Challenges have arisen regarding regulations related to labour, insurance, and taxes for foreign workers who are transferred from international offices within the same group to work in Vietnam.
An increasing number of foreigners are coming to Vietnam for work, especially in foreign-invested enterprises. As reported by the Ministry of Labor, Invalids and Social Affairs, there were around 136,800 foreign workers in Vietnam by the end of 2023.
The Vietnamese government has implemented legal frameworks to support the employment of foreign workers in the country.
According to Decree No. 152/2020/ND-CP (Decree 152), foreign workers transferred within an enterprise include managers, executive directors, experts and technical workers from foreign companies that have established a commercial presence in Vietnam.
These workers must be temporarily transferred to this commercial presence and must have been employed by the foreign enterprise for at least 12 consecutive months prior to their transfer.
In practice, multinational corporations frequently transfer personnel among companies within the same group, even if the transfer is not directly from the parent company to a subsidiary with direct investment.
This strategy aims to optimise high-quality talent, reduce costs, and meet business demands. For instance, a parent company in Japan might transfer employees from a subsidiary in Singapore to a subsidiary in Vietnam.
However, the narrow definition of internal transfers under Decree 152 does not recognize this type of transfer as an internal transfer.
Consequently, Vietnamese enterprises encounter various challenges and may need to sign additional labour contracts with foreign workers transferred within the same group, resulting in extra costs for mandatory insurance.
Many foreign workers and companies continue to participate in mandatory insurance abroad to secure future social security benefits, leading to duplicate insurance contributions in both countries.
This situation imposes additional costs on foreign workers and relevant companies. Currently, only the social insurance agreement between Vietnam and South Korea addresses this issue by alleviating the burden of duplicate contributions.
To better reflect practical realities, the definition of 'internal transfer within an enterprise' should be broadened to encompass all cases of worker transfers among companies within the same group.
Alternatively, if foreign workers retain their employment relationship with the foreign company and do not sign a labour contract with the Vietnamese company, they should be exempt from mandatory insurance participation in Vietnam.