IMPACT – MEDIUM

What is the change? The Department of Labor, Invalids and Social Affairs of Ho Chi Minh City has released additional information on guidance provided last month, including announcement of a new rule that an assignment letter justifying an intracompany transfer must be issued by an owner or shareholder of the Vietnamese host company.

What does the change mean? The new information provides additional information and clarification on intracompany transferees, foreign labor reporting requirements and the penalties for failing to return old work permits.

  • Implementation time frame: Ongoing.
  • Visas/permits affected: Work permits, including those for intracompany transfers.
  • Who is affected: Companies employing or assigning foreign nationals in Vietnam.
  • Impact on processing times: Employers who do not adhere to the new requirements may have their work permits unnecessarily delayed.
  • Business impact: The new requirements will, in some cases, make it more difficult for companies to transfer employees to Vietnam.

Background: Officials provided additional information at a recent training session after issuing Circular 40 in December. The circular provided guidance on how to implement Decree 11, which introduced new rules for foreign employees, including intracompany transfers.

Key points:

  • Intracompany transfers – assignment letters. Assignment letters for intracompany transfers must be issued by an owner or shareholder of the Vietnamese host company. This marks a change from the practice of allowing assignment letters to be issued by corporate human resources offices, which are not always directly affiliated with owners or shareholders of the relevant host companies. Assignment letters must be signed, sealed, notarized, translated and legalized.
  • Quarterly reporting. As noted last month, quarterly foreign labor use reports must be submitted by companies on a new form provided by labor authorities. Authorities have additionally clarified that foreign experts and managers who come to Vietnam for 30 days or less must be included in the quarterly reports. Penalties for not filing quarterly reports will range from 1 to 2 million dong (about US$45 to $90).
  • Work permit return. Upon termination of employment, a foreign employee’s work permit must be returned to the Labour Department within 15 days. Penalties for failing to return old work permits will range from 30 to 45 million dong for up to 10 employees, 45 to 60 million dong for between 10 and 20 employees, and 60 to 75 million dong for more than 20 employees.

BAL Analysis: The new information on the ICT procedures are of particular note, as companies must be sure that the assignment letters are issued by the appropriate host company owner or shareholder. Contact BAL with questions about the new requirements to ensure that applications are not unnecessarily delayed.

This alert has been provided by the BAL Global Practice group and our network provider located in Vietnam. For additional information, please contact your BAL attorney.

Copyright © 2017 Berry Appleman & Leiden LLP. All rights reserved. Reprinting or digital redistribution to the public is permitted only with the express written permission of Berry Appleman & Leiden LLP. For inquiries please contact copyright@bal.com.