Labor Contract Disputes with Foreign Experts in Vietnam

When companies in Vietnam sign labor contracts with foreign experts, disputes can easily arise due to differences in laws, work permits, contract durations, termination conditions, etc. Below is a summary of the latest regulations and practical experience for effectively handling labor contract disputes involving foreign elements.

1. Recent Legal Developments in Vietnam Regarding Labor Contracts with Foreign Experts

1.1. Definition of Experts, Work Permits, and Applicable Contract Types

According to Decree 152/2020/ND-CP, amended by Decree 70/2023/ND-CP, a foreign expert is defined as a foreign worker who meets at least one of the following criteria: a university degree or higher plus at least 3 years of experience relevant to the job position; or at least 5 years of experience plus a relevant professional certificate; or in special cases, as approved by the Prime Minister.

Foreign experts working in Vietnam must obtain a valid work permit, except in specific exempted cases, such as working less than 30 days and no more than three times per year in positions like expert, technician, manager, or executive.

Regarding contract types: new regulations only allow for fixed-term labor contracts with foreign workers. The contract duration must not exceed the validity of the work permit. Signing indefinite-term contracts with foreign experts is not permitted.

1.2. Termination of Labor Contracts & Entitlements upon Termination

The 2019 Labor Code adds special cases for terminating labor contracts with foreign nationals, such as when the work permit expires, when the worker is deported under a valid court decision, or in other legally specified situations.

Upon termination, foreign experts are entitled to benefits as stipulated under Vietnamese labor laws unless international treaties provide otherwise. These include severance allowances, unpaid wages, and other agreed benefits.

2. How to Handle Labor Contract Disputes Involving Foreign Experts

2.1. Determining Time Limits & Jurisdiction for Resolving Disputes

Time limits for resolving individual labor disputes in Vietnam are as follows:

• Labor conciliator: Within 6 months from the date the violation is discovered.

• Labor arbitration council: Within 9 months from the date the violation is discovered.

• People’s Court: Within 1 year from the date the violation is discovered.

Jurisdiction for resolving disputes with foreign elements includes:

• Initially handled by a labor conciliator (unless the law exempts this requirement).

• If conciliation fails or is not applicable, the case may be brought before a labor arbitration council or a People’s Court.

• Certain disputes do not require prior conciliation, such as dismissal cases, unilateral termination, severance pay, or compensation upon contract termination.

2.2. Preparing Documentation, Evidence & Choosing a Dispute Resolution Method

Preparing documentation includes:

• The original or certified copy of the labor contract between the foreign expert and the company.

• Valid work permit or exemption documents.

• Related evidence: emails, notices, meeting minutes, degrees, proof of experience, professional certifications, residence documents, negotiation efforts, etc.

• Documents relating to violations: termination agreements, dismissal letters, disciplinary decisions, wage arrears, unpaid leave, etc.

Choosing a resolution method:

• Start with internal negotiation and conciliation, which are low-cost and preserve working relationships.

• If unsuccessful, conciliation through a labor conciliator is mandatory in many cases.

• If conciliation fails or is not required, the case may go to labor arbitration or court. Arbitration is often faster and more confidential, but if the other party refuses to participate, court proceedings are necessary.

• In cases where the foreign expert has left Vietnam or due to international factors, they may authorize a lawyer in Vietnam to represent them in resolving the dispute.

2.3. Practical Tips to Avoid Risks & Achieve Better Outcomes

• Carefully check the validity of the work permit. If it has expired, the contract may be legally terminated.

• Clearly define job conditions, insurance, working hours, wages, responsibilities for breaches, and termination costs in the contract.

• Preserve evidence (negotiation records, written exchanges, emails, meeting minutes, etc.). If the foreign expert leaves Vietnam, they can authorize a local representative to receive notices or file claims.

• Strictly observe the time limits for initiating legal action to avoid losing the right to dispute resolution.

• Consider the impact of international treaties, which may override or supplement Vietnamese laws in certain cases.

3. Conclusion

When a dispute arises with a foreign expert, both the company and the employee should calmly assess the situation: What is the dispute about (salary, dismissal, work permit, working conditions, etc.)? Is the subject a foreign expert? Is the time limit still valid? Is there a written contract? What’s the status of the work permit?

Prioritize negotiation or mediation to reduce costs and reputational risks.

If resolution through mediation is not feasible, prepare full documentation and pursue resolution through labor arbitration or court—authorize representation if the expert has left Vietnam.

Always stay updated on changes to labor laws, regulations on work permits, and foreign labor contracts to ensure compliance and protect the rights of both the enterprise and the foreign expert.

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