05 Notes To Keep In Mind When Internally Transferring Employees Within A Multinational Enterprise

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05 Notes To Keep In Mind When Internally Transferring Employees Within A Multinational Enterprise

Nowadays, as many multinational corporations are establishing their existence in Vietnam, the demand to use highly qualified employees is increasing non-stop. Although the Vietnamese workforce can satisfy these corporations’ labor demands, Vietnamese employees cannot fully qualify for managerial or peculiar positions of the enterprises yet. Therefore, parent companies will have to appoint personnel to cover the aforementioned positions. Specified hereunder are 05 matters the employers should take into account when using foreign employees under intra-company transfers:

Determining positions opening for recruitment 

Employers shall determine which positions will be taken up by foreign employees in order to petition for the provincial People’s Committee’s approval prior to recruitment. Specifically, this is the step where employers decide which positions are open for recruitment (experts, managing directors, managers, or technicians), and the number of employees for each position. The application for approval to use foreign employees shall be conducted at least 30 days in advance of the day expected to use such employees.

This step is particularly important because the approval of the provincial Peoples’ Committee will be the grounds for the issuance of work permits. In addition, the determination of recruiting positions will also affect the contents of dossiers the employees need to provide when applying for work permits. 

The employee’s working period at the parent company

Pursuant to current regulations, foreign employees will be deemed intra-company transferees if they are recruited by the parent company for a period of 12 months or more. However, a question will arise when an employee has worked for the corporation for 12 months or more, but has been transferred between the subsidiaries making their period of work under each subsidiary is less than 12 months, will that employee be recognized as an intra-company transferee? This question is yet to be answered clearly by any guiding documents of the Labor Code. Therefore, at the moment, the determination of whether or not such employee is recognized as an intra-company transferee depends on the opinion of the competent agency. In fact, most agencies do not accept the combination of working experience from multiple subsidiaries within a corporation because each subsidiary is an independent legal entity. Therefore, enterprises should take this issue into consideration to come up with an effective solution.

Determining cases of exemption from obtaining work permits

Intra-company transferees can be exempt from obtaining work permits if the enterprise operates in the following sectors: business services, communication services, construction services, distribution services, education services, environment services, financial services, medical health services, tourism services, culture and entertainment services and transportation services. Determining whether the employees are exempt from obtaining work permits will help enterprises save time and expenses when applying for work permits. However, enterprises still have to seek confirmation from competent authorities that their employees are actually exempt from obtaining work permits. The procedures for confirming that foreigners are in the category not required to have work permits will be simpler than those of application for the issuance of work permits.

Social insurance of employees

According to Clause 1 and 2 of Article 2 of Decree No. 143/2018/ND-CP, foreign employees working in Vietnam as intra-company transferees are not obligated to purchase social insurance. In addition, pursuant to Clause 1, Article 12 of the Law on Health Insurance as amended and supplemented in 2014, foreign employees working in Vietnam as intra-company transferees are not participants of compulsory health insurance. Therefore, intra-company transferees in Vietnam are ineligible to pay social insurance and compulsory health insurance.

Temporary residence cards for employees

Once the employees are issued with work permits or certificates of exemption from obtaining work permits, the employers shall apply for the issuance of temporary residence cards for foreign employees. Temporary residence cards by way of employment will be effective for 02 years and can be extended. After obtaining such cards, employees can use them to open bank accounts, apply for driver’s licenses and register sim cards, etc. However, it should be noted that employers will have to collect the work permits and temporary residence cards after the employment relationship are terminated and return them to competent authorities in accordance with provisions of law.

We hope this article has provided you with basic things to keep in mind when using foreign employees. Should you have any queries, please don’t hesitate to contact us.