Labor-related points to keep in mind when foreign workers retire


  • Nguyen Thi Thuy Nhi

To improve the efficiency of company management and operations, Vietnamese companies often employ foreign workers in key positions. It goes without saying that compliance with laws and regulations is required when starting the employment of foreign workers, but in addition, there are also some related procedures that foreign workers must follow when they finish working for a Vietnamese company. There is a need to do. This article explains the labor procedures that companies need to implement when foreign workers retire.
Based on legal regulations and practical practices, the procedures and precautions that companies should take when a foreigner resigns are as follows.

1. Decision on dismissal or termination of labor contract
Generally, foreigners working in Vietnam will have the following format:
(a) work based on the parent company’s appointment letter and not conclude a labor contract with the Vietnamese company;
(b) Work based on the letter of appointment of the parent company and at the same time conclude a labor contract with the Vietnamese company
(c) Work only based on a labor contract concluded with a Vietnamese company (local recruitment)

Case (a): If the foreign worker does not have a labor contract with the Vietnamese company and only has a letter of appointment from the parent company, the parent company will issue a letter of dismissal when resigning, and the Vietnamese company will keep it. .

Cases (b) and (c): Since foreign workers have a labor contract with a Vietnamese company, they must comply with the provisions of Vietnam Labor Law like other Vietnamese workers. Specifically, the details are as follows.

・Signing of labor contract termination agreement by company and foreign worker
Vietnam Labor Law does not stipulate the detailed contents of the termination agreement, but it must include the following main contents:
-Employer and worker information
-Information on the concluded labor contract
-End date of labor contract
-Responsibility of both parties
-Other agreements (if applicable)

・Payment of retirement allowance and unused annual paid leave(*1)
In particular, regarding retirement benefits, if a worker has worked for more than 12 consecutive months, the company is obligated to pay an allowance equivalent to the following calculation based on the labor contract.

Average monthly salary for the 6 months immediately before the month of retirement x working period (excluding period covered by unemployment insurance) x 0.5

・Declaration of a decrease in the number of workers covered by social insurance and request for payment of social insurance benefits when returning to Japan
When terminating a labor contract, if a foreign worker is enrolled in social insurance in Vietnam, the company will carry out procedures to suspend social insurance. In addition, if a foreign worker returns to his country without continuing to work in Vietnam after retiring, he can request the Social Insurance Agency for payment of social insurance benefits. This procedure can be carried out by the worker himself or can be delegated to someone else. However, the reality is that many people do not carry out this procedure because it requires communication with the Social Insurance Agency (document preparation, explanations, etc.) and takes a considerable amount of time.

2. Work permit return procedure
When a foreigner finishes his or her employment with a Vietnamese company, the company must collect the foreigner’s work permit and return it to the issuing authority. The specific steps are as follows(*2).

・Within 15 days from the date of the foreigner’s resignation, the company will collect the work permit and return it to the issuing authority along with a document specifying the reason for return. Although current law does not specify the format of the document, as a matter of practice, the document should include the following:
-Company information
-Foreign worker information
-Issued work permit information and reason for return (note to specify the date of retirement)

– Within 5 working days from the date of receipt of the documents, the issuing authority will issue a confirmation that the work permit has been returned.

However, in reality, the issuing authority may not issue a confirmation of return, so companies need to monitor the issuing authority and periodically check on progress. To be more reliable, we recommend that when returning a work permit, you prepare two return documents and ask the issuing authority to stamp and confirm one return document. It is also recommended that companies retain such documents to prove that they have fulfilled their legal obligations.

Recently, competent authorities have strengthened their control over the issuance and return of work permits. In particular, when a company applies for a work permit for a new foreign worker, the competent authorities tend to check whether the work permit of the previous foreign worker who has already left the company has been returned. Therefore, care should be taken to properly implement work permit return procedures so as not to affect the work permit application process.

3. Visa and residence card return procedures
In order for foreign workers to legally stay and work in Vietnam, they need to obtain a work permit, a visa and a residence card from the place where they are invited to work. Therefore, when a foreigner resigns, companies must follow the steps below to collect their visa and residence card and return them to the Immigration Bureau(*3).

– Notify the issuing authority in writing that you have been granted a valid visa or residence card but are not permitted to continue residing in Vietnam.

– Cooperate with competent authorities and request foreign nationals to leave Vietnam within a specified period. In practice, as a general rule, the steps should be performed in the following order.
(i) Before the foreigner leaves Vietnam, the company collects the visa or residence card and prepares a return notice to the issuing authority.
(ii) At the same time, apply for an extension of temporary stay (approximately 15 days) so that the foreigner can prepare to leave Vietnam.
(After returning your visa and residence card, you will not be able to leave Vietnam unless you extend your temporary stay)

Foreign nationals who have a residence card often skip the temporary stay extension procedure described in (ii) above and depart from the country using the residence card. After that, it is common for the residence card to be sent to Vietnam and returned to the issuing authority.

There are also cases where foreign workers continue to work at other companies in Vietnam using their residence cards after retiring. As mentioned above, such cases are illegal as the company is required to collect and return the residence card. Therefore, if you want to continue working at another company in Vietnam after leaving your job, you will need to leave Vietnam and re-enter Vietnam with a new visa that uses your new workplace as the source of your invitation.

This article has explained the labor procedures that companies should follow when foreign workers retire. In particular, many companies overlook the procedures for returning visas and residence cards, as there are no legal deadlines and the issuing authorities do not have very strict control over them. Therefore, care should be taken to carry out procedures appropriately in accordance with current laws.

In addition to the labor procedures mentioned above, companies and foreigners must also carry out personal income tax procedures. Guidance and precautions regarding this procedure will be explained in a separate report.

1 Articles 46 and 113 of the Labor Law 2019
2 Article 21 of Decree No. 152/2020/ND-CP
3 Article 45, Paragraph 2 e of the Law on Entry, Departure, Transit and Residence of Foreigners in Vietnam

*This article was translated by Yarakuzen.

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