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In the context of global economic integration, Vietnam has attracted a large amount of foreign investment, leading to an increase in the number of foreign workers in domestic enterprises. However, the diversity in labor relations has also resulted in numerous disputes.
Resolving labor disputes with foreign elements not only affects the rights of workers and businesses but also impacts the investment environment and Vietnam’s image in the eyes of foreign investors. This article will highlight important considerations when conducting dispute resolution involving foreign elements in Vietnam.
The status of foreign workers in Vietnam
According to information from the Ministry of Labor, Invalids, and Social Affairs (MOLISA), as of March 2024, Vietnam has nearly 140,000 foreign workers. Of these, 92.1% are workers holding valid work permits, while the remainder are workers without permits or whose permits have expired or are no longer valid.
In the first three months of 2024, competent authorities issued new work permits to 94,008 people, extended permits for 16,226 workers, and reissued permits for 10,302 individuals. The remaining 8,242 workers are in the process of completing paperwork for work permit applications.
Over the past two decades, the number of foreign workers in Vietnam has continuously increased, in line with the country’s socio-economic development. For comparison, in 2005, the number of foreign workers legally employed in Vietnam was only about 12,000.
This rapid increase demands stricter legal regulations on labor and employment to monitor and control the situation of foreign workers in Vietnam, preventing any negative impact on the rights of Vietnamese workers who are qualified for available jobs.
Legal basis for foreign labor in Vietnam
Vietnam’s Labor Code clearly specifies provisions regarding foreign elements in labor relations. Article 2 of the 2019 Labor Code (Law No. 45/2019/QH14) states that foreign workers in Vietnam must hold a legal work permit, except for certain cases where a permit is not required, such as foreign investors, individuals entering Vietnam for less than 30 days, and those entering no more than three times in one year, among others.
According to Article 151 of the 2019 Labor Code, in order to obtain a work permit, foreign workers must meet several criteria: they must have full civil capacity according to the law, possess the necessary professional qualifications, skills, and expertise for the job position, have a health certificate that meets the job requirements, and not be under criminal investigation or have any unresolved criminal convictions in their home country or in Vietnam.
Additionally, another important consideration is that foreign workers are only allowed to work in Vietnam if the Vietnamese employer can demonstrate that the need for foreign labor is reasonable, as domestic workers cannot meet the job’s qualifications and skill requirements, as stipulated in Article 152 of the 2019 Labor Code.
When a dispute arises involving foreign workers in Vietnam, the parties must identify the relevant clauses in the employment contract and the applicable provisions of Vietnamese labor law for each specific case.
Furthermore, Vietnam is currently a member of numerous free trade agreements (FTAs) and international labor conventions, such as Convention No. 87 on Freedom of Association and Convention No. 98 on the Right to Organize and Collective Bargaining. These commitments not only outline the rights of workers but also aim to ensure international labor standards, contributing to favorable conditions for resolving disputes.
The Nature of Labor Disputes Involving Foreign Elements
In practice, besides the common disputes between foreign workers and Vietnamese companies regarding issues such as labor contracts, benefits, or working conditions, there are many other types of disputes related to foreign labor.
A typical example is disputes between Vietnamese workers and foreign enterprises, where workers often face difficulties in protecting their rights due to differences in language, culture, and law. However, generally, foreign enterprises operating in Vietnam, due to factors such as respecting Vietnamese law, their national laws that always prioritize the rights of workers, and other factors, rarely experience disputes with Vietnamese employees.
Another fairly common type of dispute occurs among parties involved in foreign investment projects, often related to working conditions and profit distribution.
In all cases, disputes between Vietnamese companies and foreign workers remain the most common, arising from disagreements over compensation or violations of contract terms. A common situation is when foreign workers work in Vietnam for a short period, and when they want to return to their home country, the company does not support them, creating obstacles in withdrawing their social insurance benefits through actions such as not paying wages, owing wages, delaying social insurance contributions, or not finalizing records.
Overall, Vietnamese enterprises often face difficulties in ensuring compliance with legal regulations and labor procedures, leading to prolonged disputes.
Considerations When Resolving Labor Disputes Involving Foreign Elements in Vietnam
First, when resolving labor disputes involving foreign elements, the most important factor is correctly identifying the jurisdiction of the resolving authority. These types of disputes typically fall under the jurisdiction of the Court or an Arbitration Center, depending on the provisions of Vietnamese law and the terms in the labor contract signed by both parties when establishing the employment relationship. Incorrectly identifying jurisdiction can disrupt the dispute resolution process, resulting in extended timelines and unwanted legal consequences for the parties involved.
Therefore, when a dispute arises between foreign workers and Vietnamese companies, both parties should contact reputable law firms with expertise in labor and employment law in Vietnam and internationally.
Second, to protect their rights, foreign workers are usually the plaintiffs in such disputes, with the Vietnamese employer as the defendant. However, the reverse situation can also occur, where an organization or collective sues the worker. The litigation process begins by submitting a complaint to the competent authority, accompanied by important documents such as the labor contract and other documents related to the dispute.
Both parties need to carefully and thoroughly prepare these documents to ensure their rights are protected. Failure to prepare these documents properly can lead to not achieving the desired result during the trial process.
Third, in labor disputes involving foreign elements, language is also a key factor and needs special attention. Parties should be mindful of the language used in documents and during hearings. Professional interpreters play a crucial role in ensuring accurate and complete communication between the parties, especially when many foreign workers do not know or understand Vietnamese.
Failure to understand or deliberately misunderstanding can hinder the dispute resolution process. Therefore, ensuring that the language is communicated clearly, and that translation information is accurate and verified by the parties involved, is vital to prevent serious misunderstandings that could affect the resolution process.
Finally, another important factor not to be overlooked is the statute of limitations for filing a lawsuit. According to Article 190, Clause 3 of the 2019 Labor Code, the parties have one year to file a lawsuit from the date the dispute arises regarding individual labor disputes, except for periods during which it can be proven that the right to file was not possible due to force majeure events or objective obstacles.
If this provision is not understood and the time limit is exceeded, the right to sue will be lost. In practice, it is common for foreign workers, due to needing to return to their home country and no longer being in Vietnam, to be unable to file a lawsuit themselves. In many cases, they must authorize law firms with expertise to represent them in resolving disputes with Vietnamese companies.
Furthermore, the average time to resolve labor disputes can range from several months to a year, depending on the complexity of the case. Monitoring closely and adhering to time regulations is essential to ensure that one does not miss the opportunity to protect their rights.
Methods of Resolving Labor Disputes Involving Foreign Elements in Vietnam
One of the most popular and effective methods of resolving disputes is mediation. This method helps the parties reach an agreement without having to go to court, thus saving time and costs. A mediator, acting as an intermediary, can assist the parties in finding a reasonable solution that aligns with the interests of both parties while maintaining a long-term cooperative relationship.
For individual labor disputes, under Article 188, Clause 1 of the 2019 Labor Code, disputes must be resolved through the mediation process conducted by a labor mediator before requesting the Labor Arbitration Council or the Court to resolve the dispute, except in cases where mediation is not mandatory.
Arbitration is also a common method for resolving international labor disputes. The arbitration process is quick and confidential, allowing the parties to resolve the dispute discreetly and effectively. However, to maximize the effectiveness of arbitration, the parties must agree on the arbitrator and the procedure before starting. This will help avoid unnecessary conflicts during the resolution process.
In labor disputes in Vietnam, the parties have the right to request the Labor Arbitration Council to resolve the dispute if mediation is not mandatory or if mediation fails, according to Article 189, Clause 1 of the 2019 Labor Code. Furthermore, it should be noted that when requesting the Labor Arbitration Council to resolve the dispute, the parties are not allowed to simultaneously request the Court to handle the dispute.
If mediation and arbitration do not lead to a resolution, the parties can choose to file a lawsuit in court. Although the court process can be longer and more complex, the court’s ruling has higher legal value and is enforceable. Filing a lawsuit in court should be considered as a last resort after other methods have failed to produce the desired results.
Conclusion
Resolving labor disputes with foreign elements in Vietnam requires strict adherence to legal regulations, thorough preparation of documents, and the correct choice of dispute resolution method, such as mediation, arbitration, or court proceedings.
Additionally, parties need to pay particular attention to factors such as language, statute of limitations for filing a lawsuit, and the jurisdiction of the resolving authority to ensure the protection of both workers’ and businesses’ rights, contributing to a stable and professional investment environment in Vietnam.
To protect their rights, disputing parties should contact reputable law firms with high expertise in labor and employment law in Vietnam and internationally.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
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