Richard Stapley-Oh, Managing Partner KPMG Law, Minh Ngo, Managing Partner BLawyers Vietnam, and Tran Thi Thanh Minh, a Director at KPMG Vietnam, weigh in on the additional difficulties foreigners face when it comes to the ultimate job stress – being laid-off.  

While Vietnam’s GDP growth hit 5% in 2023, it was a difficult year for many. Manufacturers in the apparel and footwear industries, for example, laid off or reduced hours for tens of thousands of employees as overseas orders fell. These layoffs largely impact Vietnamese workers, but global and national economic developments hurt foreign employees as well, and they often don’t have the same level of legal protection as domestic workers. 

“There are significant economic headwinds in the building, construction, and real estate (BCRE) sectors which are flowing through to other parts of the economy,” said Richard Stapley-Oh, Managing Partner KPMG Law. “Companies in BCRE are in trouble; the work’s not coming in, and the first people that get looked at in times of trouble are expats.”

This is because it’s very difficult to lay off a Vietnamese national on a full-term contract.

“Foreigners can only get a two-year labor contract and work permit, meaning people on fixed-term contracts like that are easier to address,” he added. 

This can be especially challenging since residency is tied to employment, meaning a foreign employee who is laid off or doesn’t have their contract renewed must quickly find a new job or leave Vietnam. 

Tran Thi Thanh Minh, a Director at KPMG Vietnam, added that there are two types of expatriate employment in Vietnam, and this determines whether a foreign employee has any access to social insurance. 

“There are internal transfers in which an employee is assigned from the parent company to Vietnam, and in this case, they don’t have a proper labor contract with the Vietnamese entity,” she said. “For this type of employee, there is no social or health insurance contribution to the state.” 

The other type of employment is through a proper labor contract, meaning they are considered to be hired locally. In this case, a company must apply for a work permit through the government, and social and health insurance contributions are then carried out. 

However, this is still restricted to two years, while the Vietnamese government is striving to ensure that companies attempt to recruit Vietnamese nationals before hiring a foreign employee. 

“Regarding legal frameworks, employers in Vietnam must proceed with the announcement of recruiting Vietnamese employees to the position expected to recruit foreign employees on the website of the Ministry of Labor, War Invalids and Social Affairs or the website of the local Employment Service Center within at least 15 days before submitting the explanation for demand of employing foreign employees to local labor authorities,” explained Minh Ngo, Managing Partner, BLawyers Vietnam. In his view, this is one factor driving layoffs of foreign employees. 

“Both local companies and foreign-invested companies have a trend of laying off foreign employees who hold top positions in companies and are well-paid in an effort to restructure their labor force, business, and finance,” Minh continued. 

Mass layoffs on a global scale, especially in sectors such as tech, education, banking, and the previously mentioned apparel and footwear, have also impacted Vietnam, and in some cases, foreign employees have been illegally terminated. 

“Nearly 80% of our individual clients who need legal support against their employers because of illegal layoffs are from those industries,” Minh said. 

He advised foreign employees to determine whether their employer is complying with Vietnam’s 2019 Labor Code, with specific attention paid to details of the labor contract including its term, termination provisions, and respective rights and obligations; the termination process, including the notice period; and any payment provided to an employee for termination. 

“Should an employee ascertain that an employer has unlawfully and unilaterally terminated a labor contract, the employee may engage in negotiations to come to a mutual agreement or conduct a complaint or initiate a lawsuit to the competent authorities for consideration and settlement,” he continued. 

One long-time expat who wished to remain anonymous shared how moving between roles and countries can put employees at a disadvantage, recalling how he had been with a company for 11 years, but only received compensation for five years after being terminated when the firm argued that he had only been in his current role for that amount of time. 

Unfortunately, neither Minh Ngo or Richard Stapley-Oh see this economic situation improving in the near future. 

“The anti-corruption campaign has led to a series of corporate collapses and arrests, and that flows through all sectors, especially consulting services, banking, etc.,” the KPMG legal expert said. “Until the campaign concludes, I don’t see the economy getting better for the foreseeable future.

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