What should businesses be aware of regarding the rights of foreign employees in Vietnam?

A foreigner is preparing to leave Vietnam after several years of work. Just before their departure, they learn they can withdraw their social insurance benefits but are unsure of the conditions, procedures, or appropriate timing. The company is also confused because they have never handled this before. This is not an uncommon situation, and without prior preparation, employees' rights may be missed, leading to risks for the company.

1. Overall Rights of Foreign Workers in Vietnam

The rights of foreign workers extend beyond contracts and salaries. In fact, they are protected by multiple layers of regulations, from labor, insurance, and taxes to termination benefits.

Contract and Working Conditions Rights

Foreign workers legally employed in Vietnam need work permits and appropriate contracts. They have the right to receive timely wages, work in safe conditions, and take leave as prescribed.

A frequently overlooked aspect is the connection between the labor contract and the work permit. If the permit expires and is not renewed in time, the contract may become invalid. This affects all related rights, including insurance and contract termination.

Insurance and Financial Rights

One of the biggest concerns for many businesses and foreign workers is social insurance. According to the Social Insurance Law 2014 and Decree 143/2018/ND-CP, foreign workers in Vietnam are subject to mandatory social insurance if they have a work permit and a contract of one year or more.

Benefits include:

• Sick leave and maternity leave
• Workplace accident and occupational disease insurance
• Pension or lump-sum social insurance payment

In particular, upon termination of their contract and departure from Vietnam, foreign workers may be eligible to withdraw their social insurance contributions in a lump sum. This is an important financial benefit that is often missed due to misunderstanding regulations or failure to follow the correct procedures.

2. Common Business Risks When Employees Don't Manage Benefits

Most risks don't appear immediately upon signing a contract but become most apparent when an employee leaves. This is when businesses must simultaneously address multiple issues such as contract termination, insurance, taxes, and remaining benefits.

Some common real-world situations businesses encounter include:

• Workers are unaware they can withdraw their social insurance benefits and miss out on their entitlements.
• The insurance claim file was incomplete, resulting in the claim being processed.
• The employee has returned to their home country but their benefits have not yet been processed, causing difficulties in granting authorization.
• Disputes arise from misunderstandings regarding financial obligations.

These issues not only harm employees but also directly affect the company's image, especially in an international human resources environment. A crucial point is that the cost of dispute resolution in Vietnam is not low and doesn't necessarily guarantee practical effectiveness. Even with a favorable ruling, enforcement remains a different story, particularly when the party involved is no longer operating or has left Vietnam.

3. How Businesses Control and Ensure the Rights of Foreign Employees

Standardize Contracts and Internal Policies

Employment contracts with foreign employees should be designed to comply with Vietnamese law, rather than using international templates. Clauses related to insurance, taxes, and contract termination need to be clearly stated. When contracts are clear, businesses will significantly reduce risks when real-world situations arise, especially at the end of the partnership.

Monitor Throughout the Employment Process

Employee rights are not a one-time issue but a continuous process. Businesses need to monitor factors such as work permit expiration dates, social insurance contributions, and tax status. This helps avoid situations where checks are only conducted when necessary, often making adjustments too late.

Prepare Before Employees Leave Vietnam

This is the most important stage, but it is often overlooked. Workers need clear guidance on their rights, especially regarding lump-sum social insurance payments.

In practice, there are two main approaches:

• Completing the procedures while still in Vietnam helps shorten the processing time.
• Alternatively, you could do it after returning to your home country through authorization, but that would be more complicated.

The choice of which option to pursue depends on the employee's timeframe, documentation, and residency status. Without proper preparation, there's a high probability that benefits will be delayed or difficult to obtain.

The benefits of foreign employees in Vietnam constitute a comprehensive system, encompassing not only legal aspects but also financial, insurance, and work experience considerations. If a business only considers one aspect, risks will arise in the others. The key is not to deal with problems when they arise, but to understand and prepare correctly from the outset. Each case will depend on the employee's documentation, length of service, and residency status, so a flexible and practical approach is necessary.

DEDICA can assist you from document review to application processing, saving you time and minimizing risks.

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