Drafting Labor Contracts with Foreign Workers: Key Legal Considerations

Jun 25

1. Working Conditions & Work Permits

According to Article 151 of the 2019 Labor Code, foreign workers in Vietnam must meet the following conditions: be at least 18 years old, have full legal capacity, possess the required qualifications and health conditions, have no pending criminal liability, and hold a valid work permit.

A work permit must be issued before signing the employment contract; contracts signed without a valid permit are deemed legally invalid and may be annulled by the court.

Note: Never sign a contract before the work permit is granted. The employer bears the main responsibility, but the employee must also cooperate in providing the necessary documentation.

2. Contract Duration & Extension

Under the 2019 Labor Code, there is no limit on the number of fixed-term contracts signed with foreign employees. However, each contract term must not exceed the duration of the employee’s work permit.

According to Decree 152/2020/NĐ‑CP and relevant guidance, a work permit may be valid for up to 24 months.

Permit extension: Applications can be submitted 5–45 days before expiration. Within 5 working days, the competent authority must respond. If approved, both parties must sign a new contract and submit a copy to the labor authority.

3. Contract Content – Template & Mandatory Clauses

Based on guidance from law firms and 2025 social insurance software updates, the contract should include:

Language: Bilingual (Vietnamese + English or the employee's native language)
Job Description: Title, duties, and work location
Term & Extension: Start and end dates aligned with the work permit validity
Salary & Payment Method: Clear salary structure, including allowances, payment method (VND or foreign currency)
Social Insurance & Tax: Details on social insurance (if applicable) and PIT deduction commitment
Visa & Residency: Ensure visa and temporary residence card are valid
Working Time & Leave: Work hours, holidays, annual leave, and occupational safety
Termination/Dispute Resolution: Contract termination process and dispute resolution clause
Special Clauses: Confidentiality, non-compete, and compliance with company regulations

Additionally, some sample contracts from 2025 are available and can be customized to suit actual needs.

4. Labor Demand Reporting Requirements

Employers must report the demand for foreign workers annually or upon any changes to the Department of Labor, Invalids and Social Affairs (DOLISA). Under Decree 70/2023/NĐ‑CP, the notice period has been reduced from 30 to 15 days.

The report must include: job position, reason for hiring, quantity, and proof that no qualified Vietnamese candidates are available.

5. Union Rights & New Policies

Effective from July 1, 2025, under the 2024 Trade Union Law:

Foreign workers with contracts of 12 months or more are eligible to join grassroots trade unions. Employers should consider adding a clause regarding union rights where applicable.

6. Consequences of Non-Compliance

A contract is invalid if signed without a work permit, according to recent rulings by the Supreme People’s Court and the High People’s Court in HCMC.

Employers using foreign workers without valid permits are subject to administrative penalties under Decree 152/2020/NĐ‑CP.

Conclusion & Recommendations

Review legal documents: Ensure work permits, visas, and residence cards are valid before drafting.
Draft bilingual contracts: Clearly define roles, duration, salary, benefits, social insurance, and taxes.
File labor demand reports on time as required under Decree 70/2023/NĐ‑CP.
Prepare union clauses if the contract is 12 months or longer (effective from July 2025).
Track permit extensions and promptly re-sign contracts to avoid "invalid contract" risks.
Keep records of contracts and permits ready for inspection by authorities.