New Decree 102 on Work Permits and its Impact on Business

By Oliver Massmann
> Japanese

Decree 102/2013/ND-CP brings changes to current regulations, which will have negative and positive impacts on the employment of foreigners in Vietnam.

Positive impacts: Increasing opportunities with regard to the employment of foreigners

  • The most promising advantage is the “intra-corporate transferee” category. Employees who fit this category are exempted from the work permit requirement in Vietnam. Of course, this must be further considered subject to the guidelines of the MOIT. Other new categories of foreigners that are not subject to work permits in Vietnam include international volunteers and teachers working at international university. Foreigners can also be assigned to Vietnam (e.g., technical workers). Overall, a wider range of intra-corporate transferees can be permitted to be assigned to Vietnam.
  • The wording “extension of work permit” is no longer used. Article 13 provides that a work permit can be “re-issued” upon expiration of a current work permit for a period of up to 2 years.
  • Decree 102 does not require employers to place a job advertisement. This requirement in Decree 34 and Decree 46 has been removed.

Negative impacts: Restricting employment of foreigners

  • One significant negative impact of Decree 102 is the requirement that enterprises must obtain approval of the Chairman of the People Committee for the annual demand on foreign employees. First, the lack of a specific procedure for the issuance of such approval confirmation by the Chairman and may cause delay to the employment of foreigners (NB: a work permit application requires this approval).
  • The confirmation letter required for foreigners exempt from work permits is a new baby permit that will cause more paperwork for employers.
  • Decree 102 abolishes the regulation that a foreigner who works less than 3 months is not subject to a work permit. This may be a disadvantage for the employer, because the employer can no longer apply the first 3 months as a probation period for a foreign employee. Now, in any case, employers must obtain work permits for such foreigners from the very beginning of the employment.

Conclusion: Overall, it appears to us that if Decree 102 will be implemented its effect will not contribute to doing business easier than the current regulations, since it does not clearly provide all procedures necessary for foreigners to work in Vietnam. This may cause delay and challenges to foreign investors who employ foreigners when Decree 102 comes into effect. Of course, if the Government and MOLISA promptly provide necessary guidelines, that would mitigate somehow the foregoing challenges of Decree 102, then there is a chance to avoid work permits, so long as the regulation on “intra-transferees” is not too strict.

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