What are regulations on labor outsourcing in Vietnam under the Labor Code 2019?

What are regulations on labor outsourcing in Vietnam under the Labor Code 2019? (illustration)

1. What is labor outsourcing in Vietnam?

According to labor law regulations, "labor outsourcing" is when an employee enters into a employment contract with an employer that is a labor outsourcing enterprise, and then the employee is transferred to work and be managed by another employer while still maintaining a labor relationship with the employer who initially signed the employment contract.

2. Principles of labor outsourcing operations in Vietnam

Although continuing the spirit of the Labor Code 2012, the legislators have gradually perfected the regulations regarding labor outsourcing to make this relationship more stringent. Due to the complex nature of labor relationships, the labor outsourcing relationship becomes even more complicated when employees are transferred to work for and under the control of another employer while still maintaining a labor relationship with the initial employer. Therefore, the principles of labor outsourcing operations are stipulated in the Labor Code 2019 as follows:

Firstly, the maximum duration of labor outsourcing for an employee is 12 months.

Secondly, the labor outsourcing hirer can use leased labor in the following cases:

- To temporarily meet a sudden increase in the need for labor in a certain period;

- To replace employees during maternity leave, occupational accident, occupational disease, or when performing civic duties;

- When there is a need for labor with high technical expertise.

Thirdly, the labor outsourcing hirer cannot use leased labor in the following cases:

- To replace employees who are currently on strike or resolving labor disputes;

- When there is no specific agreement about compensation responsibilities for occupational accidents and diseases between the labor outsourcing hirer and the labor outsourcing enterprise;

- To replace workers who have been laid off due to structural changes, technological reasons, economic reasons, or during mergers and acquisitions.

Finally, the labor outsourcing hirer cannot transfer the leased employee to another employer; and cannot use leased employees provided by an enterprise without a labor outsourcing Operation License.

3. Conditions for enterprises to conduct labor outsourcing operations in Vietnam

According to the legal regulations, labor outsourcing operation is a conditional business line, and it can only be performed by enterprises with a labor outsourcing Operation License and is applicable to certain jobs. Furthermore, the labor outsourcing enterprise must make a deposit and be granted a labor outsourcing Operation License.

Note: the Government of Vietnam stipulates deposit requirements, conditions, order, procedures for issuance, re-issuance, extension, and revocation of the labor outsourcing Operation License, and the list of jobs subject to labor outsourcing.

4. Labor outsourcing contract in Vietnam

The Labor Code 2019 stipulates that the labor outsourcing enterprise and the labor outsourcing hirer must sign a written labor outsourcing contract in two copies, each party keeping one copy.

The main content of the labor outsourcing contract includes:

- Working location, job positions requiring leased labor, specific job contents, specific requirements for leased labor;- Labor lease duration; start time of leased laborer’s work;- Working hours, resting hours, labor safety, and hygiene conditions at the workplace;- Compensation responsibilities for occupational accidents and diseases;- Obligations of each party towards the employee.

Overall, the primary terms stipulated in the labor outsourcing contract are inherited from the Labor Code 2012. However, the clause regarding compensation responsibilities for occupational accidents and diseases has been added to increase the responsibility of the labor outsourcing hirer towards the directly working employee. This will help protect the rights of employees working in harsh environments that affect health.

Legal Basis:

- Labor Code 2019.

- Labor Code 2012.

Long Binh

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