In recent years, the recruitment of the foreign worker in Vietnamese enterprises has been becoming rampant. However, it is not any circumstance that a foreign individual fully meets the conditions as prescribed by Vietnamese laws. Therefore, besides some enterprises using the foreign worker who already has a Work Permit, there are many enterprises and foreign individual “recklessly” establishing labor relations without taking essential steps to apply for a Work Permit. Hence, Is there any risk for parties? Readers can view more at CDLAF’s allocation in the article below:

1. Invalid Labor Contract

Surely many enterprises as well as foreign individual wonder that without a Work Permit, whether the labor contract between the parties still has binding validity, or how the content in which the parties have handled before? The answer for the parties is that: The labor contract of the parties shall be completely invalid because the parties are violating the prohibition prescribed by civil law and labor law. Article 49 of the Labor Code stipulates as follows:

 “Article 49. Invalid Labor Contract

1. A labor contract is completely invalid in the following cases:
2. a) The entire contents of the labor contract violate the law;
3. b) The person who enters into the labor contract without due competence or violates the principle of entering into a labor contract as specified in clause 1 Article 15 of this Code;
4. c) The work entered into the labor contract is prohibited by law.”

Although this provision does not state directly that “without a Work Permit, the labor contract shall be completely invalid”. However, Article 153 of the Labor Code further states that a foreign worker working in Vietnam without a Work Permit shall be forced to exit or deported. Thus, it can be seen that having a Work Permit is a mandatory condition and a prerequisite one that the foreign individual shall meet.

Therefore, the foreign worker working in Vietnam without a Work Permit shall be considered that he/she violate the  prohibition and this is a basis leading to an invalid labor contract.

2. Handling invalid Labor Contract

How to handle an invalid labor contract when the parties have made some commitment to each other before? In this case, when the labor contract is declared invalid, the parties have the right to choose:

• Entering into a New labor contract, and definitely the parties shall meet conditions about Work Permit before establishing a New labor contract;
• Performing the termination of the labor contract.

In case of choosing to perform the termination of the labor contract, the rights, obligations and benefits of the worker from the time of starting to work under the labor contract which is declared invalid to that of terminating the labor contract are resolved in the following directions:

• When the rights and benefits of each party in the labor contract are not lower than the provisions of law, collective labor agreement, then the rights, obligations and benefits of the worker are performed according to the labor contract which is declared invalid.
• The enterprise pays the worker an amount agreed upon by the two parties, but that for each working year at least equals to one month’s region-based minimum wage. The working period of time of the worker to calculate the allowance is the actual working time according to the labor contract which is declared invalid. At the same time, the enterprise handles severance allowance regime for labor contracts before the labor contract is declared invalid.

Thus, it can be seen that, although a labor contract is invalid, the benefits of foreign worker are still guaranteed according to what has been committed before. Because of the provisions the law stipulates that the contract is invalid, then the parties return to each other what they have received. However, as you can see, labor is non-refundable. This is also the reason why the law still stipulates rights enjoyed by foreign worker for the period of time before the invalidation event.

As for the enterprise, it shall face administrative violations with high penalty. As for the foreign worker, besides incurring penalty, he/she shall face being deported or forced to exit, as well as the ability to return to the Vietnam labor market will be more difficult than usual.

In fact, the competent authority controls working activities in Vietnam quite closely, however, there will still be difficult in managing a foreign individual entering Vietnam to work but the documents of entry stipulate for another purpose other than labor. Some acts of violation are often discovered when one of the parties has a dispute and asks the competent authority to handle it.

Time of Writing: 09/03/2023

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