Vietnam: What is labor outsourcing?

What is labor outsourcing?

Pursuant to Article 52 of the Labor Code 2019, labor outsourcing is an arrangement in which a worker enters into an employment contract with an outsourcing enterprise, which subsequently dispatches the worker to work for another employer (client enterprise) while maintaining labor relations with the outsourcing enterprise with which the employment contract is concluded.

Labor outsourcing is a conditional business, requires the labor outsourcing license and applies only to certain types of work.

Vietnam: What is labor outsourcing? (Internet image)

Labor outsourcing rules in Vietnam

Labor outsourcing must ensure the principles specified in Article 53 of the Labor Code 2019, specifically as follows:

- The maximum duration of labor outsourcing is 12 months.

- The client enterprise may employ an outsourced worker in the following cases:

+ The employment is necessary for the sharp increase in labor demand over a limited period of time;

+ The outsourced worker is meant to replace another employee who is taking maternal leave, has an occupational accident or occupational disease or has to fulfill his/her citizen’s duties;

+ The work requires highly skilled workers.

- The client enterprise may not employ an outsourced worker in the following cases:

+ The outsourced worker is meant to replace another employee during a strike or settlement of labor disputes;

+ There is no agreement with the outsourcing enterprise on responsibility for compensation for the outsourced worker’s occupational accidents and occupational diseases;

+ The outsourced worker is meant to replace another employee who is dismissed due to changes in organizational structure, technology, economic reasons, full division, partial division, consolidation or merger of the enterprise.

- The client enterprise must not dispatch an outsourced worker to another employer; must not employ an employee dispatched by an enterprise that does not have the labor outsourcing license.

Labor outsourcing contracts in Vietnam

According to the provisions of Article 55 of the Labor Code 2019, the outsourcing enterprise and the client enterprise shall conclude a written labor outsourcing contract, which is made into 02 copies, each of which shall be kept by a party.

A labor outsourcing contract shall have the following major contents:

- The work location, the vacancy which will be filled by the outsourced worker, detailed description of the work, and detailed requirements for the outsourced worker;

- The labor outsourcing duration; the starting date of the dispatch period;

- Working hours, rest periods, occupational safety and health at the workplace;

- Responsibility for compensation in case of occupational accidents and occupational diseases;

- Obligations of each party to the outsourced worker.

The labor outsourcing contract shall not include any agreement on the rights and benefits of employee which are less favorable than those stipulated in the concluded employment contract between the employee and the outsourcing enterprise.

Mai Thanh Loi

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE