Vietnam _New Regulation Provides More fFvorable Conditions for Employment Agencies in Vietnam

1. New Regulation Provides More Favorable Conditions
for Employment Agencies in Vietnam
By Oliver Massmann
New regulations provide more favorable conditions for establishing and operating employment
agencies in Vietnam, though fail to clarify conditions for foreign investors.
On 23 May 2014, the Government of Vietnam issued Decree No. 52/2014/ND-CP (“Decree
52”), which entered into force on 15 July 2014 to replace of Decree No. 19/2005/ND-CP as
amended and supplemented by Decree No. 71/2008/ND-CP (collectively, “Decree 19”),
introducing changes to the current regulations on employment service activities in Vietnam.
UConditions for obtaining licenses loosened
Any enterprise planning to engage in the employment service sector must place a deposit of
VND 300 million with the commercial bank where it has opened its main account. The cash
deposit shall be used to settle risks and compensation claims that might arise during the
enterprise’s course of operation. The same deposit requirement was also in place in the old
Decree 19, but Decree 52 stipulates further conditions and restrictions on the refund and
withdrawal of the deposit.
Besides the deposit requirement, two other conditions have to be complied with for operation
licenses to be granted:
1. Enterprises must have stable head offices and branches with a term of at least 3 years (36
months); if the premises are leased from a landlord, the term of the lease must be at least 3 years
(36 months).
2. The enterprise must have at least three qualified employees of college level or higher, who
have full civil act capacity and have clear backgrounds.
A quick comparison reveals that the conditions for obtaining a license under the new Decree 52
are less stringent compared to those under Decree 19. Specifically, Decree 19 imposed an

2. additional condition in respect of the facilities required for the granting of a license, namely (i) a
room for consultancy activities, (ii) a room for labor introduction and supply, (iii) a room for
activities relating to labor market information which was to be fully equipped with computers,
telephones, faxes and emails and other labor market data, as well as other facilities for the
purpose of serving the clients. In addition, Decree 19 required at least five qualified employees
of college level or higher, as compared to three qualified employees under Decree 52.
Hence, except for a stricter requirement on the deposit of VND 300 million, the new Decree
seems to facilitate enterprises planning to engage in employment service activities by loosening
licensing conditions.
UDuration of Licenses Increased
In terms of the duration of the operation licenses, Decree 52 is also more favorable to enterprises
working in this service sector as licenses are provided for a longer duration of 5 years, followed
by 5 more years for each subsequent extension of the license. This is in comparison to the
previous 3-year validity period of the license followed by 3 more years for each subsequent
extension under Decree 19.
UScope of Employment Service Activities Broadened
The new Decree also broadens the scope of employment service activities that an enterprise may
undertake. Specifically, Article 3 of Decree 52 provides that an employment service enterprise
may:
1. Give advice to employers and employees, including advice to laborers on selection of jobs,
training level, learning institutions that are compatible with their capacity and demands,
examination skills, job-generating and job-searching in and out of the country, as well as advice
to employers in respect of recruiting, managing and developing manpower.
2. Recommend jobs to laborers who are in need of employment as well as recruit and supply
laborers to meet the employers’ demand. This includes enterprises which are granted permits for
bringing Vietnamese laborers to work abroad pursuant to their contracts.
3. Collect, process, forecast and supply information on the labor market.
4. Organize training for laborers.

3. 5. Implement projects and programs on employment.
The expanded description of the scope of employment service activities under Decree 52
provides a better guideline for enterprises planning to enter this field as compared to Decree 19.
UImplications for Foreign Investors in Vietnam
Vietnam’s 2007 WTO Service Sectors Commitments do not regulate foreign investment in the
employment services sector. Decree 52 does not provide guidance on foreign investment either.
Previous guiding regulation to Decree 19 provided that foreign-invested enterprises would not be
excluded (Circular 27/2008/TT-BLDTBXH amending and supplementing Circular 20/2005/TT-
BLDTBXH guiding Decree 19/2005/ND-CP). However, licensing authorities will probably wait
for further guidance with regard to the in-effect Decree 52. As such, the licensing authorities will
have complete discretion to permit or reject applications by foreign-invested enterprises. In
practice, the authorities rarely permit foreign investment in such cases.
Besides the need for more certainty with regard to foreign-invested enterprises, the new Decree
provides more detailed guidelines and creates more favorable conditions for the employment
service sector in Vietnam in general.
Should you have any question on the above, please contact Uomassmann@duanemorris.comU;