Conditions for Foreign Investors to Operate in the Labor Outsourcing Sector in Vietnam

In recent years, along with the rapid development of Vietnam’s economy, the demand for short-term, seasonal, or project-based labor has been increasing significantly. Enterprises, especially foreign-invested companies and factory projects in industrial parks and export processing zones, often have a recurring need for additional human resources but may not wish or be able to sign direct labor contracts. In this context, labor outsourcing services (also referred to as labor supply services) have emerged as an effective solution, enabling businesses to manage their workforce more flexibly while ensuring the protection of employees’ rights and benefits through their legal relationship with the labor outsourcing enterprise. 

However, unlike normal business activities, labor outsourcing is classified under Vietnamese law as a conditional business line. Moreover, the scope of jobs that may be outsourced is restricted by legal regulations. This article provides a detailed analysis of the current legal framework governing labor outsourcing activities, including: the definition, permitted scope of work, licensing conditions, market access restrictions for foreign investors, contractual requirements, as well as the rights and obligations of labor outsourcing enterprises. 

1. Definition and Scope of Labor Outsourcing Activities  

According to Article 52 of the 2019 Labor Code, labor outsourcing refers to the arrangement whereby an employee signs a labor contract with an outsourcing enterprise (the lessor) and is subsequently assigned to work under the management and supervision of another employer (the labor lessee), while still maintaining the labor relationship with the outsourcing enterprise that originally signed the contract.  

A distinctive feature of this form is the existence of a “parallel relationship”, which includes:  

• The employee is directly managed, supervised, and instructed by the labor lessee; 

• However, the labor relationship (including fundamental rights and obligations such as salary, insurance, and other benefits) is maintained with the labor outsourcing enterprise. 

For this reason, labor outsourcing is classified as a conditional business line, which can only be carried out by enterprises that have been granted a Labor Outsourcing License, and it applies exclusively to a limited number of permitted jobs. 

2. List of Jobs Eligible for Labor Outsourcing 

Not every type of work may be performed under a labor outsourcing arrangement. Enterprises are only permitted to outsource employees for the specific 20 job categories stipulated in Appendix II – List of Jobs Eligible for Labor Outsourcing, issued together with Decree No. 145/2020/ND-CP, including: 

• Interpreter/Translator/Stenographer; 

• Secretary/Administrative Assistant; 

• Receptionist; 

• Tour Guide

• Sales Support

• Project Support

• Programming for Production Systems
• Manufacturing and Installation of Broadcasting and Telecommunications Equipment

• Operation/Inspection/Maintenance of Construction Machinery and Production Electrical Systems; 

• Building and Factory Cleaning

• Document Editing

• Security Guard/Bodyguard; 

• Telemarketing/Customer Service via Telephone; 

• Handling Financial and Tax Matters

• Automobile Maintenance/Inspection and Operation; 

• Industrial Technical Drawing/Interior Design; 

• Driver

• Management, Operation, Maintenance, and Service on Ships; 

• Management, Supervision, Operation, Repair, Maintenance, and Service on Oil and Gas Rigs;  

• Aircraft Piloting, In-flight Service, Aircraft and Equipment Maintenance/Repair, Flight Dispatch and Operations, Flight Supervision.  

3. Conditions for Obtaining a Labor Outsourcing License 

In order to be permitted to operate in labor outsourcing services, an enterprise must apply for and obtain a Labor Outsourcing License and satisfy the conditions stipulated in Article 21 of Decree No. 145/2020/ND-CP, including: 

(i) Conditions regarding the legal representative: 

The legal representative of an enterprise conducting labor outsourcing activities must meet the following requirements:  

• Be an enterprise manager as defined under the Law on Enterprises. This includes owners of private enterprises, general partners, Chairpersons and members of the Members’ Council, Company Presidents, Chairpersons and members of the Board of Directors, Directors or General Directors, and other managerial positions specified in the company’s charter; 

• Have no criminal record

• Possess at least three (03) years (36 months) of direct professional experience or management experience in labor outsourcing or labor supply within the five (05) consecutive years prior to the application. 

(ii) Deposit requirement

The enterprise must place a deposit of VND 2,000,000,000 (two billion Vietnamese Dong) at a commercial bank in Vietnam or a branch of a foreign bank legally established and operating in Vietnam.  

The receiving bank is responsible for issuing a certificate of the labor outsourcing deposit in accordance with Form No. 01/PLIII, Appendix III issued together with Decree No. 145/2020/ND-CP once the enterprise has completed the deposit procedures. The bank must also block the full deposit amount and manage it in accordance with Vietnamese law on deposits. The bank is prohibited from allowing the enterprise to withdraw the deposit without the prior written consent of the Chairman of the provincial-level People’s Committee. 

It should be noted that the deposit is intended to cover the payment of salaries, social insurance, health insurance, unemployment insurance, occupational accident and disease insurance, and other entitlements of outsourced employees as stipulated in the labor contract, collective labor agreement, or internal regulations of the outsourcing enterprise. The deposit may also be used to compensate outsourced employees in cases where the enterprise violates its contractual obligations or otherwise fails to safeguard their lawful rights and interests.  

4. Market Access Restrictions for Foreign Investors in Labor Outsourcing 

Under current regulations, labor outsourcing services are not included in the list of business sectors that Vietnam has committed to opening to foreign investors under its WTO accession commitments, nor are they listed in Decree No. 31/2021/ND-CP guiding the Law on Investment. This means that, in principle, this sector is not automatically open to foreign investment and remains subject to review and approval by competent authorities on a case-by-case basis. 

Specifically, when receiving an application for an Investment Registration Certificate from a foreign investor whose project involves labor outsourcing, the Department of Finance (formerly the Department of Planning and Investment) will consult with relevant agencies to assess the feasibility, suitability, and the investor’s ability to meet the statutory conditions for this conditional business line. In addition, the investor’s financial capacity, operational experience, knowledge of the Vietnamese labor market, and the adequacy of its facilities and personnel will be important factors considered by the authorities before granting approval. 

In practice, based on our advisory experience, a number of wholly foreign-owned enterprises have been licensed to operate in labor outsourcing in Vietnam (notable examples include Olik Vietnam, Strideforth, and Well Viet Nhat). This indicates that, although labor outsourcing is not freely open to foreign investment, the market is not entirely “closed.” Particularly, foreign investors who prepare their legal documentation thoroughly, commit to complying with all statutory requirements, and demonstrate sufficient capacity to implement the project are more likely to obtain approval. 

Developing a feasible business plan with clear explanations of facilities, professional personnel, and operational arrangements is a key factor that enhances the likelihood of being licensed to operate in this sector in Vietnam. 

5. Labor Outsourcing Contracts 

Enterprises engaged in labor outsourcing and the labor lessee must enter into a written labor outsourcing contract, prepared in two copies, each party retaining one, in accordance with Article 55 of the 2019 Labor Code. 

The contract must contain at least the following key contents: 

• The workplace, job position requiring outsourced labor, specific work details, and requirements for the outsourced employee;

• The term of the outsourcing arrangement and the commencement date of the employee’s work;

• Working hours, rest periods, and occupational safety and hygiene conditions at the workplace; 

• Responsibilities for compensating occupational accidents and diseases; 

• Obligations of each party toward the outsourced employee. 

It should be noted that labor outsourcing contracts must not include any terms granting outsourced employees rights and benefits that are less favorable than those under the labor contract the outsourcing enterprise signed with them. The maximum term of a labor outsourcing arrangement is 12 months, as provided under Article 53.1 of the 2019 Labor Code.  

Labor outsourcing services in Vietnam constitute a conditional business sector, offering both opportunities and legal challenges. For foreign investors, market entry is subject to strict review by competent authorities, as the sector has not yet been fully liberalized under Vietnam’s international commitments. Nevertheless, opportunities remain available for investors with strong financial capacity, proven management experience, and feasible business plans. Therefore, to successfully invest in this field, enterprises should prepare comprehensive legal documentation, develop a clear operational plan, and demonstrate their financial and managerial capability, while strictly complying with Vietnam’s regulatory framework. 

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