Foreign Investment Restrictions and Business Conditions for the Labor Dispatch Business in Vietnam
Table of Contents
A Vietnamese-qualified lawyer clearly explains the practical matters that Japanese companies considering entry into the labor dispatch business in Vietnam should examine — foreign investment restrictions, forms of investment, required licenses, capital requirements, and the extent to which local partners may be involved. The article also touches on the distinction from recruitment agency business and the risk of illegality, and provides concrete support from obtaining licenses through to establishing the operating structure. NEXORA LAWFIRM has been involved in numerous launches of human-resources-related businesses by Japanese companies, providing comprehensive support for complex legal practice, including license acquisition, optimal design of foreign ownership ratios, contract review, and compliance with labor laws and regulations.
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1. Overview of Regulations
Business: Domestic Labor Dispatch Business in Vietnam
Official Business Name under Vietnamese Law
CPC Code
VSIC Code
1. Activities of centers and agencies providing consulting, referral, and intermediary services relating to labor and employment
None
7810
2. Provision of temporary labor
7820
3. Supply and management of labor
7830
Investment and Business Conditions
Conditions under WTO Commitments
Conditions under Vietnamese Domestic Law
Labor Code No. 45/2019/QH14
Decree No. 145/2020/ND-CP detailing and providing guidance on the implementation of certain provisions of the Labor Code regarding working conditions and labor relations
(1) The domestic labor dispatch business in Vietnam is not committed under the WTO. However, because it does not fall within the sectors restricted from market access in Vietnam, it may be understood that foreign-invested enterprises may establish a labor dispatch company in Vietnam with up to 100% foreign ownership.
(2) Cross-border provision of services is, in principle, not permitted. However, as an exception, personnel transfers (secondments) between group companies or related parties that are not conducted for profit-seeking business purposes are permitted. Specifically, there are two such scenarios.
① Transferring personnel of a Vietnamese company to its Japanese parent company or an affiliated company
In this case, the Vietnamese company is not required to obtain any particular license; however, a report must be filed with the Department of Labor, Invalids and Social Affairs prior to the transfer overseas.
In addition, in order to obtain an intra-company transferee status of residence in Japan, the individual must have been employed locally in Vietnam for a period of at least 12 months.
② Seconding personnel of a Japanese company to a Vietnamese subsidiary or affiliated company
In this case, a secondment agreement must be concluded between the Japanese company and the Vietnamese company. On that basis, once a work permit is obtained for the seconded individual in Vietnam, the individual may work in Vietnam.
(3) The labor dispatch business itself falls within a conditional business sector, and a business operation license for labor dispatch services must therefore be obtained.
2. List of Industries in Which Labor Dispatch Is Permitted
Worker dispatch business may only be conducted in the following industries.
① Interpretation/translation/stenography
② Secretarial/administrative assistance
③ Reception
④ Tour guiding
⑤ Sales support
⑥ Project support
⑦ Programming of production systems
⑧ Manufacturing and installation of television and telecommunications equipment
⑨ Operation/inspection/repair of construction machinery and electrical systems for manufacturing
⑩ Cleaning of buildings and factories
⑪ Document editing
⑫ Bodyguard/security services
⑬ Telemarketing/customer support
⑭ Handling of financial and tax matters
⑮ Automobile repair/inspection
⑯ Scanning and preparation of industrial technical drawings/interior design
⑰ Driving
⑱ Management, operation, maintenance, and servicing of ships
⑲ Management, supervision, operation, repair, maintenance, and servicing of oil rigs
⑳ Aircraft piloting/servicing, maintenance and repair of aircraft and their equipment, operation management, flight operations, and flight monitoring
3. Obtaining a Business Operation License for Labor Dispatch, and Reporting Obligations
(1) Requirements for Obtaining a Business Operation License for Labor Dispatch
To obtain a business operation license for labor dispatch, the following requirements must be satisfied.
Condition
Details
Charter capital
There is no specific requirement, but the total amount must be at least the sum of the deposit amount plus the business's working capital.
Deposit amount
VND 2 billion
This deposit must be paid into an escrow account at a bank in Vietnam and maintained throughout the validity period of the business operation license.
Conditions applicable to the legal representative
The company's legal representative must satisfy the following conditions.
Being a manager of the enterprise as defined under the Law on Enterprises.
Having no criminal record.
Having at least three years (36 months or more) of professional or managerial experience in labor dispatch or labor supply within the five years preceding the license application.
(2) Practical Points to Note Regarding the Acquisition of a Business Operation License for Labor Dispatch
As described above, foreign-invested enterprises can, in principle, obtain a business operation license for labor dispatch and enter the labor dispatch business. However, there are few precedents of applications by foreign-invested enterprises, and the labor dispatch business itself is regarded as a sensitive sector. As a result, obtaining this license as a foreign-invested enterprise is not straightforward and involves considerable hurdles in practice.
The competent authority for the business operation license for labor dispatch is the People's Committee. Because jurisdiction lies with the People's Committee, the processing period tends to be somewhat longer than for standard procedures, and reference to precedent timelines may not always be meaningful.
The business operation license for labor dispatch is valid for a maximum of 60 months. It may be renewed after this period expires.
(3) Reporting Obligations
Operators must prepare a report on the status of labor dispatch operations on a semi-annual and annual basis, and submit it to the Chairman of the People's Committee of the province where the enterprise's head office is located, the Department of Labor, Invalids and Social Affairs, and the Management Board of Industrial Parks and Economic Zones. In addition, where labor dispatch is conducted in another province, a report on the status of labor dispatch operations in that region must also be submitted to the Department of Labor, Invalids and Social Affairs and the Management Board of Industrial Parks and Economic Zones of that province. Semi-annual reports must be submitted by June 20, and annual reports by December 20.