Vietnam labor outsourcing rules for employers and agencies

Vietnam labor outsourcing rules let a company use workers hired by a licensed agency, but only for set jobs, only for set reasons, and for no longer than 12 months. Both must sign a written contract first, and both carry duties toward the worker. Running an outsourcing business without a licence can bring fines.

What labor outsourcing means

Labor outsourcing is when one company hires a worker and sends that worker to do the job at a third party. It is also called labor hire, labor dispatch or temporary work. Firms use it to match staff numbers to demand. Many factories, for example, need more hands near the end of the year and fewer in the first months of the next.

Three parties are involved. The agency employs the worker. The user company, sometimes called the client, receives the worker. The worker keeps an employment contract with the agency, not with the client.

The main law is the Labor Code of 2019. Decree 145/2020/ND-CP adds detail, including the list of permitted jobs and, in Chapter 4, the rules for getting a licence to run an outsourcing business.

Sources: Vietnam Briefing, "Labor Outsourcing in Vietnam in 2023" (23 November 2023).

Which jobs are allowed

Outsourcing is not open to every role. It is limited to the jobs on the list in Decree 145/2020/ND-CP. The list includes:

Interpreters and translators.
Secretaries and administrative assistants.
Receptionists and travel guides.
Sales support and project support staff.
Cleaners for buildings and factories.
Security guards and bodyguards.
Telemarketing and phone customer care staff.
Financial and tax support staff.
Drivers, and car repair and inspection staff.
Certain technical, ship, oil rig and aircraft roles.

If a role is not on the list, an agency may not supply a worker for it. Check the exact wording of the decree before you sign. Titles such as "support staff" are broad, so ask the agency which listed job the post falls under.

Sources: Vietnam Briefing, "Labor Outsourcing in Vietnam in 2023" (23 November 2023), which lists the jobs in Decree 145/2020/ND-CP.

When you can and cannot use outsourced workers

A listed job is not enough. The Labor Code also asks for a real reason. A company may use an outsourced worker when:

demand rises sharply for a limited time;
a permanent employee is away for a time, for example on maternity leave or after a workplace injury; or
the role needs a highly skilled worker.

The law also names cases where it is not allowed. You may not use an outsourced worker to cover for someone on strike or in a labor dispute. You may not use one to replace an employee let go in a restructuring. And you may not use one until the agency and your company have agreed who is responsible if the worker is hurt at work.

Two more limits apply. A single outsourcing arrangement can run for 12 months at most. And you must use an agency that holds a labor outsourcing licence. A company that sends the worker on to a third firm also breaks the rules.

Sources: Vietnam Briefing, "Labor Outsourcing in Vietnam in 2023" (23 November 2023), summarising the Labor Code 2019.

What the contract must say

The agency and the user company must sign a written outsourcing contract before work starts. It should state:

where the client is based, the job to be filled and what the work involves;
how long the worker will be placed and the start date;
working hours, rest periods and health and safety rules; and
which party pays the worker if there is an accident at work.

The terms the worker gets must be at least as good as those in the worker's own contract with the agency. Keep both papers in the same file so you can show the match.

Sources: Vietnam Briefing, "Labor Outsourcing in Vietnam in 2023" (23 November 2023).

What the agency and the user company each owe

The agency must make sure the worker knows what the contract says. It must give the client the worker's CV. It must pay at least what the client pays its own staff in the same job with the same skills. It must also keep records of its outsourcing contracts and send reports to the provincial labor authority.

The user company must explain its internal work rules to the worker. It must not treat the worker worse than its own staff. Night work and overtime need the worker's agreement, within the Labor Code limits. If the worker does not meet the job's needs, the client sends the worker back to the agency. If the worker breaks a rule, the client passes the proof to the agency, which holds the right to discipline the worker.

Sources: Vietnam Briefing, "Labor Outsourcing in Vietnam in 2023" (23 November 2023).

Risks of getting it wrong

Operating an outsourcing business without a licence is a punishable breach. Decree 28/2020/ND-CP, in force from 15 April 2020, sets penalties for labor violations, including outsourcing without a proper licence. Fines on companies can reach VND 200 million for the most serious violations under the decree, and violators may be ordered to turn over money received from outsourcing workers.

A short check before each placement helps. Is the job on the list? Is there a valid reason? Does the agency hold a licence? Is the term under 12 months? Is the contract signed and the injury duty settled? If any answer is no, pause the placement.

Sources: Tilleke & Gibbins, "Vietnam strengthens regulations protecting workers" (27 March 2020), on Decree 28/2020/ND-CP.