In early January of 2014 the Ministry of Labor, War Invalids and Social Affairs (“MOLISA”) enacted Circular No. 01/2014/TT-BLĐTBXH (“Circular 1”) for the purpose of detailing and guiding Decree No. 55/2013/NĐ-CP (“Decree 55”) implementing Article 54.3 of the Labor Code on licensing of labor outsourcing activities, payment of escrow deposit, and regulating the list of jobs for which labor may be outsourced. In general, Circular 1 stipulates the conditions and procedures of issuance, re-issuance, extension and withdrawal of the labor outsourcing license (“License”) as well as some other matters in terms of activities of labor outsourcing enterprises.

Circular 1 makes clear the definition of “enterprise specializing in the business of labor outsourcing”, which is a principle condition applicable to foreign enterprises seeking to set up a joint venture with a domestic enterprise for carrying out labor outsourcing in Vietnam according to Article 6.3(a) of Decree 55. Thereby, Circular 1 requires that such enterprise have its main business operations being labor outsourcing activities as proved by the following documents:

  • Business registration certificate presenting the licensed activities of labor  outsourcing;
  • Labor outsourcing operation license issued by competent authority of its home  country;
  • Other written documents issued by competent authorities of its home country to  conduct the labor outsourcing operations.

Circular 1 requires the submission of a legal capital confirmation from a Vietnamese licensed commercial bank regarding the escrow deposit of founding members (in case of new establishment) or from an independent auditing institution regarding the current equity of the enterprise (in case of supplementation of labor outsourcing business line), in order to confirm that such deposit or equity is more than or equal to the required legal capital pursuant to Decree 55.

Further evidence required to prove the satisfaction of at least five years experience in providing labor outsourcing services of such foreign enterprise (according to Article 6.3(b) Decree 55) are copies of its labor outsourcing contracts.

Circular 1 also supplements Decree 55 by listing the Director or General Director, Chief Accountant and other Managers regulated in the company charter or appointed by authorized persons as “manager or person in a key position” mentioned in Article 9 Decree 55.

Labor outsourcing enterprises should take note that the License is permitted to extend twice only. Enterprises will thus have to obtain a new License to continue labor outsourcing activities after the end of its second extension period.

Last but not least, labor outsourcing enterprises are allowed to move their registered head office, branch and representative office only in the circumstances of fire hazard; collapses or damage from landslides causing damage; clearance of the competent authority and other force majeure circumstances.

Circular 1 took effect on 1 March 2014.