Foreigners who want to work in Vietnam must have a work permit issued by a competent Vietnamese agency

Legal grounds:

• Civil Code 2015;
• Labor Code 2019;
• Decree No. 145/2020/ND-CP.

According to the provisions of Article 151 of the Labor Code, foreigners who want to work in Vietnam must meet certain conditions, including the requirement to have a work permit issued by a competent Vietnamese agency. However, in fact, many businesses in Vietnam do not comply with this regulation, accepting foreigners to work without valid work permits, affecting the interests of foreign workers. Normally, the matter is only discovered and handled when there is a labor dispute. In that case, is the labor contract of a foreigner without a work permit valid? And how does not having a work permit affect the interests of foreign workers?

1. Term of the labor contract under the work permit

Labor law has provisions on the conversion of the type of labor contract. Specifically, the Labor Code 2019 stipulates as follows:

If within 30 days from the date of expiry of the definite-term labor contract, the two parties do not sign a new labor contract, the signed contract becomes an indefinite-term labor contract;

In case the two parties sign a new labor contract, which is a definite-term labor contract, it is only allowed to sign one more time, after that, if the employee continues to work, he must sign an indefinite-term labor contract. …

Previously, the Labor Code 2012 also had regulations on converting the same type of labor contract as above. Therefore, in many cases, enterprises and foreign workers have entered into labor contracts of indefinite term. However, the above provisions do not apply to foreign workers and it is illegal to enter into an indefinite term labor contract with a foreign worker. Because the term of the foreign worker’s labor contract is limited by the term of the work permit. The 2012 Labor Code does not clearly stipulate this content. But this has been remedied by the 2019 Labor Code in Clause 2, Article 151 as follows:

2. The term of the labor contract for a foreign worker working in Vietnam must not exceed the term of the work permit. When employing foreign workers to work in Vietnam, the two parties may agree to enter into multiple definite-term labor contracts.

2. Labor contract is invalid

The cases in which a labor contract is completely invalidated are specified in Article 49 of the Labor Code 2019 including:

a) The entire content of the labor contract violates the law;

b) The person entering into the labor contract is not within the competence or violates the principle of entering into the labor contract…;

c) The work entered into in the labor contract is a job prohibited by law.

Thus, according to the above provisions, the Labor Code does not specifically stipulate whether a labor contract with a foreign worker without a work permit is invalidated or not, and if it is invalid, which of the above conditions is applied?

Considering the provisions of Article 153 of the Labor Code 2019, foreign workers working in Vietnam without a work permit will be forced to exit or deported in accordance with the law. This content can be understood that without a work permit, foreigners have no right to work in Vietnam and may be forced to exit or deport.

The trial practice shows that the courts have ruled that the labor contracts signed with foreign workers without a work permit are invalid due to violations of the law on work permits, and violation of the prohibition of the law as provided for in Article 123 of the Civil Code.

3. Legal consequences of an invalid labor contract

According to the Civil Code, an invalid contract does not give rise to, change or terminate the rights and obligations of the parties from the time the contract is established and the parties restore the original state, refund each other what was received. However, the object of the labor contract is labor power. The labor that has been sold cannot be returned. Therefore, it is difficult to apply the above provisions to the handling of invalid labor contracts. Specifically, Article 11 of Decree No. 145/2020/ND-CP guides the handling of invalid labor contracts as follows:

• Entering into a new labor contract in accordance with the law, in this case, a foreigner who wants to enter into a new contract must meet the conditions of a work permit.
• If a new labor contract is not concluded: the interests of the foreign worker are guaranteed up to the time the labor contract is declared invalid. In addition, the enterprise must pay the employee an amount agreed upon by the two parties, but for each year of work at least equal to one month’s regional minimum wage.

The trial practice shows that, when there is a dispute about the illegal unilateral termination of the labor contract, the court will settle it in the direction of declaring the labor contract invalid due to the lack of a work permit, instead of settle disputes unilaterally terminating the labor contract illegally. And although the labor contract is invalidated due to the lack of a work permit, the enterprise still has to pay the foreign worker for the work performed.