Notes on conditions for subject and escrow for enterprises providing services of Vietnamese guest workers

Currently, the service of Vietnamese guest workers to work abroad under contracts is increasingly developing. This article will provide some additional notes on conditions for subjects and for escrow to businesses that are eager to provide services to Vietnamese guest workers.  

1. Conditions on service providers providing services to Vietnamese guest workers  

Not all businesses operating in Vietnam are authorized to provide the service of sending Vietnamese laborers to work abroad under contract. In reality, this service is exclusively conducted by Vietnamese enterprises. 

Accordingly, under Clause 1, Article 8 of the Law on Vietnamese guest workers 2020 stipulates, “Provision of Vietnamese guest worker service is a conditional line of business and shall only be provided by Vietnamese enterprises having license for providing Vietnamese guest worker service issued by Minister of Labor – War Invalids and Social Affairs.” Thus, the specialized law recognizes this activity as a conditional business line and can only be performed by Vietnamese enterprises. 

Under Clause 12, Article 4 of the Law on Enterprise 2020, a Vietnamese enterprise is an enterprise established and registered in accordance with the provisions of Vietnamese law and has its headquarters in Vietnam.  

Furthermore, as stipulated in Appendix I, Section A of Decree No. 31/2021/ND-CP elaboration of some articles of The Law on Investment, the service of Vietnamese guest workers to work under contract is a sector that has not yet been opened to foreign investors. 

It can be understood that only domestic economic organizations can carry out this activity, but economic organizations with foreign investment capital falling into the cases specified in Clause 1, Article 23 of the Law on Investment 2020 will not be able to provide the service activities of Vietnamese guest workers, specifically: 

• Over 50% of its charter capital is held by a foreign investor(s) or, in case of a partnership, the majority of its general partners are foreigners;
• Over 50% of its charter capital is held by a business organization(s) mentioned in Section (i) of this Clause;
• Over 50% of its charter capital is held by a foreign investor(s) and a business organization(s) mentioned in Section (i) of this Clause.

Therefore, investors need to consider the qualifications of the entity before undertaking the activity of Vietnamese guest workers in accordance with Vietnamese legal provisions. 

2. Conditions for escrow of service enterprises 

According to the provisions of Point b, Clause 1, Article 10 of the Law on Vietnamese Guest Workers 2020, escrow is one of the conditions for an enterprise to be granted a License to operate the service of Vietnamese guest workers. 

The purpose of the escrow is to ensure that Vietnamese enterprises providing services of Vietnamese guest workers (“service enterprises”) have the financial capacity and commitment to meet obligations to workers, such as ensuring working conditions and protecting their rights when working abroad. Simultaneously, escrow can also be used to handle cases of violation or infringement of workers’ rights while working abroad. 

Under Article 23 of Decree 112/2021/ND-CP elaboration of some articles and measures for executing Law on Vietnamese Guest Workers, the current escrow deposit level is VND 2,000,000,000 (Two billion) and service enterprise must make a deposit at a bank or foreign bank branch established and legally operated in Vietnam. In case a service enterprise assigns its branch to carry out service activities of Vietnamese guest workers 2020, it must escrow deposit an additional VND 500,000,000 (Five hundred million) for each assigned branch.  

After the escrow deposit, the custodian bank will confirm by a written certification of deposit of the enterprise and this will be a document proving that the service enterprise has met the escrow conditions. Accordingly, this deposit is frozen and can only be used upon written request of the Ministry of Labor, War Invalids and Social Affairs in cases prescribed by law, specifically: 

• At the request of a competent state agency; 
• Service enterprises do not perform or do not fully perform their obligations in service activities of Vietnamese guest workers.

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