecessary documents.

3.3. Issuing work permits to foreign workers working in many localities

Problem statement:

Enterprises expand the working location of foreign workers to another province or city but still keep the work permit issued in one locality.

Compliance guidance:

If a enterprise needs to arrange for foreign workers to work in many different provinces and cities, it is necessary to prepare a file to apply for a new work permit at the Ministry of Home Affairs^[6]. In the file, the enterprise needs to clearly list all work locations to avoid violating labor laws.

3.4. Proposal to issue a 2-year work permit when only using foreign workers for seasonal work

Problem statement:

Enterprises only use foreign workers for a few months a year but request to issue work permits with a maximum term of 2 years to extend the validity of the permit.

Compliance guidance:

The term stated in the work permit must be consistent with the term of the proposed employment contract^[7]. For seasonal positions, enterprises should only request a permit for the actual working time to avoid being fined for dishonest declaration. When a foreign worker quits, the enterprises must also proactively return the permit to close the file in accordance with the procedure.

3.5. Issuing work permits to employees with dual Vietnamese and foreign citizenship

Problem statement:

Enterprises apply for work permits for employees with two nationalities, one of which is Vietnamese and the other is foreign.

Compliance guidance:

Enterprises should determine the nationality that employees will use when working in Vietnam. If employees use Vietnamese nationality in their records and contracts, they do not need to apply for a work permit. Conversely, if they use a foreign nationality, enterprises must carry out work permit procedures. Determining from the beginning will help enterprises avoid wasting time and ensure compliance with the law.

3.6. Granted a work permit but did not sign a employment contract with foreign workers

Problem statement:

After foreign workers are granted work permits in the form of employment contracts, some enterprises do not sign employment contracts and do not send contracts to the licensing authority.

Compliance guidance:

After receiving the work permit, the enterprise must complete the signing of a written employment contract with the foreign worker before the date the foreign worker officially starts working^[8]. The signed contract must be returned to the licensing authority, in the form of an original or a certified copy. This is a mandatory regulation, so enterprises must pay attention to it to avoid administrative penalties.

3.7. Submit explanation for using foreign workers earlier than actual recruitment time

Problem statement:

The enterprise prepared and submitted a report explaining the need to use foreign workers before the project officially started but failed to recruit in time, resulting in the approval document expiring.

Compliance guidance:

In fact, enterprises can still make a report explaining the need to use foreign workers before the project is officially implemented. However, if the actual recruitment time is too late compared to the time of submitting the report, the approval document may expire before the enterprise recruits suitable workers. At that time, the entire explanation procedure must be redone from the beginning, causing time and cost. Therefore, to ensure efficiency, enterprises should consider making a report explaining the need to use foreign workers close to the actual implementation time of the project.

3.8. Granting work permits to foreign workers working for many enterprises

Problem statement:

Do foreign workers working for many different enterprises need to apply for multiple work permits?

Compliance guidance:

Each work permit will clearly state the name and address of the company where the foreign worker works, the position, title and working term of the foreign worker at that company. Therefore, when a foreign worker works for many different companies, there must be many work permits corresponding to each company where the foreign worker works and these companies must still carry out the procedures to apply for a work permit for this individual.

In particular, for foreign workers who have been granted a valid work permit and wish to work for another employer in the same position and job title stated in the work permit, this is a special case and the application for a new work permit is simplified according to Clause 9, Article 9 of Decree 152/2020/ND-CP.

3.9. Determine where to submit the application for a work permit for enterprise with operating licenses issued by multiple competent authorities.

Problem statement:

Some businesses may simultaneously hold multiple operating licenses issued by different agencies, for example, a foreign law firm may have its establishment license issued by the Ministry of Justice and its operating license issued by the Department of Justice. So, are the procedures for work permits for foreign workers handled by the Ministry of Home Affairs or the Department of Home Affairs?

Compliance guidance:

When preparing the application for a work permit, the enterprise needs to determine which agency issued its main operating license - provincial or ministerial/ industry level. If the main operating license is issued by a ministry or ministerial-level agency such as a foreign law firm, the application for a work permit must be submitted to the Ministry of Home Affairs^[9]. Therefore, the enterprise should review the establishment license to avoid submitting it to the wrong licensing agency, causing delays or being required to re-submit from the beginning.

 

Source: German Business Association - GBA

 

4. MISTAKES IN PERFORMING PROCEDURES FOR RE-ISSUANCE/ RENEWAL OF WORK PERMIT

4.1. Report the demand for employing foreign workers when renewing work permits

Problem statement:

Enterprises carry out procedures to extend work permits for foreign workers but do not re-perform the steps of announcing the recruitment of Vietnamese workers and reporting the demand for employing foreign workers.

Compliance guidance:

According to regulations, employers must notify the recruitment of Vietnamese employees for positions expected to use foreign workers and report the demand for employing foreign workers for all cases of new work permit issuance, work permit extension, and confirmation of not being required for work permit issuance (except for exempted cases)^[10]. In case the enterprise does not perform the above steps before carrying out the work permit extension procedure, the application may be rejected by the licensing authority.

4.2. Renewal or re-issuance of a work permit after it has been renewed once

Problem statement:

After the work permit has been extended once, the enterprise is wondering whether to continue the extension procedure or issue a new work permit.

Compliance guidance:

A work permit can only be extended once^[11], so foreign workers who have had their work permit extended once will have to apply for a new work permit. Note that in the case of foreign workers who are experts or technical workers who have been granted a work permit and have had their work permit extended once and want to continue working in the same position and job title stated in the work permit, they will not have to submit a new application as usual, but will only have to submit the documents mentioned in Section 6.3 Part I above^[12].

4.3. Foreign workers still keep their job position and work for the same employer.

Problem statement:

Enterprises want to carry out procedures to issue new work permits for foreign workers who still maintain the same job position and work for the same employer instead of renewing the work permit.

Compliance guidance:

This case does not fall under the special cases prescribed by regulations, therefore, the employer must carry out procedures to extend the work permit for the foreign worker and cannot apply for a new work permit.

4.4. Training major for specialist and technical worker positions

Problem statement:

For positions as experts and technical workers, is it mandatory for foreign workers to have specialized training appropriate to the work they will perform in Vietnam?

Compliance guidance:

Currently, the requirements for foreign workers in the expert position are to have a university degree or equivalent and have at least 3 years of work experience relevant to the expected job position in Vietnam. For technical labor positions, foreign workers must be trained for at least 1 year and have at least 3 years of experience relevant to the expected job position ^[13]. Thus, current regulations do not require that the qualifications or training major of foreign workers match the job they will perform, but enterprises need to pay attention to the practical work experience of foreign workers.

4.5. Working after the work permit expires

Problem statement:

In many cases, foreign workers continue to work for the employer after their work permit expires without renewing/ re-issuing it, or continue to work while waiting for a re-issue of their work permit.

Compliance guidance:

Currently, there is no regulation allowing foreign workers to continue working while waiting for a new work permit, or to work after the work permit has expired. In case foreign workers continue to work without a valid work permit, they will be fined from VND 15,000,000 to VND 25,000,000 and deported from Vietnam. Employers employing foreign workers without a valid work permit as above will be administratively fined from VND 30,000,000 to VND 150,000,000^[14].

Therefore, to ensure compliance with the law, enterprises and foreign workers need to ensure that the work permit remains valid throughout the working period in Vietnam. If the work permit expires or needs to be reissued, the foreign worker must wait until a new valid work permit is issued to be able to continue working in Vietnam.

4.6. Foreign workers change information after being granted a work permit

Problem statement:

Enterprises must simultaneously carry out procedures for re-issuing and extending work permits when the old work permit has expired and there is a change in information about the new passport number.

Compliance guidance:

In cases where foreign workers have changes in their full name, nationality, passport number, or work location, the enterprise must carry out the procedure for reissuing a work permit to update the new information before carrying out the extension procedure^[15]or must carry out a new work permit with the new information. If the enterprise directly carries out the extension procedure instead of carrying out the reissuance procedure, it will be rejected. In this case, the competent authority will not accept the application until the information is updated in accordance with the regulations through the reissuance procedure. Therefore, enterprises need to pay attention to this issue to carry out the application appropriately.