A comprehensive overview of hiring foreign nationals in Vietnam

Essential Information for Employers and Foreign Employees in Vietnam

Under Vietnamese law, foreign nationals do not have an automatic right to work in Vietnam. Whether a company intends to hire a foreign employee or an individual is seeking employment in Vietnam, a number of legal procedures must be followed. This guide outlines the key principles and processes that employers and foreign workers must understand.

Foundational Principles of Foreign Employment in Vietnam

Before reviewing the detailed procedures, it is important to understand two core principles governing the employment of foreigners:

Visas Do Not Grant Employment Rights

Business visas, visa exemptions, temporary residence cards, and other immigration documents do not authorize employment. These documents only govern entry, exit, and residence—not the legal right to work.

Work Permits Are Mandatory (Unless Exempt)

According to the Vietnam Labour Code and its implementing decrees, all foreign individuals must obtain a Work Permit before engaging in employment activities in Vietnam, unless they meet a legally defined exemption and secure an official Work Permit Exemption Certificate.

Vietnam’s system differs from many countries where a “work visa” automatically covers both immigration and employment rights. In Vietnam, immigration and work authorization are handled separately, and employers must apply for work permits for specific job positions. Work permits are not transferable between employers or roles.

Eight Key Points Employers and Foreign Employees Must Understand

1. Work Permits Are Required Unless an Exemption Applies

Employers must apply for a Work Permit on behalf of their foreign employees before employment begins. Work permits are issued by the Provincial Department of Home Affairs (DoHA).

Under Decree 219/2025/ND-CP, there are 22 exemption categories. Of these, 12 require an Exemption Certificate to be issued before the employee begins work. The remaining categories allow exemption without a certificate, but employers must notify DoHA at least three working days before the employee’s start date.

2. Work Permit Exemption Categories

There are two groups of exemption categories:

Group 1 – Exemptions Requiring an Exemption Certificate (12 categories)

Common examples include:

• Internal transferees who have worked for the overseas parent company for at least 12 months.

• Foreign interns studying at institutions outside Vietnam.

Group 2 – Exemptions Not Requiring a Certificate (but requiring DoHA notification)

Examples include:

• Managers, CEOs, experts, or technicians working less than 90 days per year.

• Individuals providing services in Vietnam for under 3 months.

• Foreign lawyers holding a valid Vietnamese practicing certificate.

• Specialists entering Vietnam for under 3 months to resolve urgent technical issues.

• Foreign employees married to Vietnamese citizens and residing in Vietnam.

• Owners or board members of companies with capital contributions of at least VND 3 billion.

3. Exemption Certificates

Exemption Certificates function similarly to work permits, though typically with fewer documentation requirements. Employers must still submit company information and documentation proving the employee’s eligibility for the exemption. The employment contract can only be signed after the certificate is issued.

4. Work Permit Application Categories

Although there is only one Work Permit (valid for up to two years), applications fall under three primary categories with distinct requirements:

Expert

Requirements:

• A university degree or higher.

• At least two years of relevant professional experience (or one year for priority sectors such as IT, innovation, fintech, etc., if the degree is directly relevant).

Previous work in Vietnam can be evidenced using prior Work Permits or Exemption Certificates.

Manager

Generally applies to:

• Chairpersons, General Directors, Directors, or positions listed in the company’s establishment license or charter.

This category does not require a degree or role‑specific experience but does require proof of managerial status.

Chief Executive Officer

Applicable to:

• Heads of departments or dependent units (branches, representative offices).

Requirements:

• At least three years of relevant managerial experience.

• Supporting documents such as establishment certificates or company charters.

Technical Worker

For those without university degrees:

• A technical certificate or training of at least 12 months, plus 2 years of experience;
  OR

• 3 years of relevant experience if no formal certificate is held.

5. Work Permits Are Employer- and Role-Specific

A work permit is tied to one employer and one job title.
If a foreign employee:

• changes employer,

• changes position within the same employer, or

• takes an additional job,

a new Work Permit is required. This is often frustrating for employees but is a strict legal requirement.

6. Working Without a Work Permit Can Create Serious Problems

Some individuals work illegally in Vietnam—paid informally and without proper documentation. This creates complications because:

• Past experience in Vietnam cannot be counted in future Work Permit applications unless supported by a valid Work Permit or Exemption Certificate.

• Applicants must declare their employment history, making undeclared work difficult to omit.

Potential consequences include:

• Deportation and bans on re-entry.

• Employers being prohibited from hiring foreigners for a set period.

• Administrative penalties for both employer and employee.

7. Tax Obligations Are Based on Tax Residency, Not Work Permit Status

Personal income tax in Vietnam is determined by tax residency status, not by whether the employee holds a Work Permit or exemption.

Tax residency typically depends on:

• Time spent in Vietnam during the tax year, or

• Whether the individual has a permanent residence or rental contract.

Thus, work authorization does not affect tax obligations.

8. Probationary Employment Still Requires a Work Permit

This requirement remains one of the most challenging aspects for employers in Vietnam. Under Vietnamese law, a foreign employee must already have a valid Work Permit (or Work Permit Exemption, where applicable) before they may commence any form of employment—including probation. This means employers cannot legally test a foreign employee’s suitability for a role through a traditional probation clause unless the Work Permit has been issued in advance.

Some employers attempt to work around this limitation by inviting the prospective employee to Vietnam under the “3-Month Rule” exemption, allowing them to work for up to 90 days in a calendar year without a Work Permit (with advance notification to DoHA). If the candidate proves suitable, the employer will then proceed with Work Permit procedures and negotiate a long-term employment contract.

While commonly used, this workaround carries risks, and acceptability depends on both the employer’s compliance posture and the candidate’s comfort level.

Risks and Challenges When Employing Foreign Workers Improperly

Failure to follow the correct procedures can lead to significant legal, financial, and operational consequences. Key risks include:

1. Tax and Accounting Issues

• Payments to foreign employees without valid work authorization may be non-deductible for corporate income tax purposes.

• Financial statements may become non-compliant with Vietnam Accounting Standards (VAS), which do not permit recording informal or undocumented payments.

• Cash or bank transfers without proper documentation expose employers to audit risks and potential penalties.

2. Labour Authority Penalties

Authorities may impose:

• Fines,

• Deportation of the foreign employee, and

• Temporary prohibitions on hiring foreign workers for non‑compliant employers.

3. Validity of Contracts and Corporate Acts

Contracts signed on behalf of the company by a foreign individual who is not legally employed, or who lacks a valid Work Permit or Exemption Certificate, may be considered invalid by government bodies—particularly tax authorities.
This can cause:

• Delays in tax filings

• Rejection of company transactions

• Potential disputes regarding enforceability of contracts

Rules for Employing Foreigners in Vietnam

All foreigners working in Vietnam—even for short-term assignments—must have one of the following:

• A Work Permit,

• A Work Permit Exemption Certificate, or

• Prior notification to DoHA, where applicable.

Without one of these, an employer cannot legally sign a Labour Contract or pay the employee’s salary.

When a Work Permit or Exemption Is in Place

Employers may:

• Pay salaries through the banking system (including payments in foreign currency)

• Sponsor a Temporary Residence Card (TRC) with validity matching the Work Permit or Exemption

• Support legal remittance of the employee’s net salary abroad, as the income is tax‑paid and compliant

Gross vs. Net Salary: What Employers Must Consider

Some companies still offer net-of-tax salary packages to foreign employees. While common in the past, this practice places all tax risks—and any subsequent increases in tax liabilities—on the employer. It is inconsistent with international best practice.

Why Gross Salary Is Recommended

• The employee bears tax changes imposed on individuals.

• The employer bears only employer‑related statutory contributions.

• The employer avoids unexpected additional tax exposure due to factors beyond its control (e.g., dependents, tax-residency changes).

Gross salary structures ensure transparency, fairness, and better compliance with Vietnamese labor and tax regulations.

Work Permits: Key Responsibilities and Process Overview

Work Permits in Vietnam are widely misunderstood but relatively straightforward when managed proactively.

Employer Responsibilities

• Apply for and obtain the Work Permit before the foreign employee begins work.

• Ensure all required documentation is collected and submitted on time.

• Retrieve the Work Permit when an employee resigns and return it to authorities within 15 days.

Employee Responsibilities

• Provide all required documentation (qualifications, experience letters, criminal record checks, etc.).

• Return the Work Permit to the employer upon termination.

Practical Tips

• Prepare documents in advance to avoid delays between job offer and employment commencement.

• Bring photocopies of submitted documents and request a stamp for record-keeping, as authorities no longer issue written confirmation upon receipt of returned Work Permits.