New labor code and law on foreigners to take effect in 2020
16 Dec 19
IMPACT – MEDIUM
What is the change? The National Assembly has adopted amendments to its immigration law and a new labor law.
What does the change mean? Under changes to the immigration law, taking effect in 2020, foreign nationals will be allowed to convert status in-country under some circumstances, and visa-waived nationals will no longer be subject to a 30-day cooling-off period. Under the new Labor Code that takes effect in 2021, work permit exemptions will be expanded to certain owners and directors and to spouses of Vietnamese citizens, and work permits will be limited in duration to two years, extendable for an additional two years.
- Implementation time frame: The amendments to the Law on the Entry, Exit, Transit and Residence of Foreigners take effect July 1, 2020. The new Labor Code takes effect Jan. 1, 2021.
- Visas/permits affected: Work permits, visa conversion, visa waivers.
- Business impact: The changes are intended to ease rules for expatriate workers and attract foreign investment.
- Next steps: The government is expect to issue guidance in 2020 that will provide implementation details and additional clarifications.
The main changes are listed below.
2020 immigration law changes:
- Change of visa category. Foreign nationals may change status in-country under certain circumstances and with proper documentation, eliminating the need to leave the country to apply for a new visa category. This will apply to business visa holders only, not to those holding tourist visas.
- Visa-exempt nationals. Visa-waived nationals will be able to enter with only a passport as long as it will remain valid for at least six months, and will no longer be subject to a 30-day cooling-off period upon exit. This change benefits nationals of Denmark, Finland, France, Germany, Italy, Japan, Korea, Norway, Russia, Spain, Sweden, and the U.K.
- Investor visas. Foreign investors will be issued visas and temporary residence cards with a duration of one to 10 years depending on the investment amount. Dependents will have a maximum duration of three years, renewable.
- DN visas. DN visas will continue to be issued to foreign nationals coming to Vietnam for general business purposes or working less than 30 days per visit. The category covers foreigners working with entities whose legal status is regulated by Vietnamese law and foreigners conducting activities under international agreements to which Vietnam is a party.
- Working (LD) visas. LD visas will continue to be issued for work permit holders and for those holding a work-permit exemption certificate, and the duration of the visa or temporary residence card will depend on the duration of the work permit.
2021 labor law changes:
- Work permit exemptions. The following categories will be exempt from work permits: owners or capital-contributing members of limited liability companies that meet minimum contribution amounts designated by the government; chairs or members of the board of directors of a joint stock company that meet government capital contribution requirements; spouses of Vietnamese citizens.
- Labor contracts. Labor contracts for foreign nationals must not exceed the validity period of the work permit. Employers may enter into multiple definite-term labor contracts with foreign employees provided that the work permit is granted.
- Work permit duration. Work permits will be issued for a maximum two years and may only be extended once for a maximum period of two years.
Analysis & Comments: The two laws contain several welcome changes that should ease rules and conditions for foreign nationals, saving time and money for companies and expatriate employees. In particular, allowing foreign nationals to change visa categories in-country and removing the cooling-off period for visa-waived nationals will eliminate or reduce the need for additional travel. Additionally, the expansion of work permit exemptions and investor visas should help attract foreign direct investment and encourage economic development; however, foreigners will only be able to renew work permits once for up to two years.
Source: Deloitte. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities. DTTL (also referred to as “Deloitte Global”) and each of its member firms are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte Legal means the legal practices of Deloitte Touche Tohmatsu Limited member firms or their affiliates that provide legal services. For legal, regulatory and other reasons, not all member firms provide legal services. This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited, its member firms or their related entities (collectively, the “Deloitte network”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No entity in the Deloitte network shall be responsible for any loss whatsoever sustained by any person who relies on this communication. © 2019. For information, contact Deloitte Touche Tohmatsu Limited.