Amid growing globalization and deeper international economic integration, Vietnam has emerged as a compelling destination for foreign investors. With rich labor resources, competitive costs, and a continuously improving business environment, the Vietnamese market offers significant development opportunities across industries, especially in the labor dispatch sector. This is considered a flexible and efficient solution that helps enterprises optimize human resource costs while promptly meeting labor demands during production peak periods. However, to engage in this sector, foreign investors must strictly comply with Vietnamese legal regulations to ensure legitimate, transparent, and sustainable business operations.

This article will analyze the conditions, challenges, and opportunities associated with labor dispatch services for foreign investors in Vietnam.

1. Business lines

The labor leasing service business in Vietnam currently imposes specific legal requirements on foreign investors. Specifically, to operate in this service, investors must establish a company with appropriate business lines, including “Provision and Management of Human Resources” (industry code 7830) and ” Temporary employment agency activities” (industry code 7820). However, a notable point is that these business lines are not yet open to foreign investors under Vietnam’s commitments within the WTO service classification system (CPC). This means there is no specific CPC code applicable to determine the scope of activities or market access for foreign investors in this field.

For this reason, the decision to grant a license depends entirely on the assessment and approval of the competent state authority in Vietnam. This process often requires careful evaluation based on factors such as labor demand, the reasonableness of opening the business lines, and the ability of foreign enterprises to comply with the law. At the same time, investors must fully meet the strict business conditions prescribed in the 2019 Labor Code and Decree No. 145/2020/ND-CP, including minimum statutory capital requirements, operational licenses, and responsibilities to ensure the rights of leased employees.

2. Market Access Conditions and Business Requirements

Operating a labor dispatch service in Vietnam is a specialized field with strict regulations for both domestic and foreign investors. For foreign investors, market access conditions outlined in the 2020 Law on Investment create a flexible but challenging mechanism. According to this law, if a business line has not been committed to opening under the WTO Schedule of Commitments or other international investment agreements, and there are no specific Vietnamese laws regulating it, foreign investors are considered under similar conditions as domestic investors. While this regulation provides opportunities for foreign businesses, it also requires full compliance with local regulations, posing significant legal barriers.

Regarding business requirements, obtaining a Labor dispatch license is mandatory. This license only permits operations within the job categories listed in Appendix II of Decree 145/2020/ND-CP. Operating outside the permitted scope may result in serious consequences, including license revocation. This requires businesses to thoroughly understand the list of permitted occupations and precisely oversee their operations to ensure compliance and avoid violations. Additionally, enterprises must meet stringent criteria regarding legal and financial capacities. The legal representative of the business must be a qualified manager under the Law on Enterprises, with no criminal record and at least three years of professional or managerial experience in labor-related fields within the past five years. These conditions ensure professionalism and practical management capacity for businesses entering this market.

Another significant barrier is the requirement for a deposit of 2 billion VND at a commercial bank or a foreign bank branch legally operating in Vietnam. This deposit is frozen and can only be withdrawn with the approval of the provincial People’s Committee Chairman, to protect the rights of workers in case of business difficulties or dissolution. This condition not only reflects the rigor in controlling business operations but also contributes to ensuring the stability and transparency of the labor market.

These regulations demonstrate Vietnam’s establishment of a comprehensive legal framework to manage and protect workers’ rights in the labor leasing sector. Simultaneously, it presents major challenges for foreign investors, requiring serious investment, clear strategies, and strict compliance with local laws to enter this promising market.

3. Detailed Guidelines on Obtaining Labor Dispatch License Procedures in Vietnam

Operating labor dispatch service in Vietnam is a conditional business with strict legal requirements. Below are detailed guidelines on the license duration, required documents, and licensing procedures for enterprises, especially foreign investors:

Applications

Include:

• Application form – Form No. 05/PLIII.
• Legal representative’s résumé – Form No. 07/PLIII.
• Judicial record certificate No. 1 – For the legal representative. If a foreigner, it can be replaced by a judicial record from their home country.
• Foreign documents must be translated into Vietnamese, notarized, and consularly legalized.
• Issued within 6 months prior to the submission date.
• Proof of managerial/professional experience.
• Employment contract, appointment decision, or business registration certificate proving at least three years of experience within the past five years in labor management.
• Confirmation of 2 Billion VND Deposit: The deposit must be made to a domestic commercial bank or a foreign bank branch in Vietnam. These funds will be frozen and cannot be withdrawn without prior approval from the provincial People’s Committee Chairman.

Licensing procedure, which includes 4 main steps:

• Submission: Submit a complete application to the Local Department of Labor, Invalids, and Social Affairs where the enterprise is headquartered.
• Reception: The department checks the application and issues a receipt acknowledging the date of submission.
• Evaluation and Approval (20 working days): The department reviews the application and forwards it to the provincial People’s Committee Chairman for approval. If the application is incomplete, the enterprise will receive a request for additional submission within 10 working days.
• License Issuance (7 working days): The Chairman issues or denies the license, providing reasons in writing. The entire licensing process may take 27–30 working days.

License duration: Initial issuance: Up to 60 months (5 years). Renewal: Multiple renewals allowed, each for a maximum of 60 months. Reissuance: The re-issuance period shall be equal to the remaining validity period of the previous license.

This regulation provides flexibility in maintaining business operations, however, businesses must strictly comply with legal requirements when applying for renewal or re-issuance.

Post-License Remarks:

• Publicly post the original license at the headquarters and authenticated copies of the license at its branches and representative offices (if any). In case of relocation to another province, send an authenticated copy of the license to the Department of Labor, War Invalids and Social Affairs of the new location for monitoring.
• Periodically, on a six-year and annual basis, preparing performance reports on employee sublease by using the Form No. 09/PLIII to Appendix III hereto, sending them to Presidents of provincial People’s Committees, Departments of Labor, War Invalids and Social Affairs, and industrial park and economic zone authorities of the places where employers’ main offices are located; report to Departments of Labor, War Invalids and Social Affairs, and industrial park and economic zone authorities of the places where enterprises render their employee sublease services on performance of employee sublease at these places in cases where subleasing enterprises move to other provinces. 6-month reports must be sent by June 20 while annual reports must be sent by December 20.
• Promptly report the labor dispatch-related incidents to local authorities or at the request of labor authorities.

4. List of Permitted Job Categories for Labor Dispatch in Vietnam

The following job categories are permitted under Vietnam’s labor dispatch regulations:

Administration: Translators/Interpreters/Stenographers; Secretaries/Administrative Assistants; Receptionists

Business and Project assistant: Tour guide; Sales assistant; Project assistant

Technical and Engineering: System programmers; Manufacturing equipment installation; Industrial design/Interior decoration

Operations: Machinery operation/inspection/repair; Automobile maintenance; Building cleaning services.

Security: Bodyguard

Customer service and Marketing: Marketing/Customer service by phone

Finance and Accounting: Managing financial and tax issues

Transportation and aviation services: Driving; Aircraft piloting and in-flight services; Maintenance and repair of aircraft and aircraft equipment; Flight dispatch, operations, and supervision.

Maritime and oil and gas: Management, operation, maintenance, and service on ships; Management, supervision, operation, repair, maintenance, and service on oil and gas rigs

This list clearly demonstrates the diversity of professions eligible for labor outsourcing, meeting workforce demands across various fields, from office administration and technological engineering to specialized equipment operation, oil and gas, and aviation. It presents an opportunity for foreign enterprises to leverage a flexible labor pool to support their production and business activities in Vietnam.

The labor outsourcing business in Vietnam not only offers significant opportunities for foreign investors to tap into the abundant labor market but also imposes stringent legal requirements to ensure transparency and stability in business operations. With a framework of market access conditions, regulations on management experience, deposit requirements, and specific licensing procedures, Vietnam has established a clear legal corridor to regulate this activity while enabling foreign businesses to achieve sustainable development

Time of writing: 30/12/2024

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

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