Key Considerations When Recruiting Foreign Employees For FDI Enterprises

In the context of international economic integration, the demand for recruiting foreign employees at FDI enterprises in Vietnam has been increasing significantly, particularly for managerial positions, technical experts, and highly skilled professionals. However, the employment of foreign workers in Vietnam is subject to strict regulations under labor laws, immigration regulations, and social insurance legislation.

Failure to fully understand and comply with these regulations may expose enterprises to risks such as administrative penalties, retroactive collection of statutory obligations, or mandatory termination of labor contracts.

Below are the key considerations that FDI enterprises should pay close attention to when recruiting foreign employees.

1. Properly Determining the Need to Employ Foreign Workers

Under Vietnamese law, enterprises are only permitted to recruit foreign employees when Vietnamese workers are unable to meet the job requirements in terms of qualifications, experience, or professional expertise.

Foreign-invested enterprises are required to:

Submit a report explaining the demand for employing foreign workers in cases where foreign employees are recruited under the following three forms (applicable to both issuance and extension of work permits):

• Employment under a labor contract;
• Participation in the execution of bidding packages or projects in Vietnam;
• Employment under labor contracts with foreign diplomatic missions or foreign organizations in Vietnam.

At least 05 days prior to the submission of the application for a work permit, the employer must have publicly announced recruitment of Vietnamese workers in accordance with the Labor Code for the positions intended to be filled by foreign workers.

The recruitment announcement must include basic information such as:

• Job position (specific role and field of work);
• Working arrangement;
• Work location;
• Duration of employment;
• Required professional or technical qualifications (if any);
  (attached recruitment announcement documents).

However, no suitable Vietnamese workers are recruited for the positions intended for foreign employees.

Therefore, FDI enterprises must:

• Clearly identify the job positions to be filled by foreign employees;
• Demonstrate the necessity of employing foreign workers;
• Complete the procedure for explaining the demand for employing foreign workers with the competent authority.

This is a mandatory step prior to carrying out the work permit application procedure.

2. Correct Classification of Foreign Employees

Foreign employees working in Vietnam generally fall into one of the following categories:

• Managers
• Executive directors
• Experts
• Technical workers

Incorrect classification may result in invalid application dossiers or rejection of work permit issuance.

FDI enterprises should carefully review:

• Professional qualifications;
• Work experience;
• Actual job positions and responsibilities undertaken at the enterprise by foreign employees.

3. Work Permit as a Key Legal Requirement

A work permit is the most important legal basis for foreign employees to work lawfully in Vietnam (except for exempted cases).

Enterprises should note that:

• Applications for work permits must be submitted before the employee commences work;
• A work permit has a maximum validity of 02 years;
• Foreign employees may only work in the position, title, and location specified in the work permit.

Employing foreign workers without a valid work permit may result in severe administrative penalties and compulsory deportation from Vietnam.

4. Notes on Work Permit Exemption Cases

Certain foreign employees are exempt from work permit requirements; however, this does not mean that no procedures are required.

Enterprises are still required to:

• Carry out procedures to obtain confirmation of work permit exemption;
• Submit reports and retain dossiers in accordance with regulations.

Overlooking this step is a common mistake among many FDI enterprises.

5. Proper Execution of Labor Contracts

After a work permit is issued (or a work permit exemption is confirmed), enterprises must:

• Execute a written labor contract;
• Ensure the contract contents are consistent with the issued work permit;
• Ensure the contract term does not exceed the validity of the work permit.

The labor contract serves as the legal basis for fulfilling obligations related to personal income tax, compulsory social insurance, and labor management.

6. Obligations Regarding Social Insurance and Personal Income Tax

Foreign employees working in Vietnam are subject to compulsory social insurance if they work under a definite-term labor contract with a term of 12 months or more, except for the following cases:

a) Intra-corporate transferees in accordance with regulations on foreign workers working in Vietnam;
b) Employees who have reached retirement age at the time of entering into the labor contract in accordance with Clause 2, Article 169 of the Labor Code;
c) Cases where international treaties to which the Socialist Republic of Vietnam is a member provide otherwise.

Personal Income Tax (PIT): Foreign employees are required to fulfill PIT obligations based on their tax residency status in Vietnam.

7. Management of Records and Reporting on Foreign Employees

Enterprises employing foreign workers must:

• Maintain complete and accurate legal records;
• Promptly update records when there are changes in job position, work location, employment duration, or information related to the employee’s passport.

Poor record management may cause difficulties in work permit renewal or result in penalties during inspections by competent authorities.

Conclusion

Recruiting and employing foreign workers offers significant benefits to FDI enterprises; however, it also involves substantial legal risks if regulatory requirements are not strictly complied with.

A thorough understanding of the key considerations when recruiting foreign employees will help enterprises:

• Operate in compliance with Vietnamese law;
• Minimize the risk of administrative penalties;
• Ensure stability and sustainable development during business operations in Vietnam.

If you require further consultation or support, please contact TPM’s specialists for professional assistance.

Ms. Đỗ Thị Thu Quỳnh
Head of Human Resources & Payroll Services
Email: quynh.do@tpm.com.vn

References

• Decree No. 219/2025/NĐ-CP
• Labor Code No. 45/2019/QH14