Answer:
- Could an Employer apply a probationary period to a foreign Employee when working in Vietnam?
The Labour Code has yet provided any regulation on probation exclusively applicable for foreign Employees working in Vietnam. However, since the Labour Code, in general, applies to both Vietnamese Employees and foreign ones[1], it can be understood that the regulations on probation, including probationary time, probationary salary, end of probation, are generally for foreign Employees as the same as Vietnamese Employees. The Employer has the full right to apply for probation to the foreign Employee working in Vietnam.
However, please note that according to Decree No. 152/2020/ND-CP dated 30/12/2020 on foreign Employees working in Vietnam and recruitment and management of Vietnamese Employees working for foreign Employers in Vietnam, the foreign Employee must be the subject to one of the allowed types of employment listed in Article 2.1 of this Decree for working in Vietnam. For this reason, in principle, if the Employer would like to impose the probationary period and for the purpose of having full eligibility to obtain work permit, the Employer should enter into a LC with the foreign Employee and the probation shall be stipulated in the LC as the analysis below, rather than sign an independent probationary contract. Additionally, during the probationary period, when the Employee did not meet the satisfied requirements or either party rescinded the agreement on probationary work that be stipulated in the LC; the LC shall be terminated automatically and both parties will not have any rights or benefits with each other[2].
2. If so, does the foreign Employee need a work permit for this period?
Any Foreign Employee when working in Vietnam must be granted a work permit issued by a competent State authority[3], except for any exemption from work permit as provided by Article 154 of the Labour Code and Article 7 of Decree No. 152/2020/ND-CP dated 20/12/2020. Accordingly, the firstly requisite and mandatory for any foreign Employee working in Vietnam is having a work permit.
Please note that, apart from the work permit, the foreign Employee must meet the following conditions[4]:
- Being a full eighteen (18) years of age and having the full legal capacity for civil acts;
- Having professional qualifications, technical and other skills, work experience and good health as stipulated in regulations of the Minister of Health; and
- Not being a person currently serving a sentence or with a criminal conviction which has not yet been absolved/removed from the record, and not subject to prosecution for criminal liability in accordance with the law of the foreign country or the law of Vietnam;
One of the contents of the explanation of need for the foreign Employee (Form No. 01/PLI attached to Decree No. 152/2020/ND-CP) and of Section 7 of the work permits is the type of employment (including the LC performance), so it could be understood that the foreign Employee is granted under the type of “LC performance” and the competent State agency shall issue the work permit according to the LC as prepared to be entered into. Accordingly, the Employer must sign the LC even for the probationary period for obtaining the work permit. However, in reality, whether the competent State agency grants the work permit during the probationary period is another story. After consulting with the officials of DOLISA of Ho Chi Minh City, please note that the probationary period for the foreign Employee working in Vietnam is not really popular and they have not seen any relevant case currently. On the other hand, the DOLISA of some provinces advised that the probationary period or working are completely dependent on the agreement between the Employer and the foreign Employee, as the labour laws do not have any regulation prohibit such case, therefore the foreign Employee still shall have a work permit for working in Vietnam. For this inconsistency between such DOLISAs, the Employer should consult the recruitment and the probationary period of the foreign Employee with the local DOLISA where the enterprise headquarter is located before carrying any produces to explain the needs of foreign Employees and obtain work permits. This act is to help get clear advice and guidance in such a case and avoid being delayed granting work permit or being declared invalid for probation contract/LC because the foreign Employee performs the LC but is not eligible for working in Vietnam.
3. During such a probationary period, is the foreign Employee required to pay SI and HI according to the Law? Why?
As mentioned above, if the Employer wants to apply probation to the foreign Employee, such probation must be stated in the LC. It is in order for the foreign Employee who entered into the LC shall be one of the applied entities by the labour law and is also the basis for being granted with the work permit. Moreover, regarding the basis for settling the payments of SI, HI for the foreign Employee, the Employer can refer to Decision No. 2777/QD-BHXH dated 31/12/2015. Under such Decision, the Employer and the Employees must participate in SI and HI, even for the probationary period if the LC has the probationary period.
Regarding the payment of compulsory SI, the Employee working in Vietnam shall be required to be the subject paying the compulsory SI when he or she had a work permit or practice certificate or license issued by the competent State authority of Vietnam and having a definite-term LC with the term of at least 01 year, the said foreign Employee shall be the subject to SI, insurance for labour accidents and occupational diseases[5]. If the foreign Employee is not eligible to participate, the Employer will have to directly pay him or her an amount corresponding to the contribution rate of SI and insurance for labour accidents and occupational diseases in the same period with the period of paying monthly salary.
Furthermore, according to the Law on HI[6], the Employee must participate in compulsory HI, including the foreign Employee working under a definite-term LC with the term of at least 3 months but not exceed 36 months as stipulated by the labour law ( also note that for the foreign Employee, the term of a LC shall not exceed 02 years in all cases as it is the maximum duration of the issued work permit). Therefore, it can be understood that, if the probation is included in the LC, the foreign Employee still is obligated to pay HI for such a probationary period.
Thus, even if the foreign Employee working in Vietnam is in the probationary period under the probation specified in the LC, the Employer and the foreign Employee are obliged to pay the HI and SI in accordance with the law.
[1] Article 2.2, 2.3 of the Labour Code
[2] Article 34.13 of the Labour Code
[3] Article 151.1(d) of the Labour Code
[4] Article 151.1 of the Labour Code
[5] Article 2.1 of Decree 143/2018/ND-CP of the Government dated 15 October 2018
[6] Article 12.1 (a) Law on HI
