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Vietnam: Employment Services Licensing Changes.

26 February, 2015

 

Legal News & Analysis – Asia Pacific – Vietnam – Labour & Employment

 

On 23 May 2014 the Vietnamese Government issued Decree 52/2014/ND-CP (Decree 52), which took effect on 15 July 2014. Decree 52 relaxes the licensing conditions for enterprises engaged in employment service activities, making it easier for enterprises to enter and operate in this industry.

 

Background

 

Under the Labour Code 2012, the conditions and procedures for the establishment, licensing and operation of enterprises engaging in employment service activities were governed by Decree 19/2005/ND-CP, as amended and supplemented by Decree 71/2008/NP-CP (together, Decree 19).

 

Decree 19 expired on 20 January 2014 and has been replaced by Decree 52, which took effect on 15 July 2014.

 

Licence Conditions

 

Decree 52 relaxes the conditions an enterprise must satisfy to obtain a licence to engage in employment service activities. It also increases the duration of a licence and a licence renewal. The table on the next page compares the licensing requirements and conditions under Decrees 52 and 19.

 

Requirement/ condition Decree 19 Decree 52
Deposit amount VND 300m (USD 14k) VND 300m (USD 14k)
This amount must be deposited in a Vietnam bank account. The deposit is used to settle disputes and compensation claims that might arise against the enterprise during its operational period. The deposit is refunded if certain conditions are met. Those conditions are more onerous under Decree 52.
Premises Stable head offices and branches with a term of at least three years. If the premises are leased, the term of the lease must be at least three years.
Staff Five qualified employees with a college education or higher. Three qualified employees with a college education or higher.
Facilities Enterprise must include the following facilities: a room for consultancy activities, a room for labour introduction and supply, and a room for activities relating to labour market information, which must be equipped with computers, telephones, faxes and emails and other labour market data. No conditions.
Licence duration 36 months 60 months
Duration of renewed licence 36 months 60 months
What activities can an employment service enterprise engage in? Under Decree 19 an enterprise that held a licence could:

 

  • provide advice to employers and employees;
  • recommend jobs to unemployed labourers and recruit and supply labourers to meet the employers’ demand;
  • collect, process, forecast and supply information on the labour market; and
  • organise training for labourers.
In addition to the activities permitted by Decree 19, the new decree allows an enterprise that holds a licence to implement projects and programmes on employment.

 

Does Decree 52 Apply To Foreign Investors?

 

Like Decree 19, Decree 52 is silent on whether it applies to foreign investors. Regulations were previously issued to clarify that Decree 19 did apply to foreign-invested enterprises. However, it is unclear if those regulations will be extended to Decree 52.

 

Licensing authorities will have complete discretion to permit or reject licence applications from foreigninvested enterprises, until there is clarification with respect to this issue.

 

Transitional Provisions

 

Enterprises that held current Decree 19 licences on 15 July 2014 can continue to operate until the expiry of that licence. Once that licence expires, those enterprises will need to apply for a Decree 52 licence.

 

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For further information, please contact:

 

George Cooper, Partner, Ashurst

[email protected]

 

Sumin Ahn, Ashurst

[email protected]

 

Jennifer Goedhuys, Ashurst

[email protected]

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