Particularly, in response to unprecedented challenges caused by the pandemic to businesses, the Government has recently issued several instructions on COVID-19 prevention regarding employment and work permits as follows:
1. EMPLOYMENT MATTERS
1.1. Benefits for employees who are infected with Covid-19 or subject to mandatory medical isolation
Employees who are infected with Covid-19 may take sick leave and enjoy benefits under the social insurance regime. The employer is not obligated to pay salary to affected employees for these off days.
On 13th February 2020, The Vietnam Social Security had sent an official letter No. 422/BHXH-CSXH to the Ministry of Labor, War Invalids and Social Affairs and the Ministry of Health proposing that employees who are subject to mandatory medical isolation will enjoy the sickness regime as per Regulations of Law “During the medical isolation period, without taking into consideration of the fact that during or after the period of medical isolation they are infected with Covid-19 or not. Payment shall be based on confirmation of local commune/ward authorities on such isolation”. However, this proposal has not been approved yet.
- For employees who are subject to mandatory medical isolation in accordance with the list and decision of competent State agencies, and for the period of being absent from work, they shall be entitled to the salary for work suspension, which shall be agreed by the two parties but must not be lower than the regional minimum salary stipulated by the Government. This is an official guidance of Ministry of Labor, War Invalids and Social Affairs (MOLISA) in Official Letter No. 1064 (“OL 1064”) issued on 25th March 2020.
According to this OL 1064, the following employees are also entitled for salary payment relating to work suspension (if not teleworking):
- Foreign employees who cannot come back to work as requested by competent State authorities;
- Employees who cannot work because their employers and/or colleagues are isolated.
1.2. Scenarios for employment arrangement
In order to protect the employees’ health as well as to deal with cost-related issues during this tough time, employers may consider the following lawful options for employment arrangement:
(i) Allowing the employees to take annual leave or teleworking
In this case, the employees are entitled to their full salary.
(ii) Reducing working time and/or salary
- Reaching agreement with the employees on reduction of working time and/or salary (the new salary must not be less than the minimum salary for the relevant area stipulated by the Government).
- Temporary transferring employees to do work other than the one stipulated in the labor contracts (in case the employers faces difficulties regarding the material supply and market causing the redundancy). The transfer period is not more than an accumulated period of 60 days in any one year unless the employee’s consent. Salary will be paid at the rate appropriate to the new work. However, if the salary rate of the new work is less than that of the previous work, employees are entitled to receive the previous salary for a period of 30 days. The new salary must equal to at least 85% of the previous salary, but must not be less than the minimum salary for the relevant area stipulated by the Government.
- If suspending work due to objective reasons (dangerous epidemic) or for economic reasons, employees are entitled to the salary for the work suspension which must be agreed to by the two parties, but must not be lower than the regional minimum wage stipulated by the Government.
(iii) Non-payment of salary
- Reaching agreement with employees for unpaid leave.
- Reaching agreement with employees on temporary suspension of the labor contracts. Period of temporary suspension of labor contracts is not included in the working period of the employees for the employers. Within 15 days from expiry of the term of suspension, employees must return to work and the employers must allow the employees back, unless the two parties otherwise agree to extend the suspension.
(iv) Termination of labor contracts
- If employers reach an agreement with their employees on the termination of the labor contracts, then the salary is paid until the date of the termination, after which employers will also need to pay the employees severance allowance (if the employees are eligible) and salary for unused annual leave (if any).
- If employers unilaterally terminate the labor contracts, then employers need to show evidence that they have taken all necessary measures to overcome the problems but still require to decrease production and staff employment. An advance notice is required to be sent to the employees depending on their contract type. The employees will receive full salary until the date of termination, severance allowance (if eligible) and salary for unused annual leave (if any).
- If employees are retrenched due to economic reasons the employers must formulate, consult opinion of trade union and implement a labor usage plan and prove that they are unable to provide work to the employee and must retrench them. The employers must inform the relevant labor authorities at least 30 days prior to the implementation of the labor usage plan. The retrenched employees will receive job-loss allowance (if eligible), salary for unused annual leave (if any) and full salary until the date of termination.
2. WORK PERMITS AND VISAS
Due to swift and complicated developments of the Covid-19 pandemic, the Vietnamese Government has imposed numerous drastic measures and restrictions on personal movement to limit interpersonal contact and minimize the spread of the virus. In particular, the Government has recently issued instructions and measures on Covid-19 prevention regarding entry, work permits and residence of foreigners as follows:
2.1. Temporary suspension of entry of all foreigners
According to Notification No. 118/TB-VPCP dated 21st March 2020 of the Government Office, the Vietnamese Government has decided to temporarily suspend entry to all foreigners, all overseas Vietnamese and their spouses and children who have been granted with the certificate of visa exemption from 22nd March 2020.
For those entering Viet Nam for diplomatic and official purposes, for participation in major diplomatic events, or being experts, business managers, highly skilled workers, they can be considered for visa issuance if deemed necessary. However, they shall be subject to mandatory medical declaration in designated areas and be properly quarantined themselves at places of residence as per the regulations.
2.2. Temporary suspension of new work permit issuance
According to Resolution No. 28/ NQ-CP dated 10th March 2020, the Vietnamese Government has requested the Ministry of Labor, War Invalids and Social Affairs to temporarily suspend the issuance of new work permits to foreign employees from countries or territories infected by Covid-19.
Since there is no further official guidance from the ministry level on this topic, and based on the verbal instructions from various officials in the Departments of Labor, War Invalids and Social Affairs (“DOLISA”) in Hanoi and Ho Chi Minh City, DOLISA have stopped receiving application files for granting new work permits.
2.3. Renewal of visas / work permits in special cases
According to Notification No. 118/TB-VPCP dated 21st March 2020 of the Government Office, renewal of expiring visas or work permits may still continue for the following cases:
- Foreigners who are unable to return to their country and must stay in Vietnam for work; or
- Foreign experts, business managers, high skilled workers etc. who have obtained a medical certificate which proves negative for Covid-19 issued by a competent authority of the home country and such certificate must be accepted for entry into Vietnam and must be strictly quarantined at accommodation place as per regulations.
For applications for renewal of work permit, based on our informal discussions with the DOLISA in Hanoi and Ho Chi Minh City and in addition to the standard documents, foreign employees are requested to submit original passport proving no exit from Vietnam from 01st February 2020 and health certificate within the latest 14 days prior to the submission date. However, there has not been any official guidance on this requirement so far, and thus its application and enforcement vary from time to time.
Please note that the above information is based on the latest official documents and our sources available up to 30th March 2020 and may change at any time by the Vietnamese Government.
3. SUPPORT FROM GORVERNMENT
3.1. Deferral of payments to social insurance fund and trade union fund
As per the Official Letter (“OL”) 860/BHXH-BT issued by Vietnam Social Security dated 17th March 2020, and OL 245/TLD issued by Vietnam General Confederation of Labor dated 18th March 2020, the deadline for making contribution of compulsory Social Insurance (particularly the part for pension and survivorship fund, including 14% contributed by employer and 8% contributed by employee) and Trade Union Fee (2% salary borne by employer) is extended until 30 June 2020, which can also be extended until 31st December 2020 if the situation has not improved. Affected enterprises are those operating in some sectors (such as transportation, tourism, hotel, restaurant, etc.), that are heavily impacted by Covid-19 epidemic and having to reduce headcounts by 50% or their business is negatively affected by more than 50% of total asset value.
3.2. Deferral of tax payment
On 08th April 2020, the Government released Decree 41/2020/ND-CP for extending the deadline of tax and land rental fee payment. As per the Decree, the enterprises, individuals and business households (“Tax payers”) operating in the following sectors can be entitled to the extension:
- Enterprises that have production activities in the industry in agriculture, forestry and aquaculture; food production and processing; textile; costume production; production of leather and related products; production of wood and of products of wood and cork, except for furniture; production of products of straw and plaiting materials; production of paper and paper products; production of rubber and plastics products; production of other non-metallic mineral products; production of basic metals; machining; treatment and coating of metals; manufacturing of electronic products, computer and optical products; manufacturing of automobiles and other motor vehicles; production of furniture; construction;
- Enterprises that have business activities in transportation and storage; accommodation and catering services; education and training; health services and social support services; real estate activities; labour service and employment activities; travel agency, tour operator and support services related to advertising and organizing tours; art, entertainment and creation; libraries, archives, museum, and other cultural activities; sport, recreation; cinema; and
- Enterprises that manufacture products and belong to the list of prioritized supporting industries; manufacturing of key mechanical products;
- Small and micro enterprises; and
- Credit institutions and branches of foreign banks that provide supports to their customers in accordance with the instruction of State Bank of Vietnam during the COVID-19 epidemic.
Per the Decree, the deadline for tax payment is extended as below:
- Value Added Tax (“VAT”) obligation for the period from March to June 2020 or Quarter I and II/2020 will be extended to 05 months from the statutory deadline;
- The deadline for settling Corporate Income Tax (“CIT”) obligation for fiscal year 2019 (“FY19”) and provisional CIT of quarter I and II/2020 will be extended to 05 months from the statutory deadline. In case the enterprises already settled the CIT obligation of FY19, then they are allowed to offset with other taxes’ obligation;
- The deadline for settling VAT and Personal Income Tax (“PIT”) obligations of individuals or household businesses for 2019 will be 31st ecember 2020; and
- The deadline for settling land rental fee obligation will be extended for 05 months from 31st May 2020.
Of note, enterprises must register with the tax authority no later than 30th July 2020 using the provided form in the Decree.
3.3. Direct support for the citizens who are impacted due to Covid-19 from the Government
On 09th April 2020, Resolution No. 42/NQ-CP on support measures for citizens who are impacted due to Covid-19, the following aid packages are available:
- Financial support of VND1.8 million/month for the employees who are on unpaid leave or suspension of labour contract for the period from April to June 2020;
- Vietnam Bank for Social Policies will grant free interest loans to employers (with maximum duration of 12 months) with the maximum amount of 50% regional minimum salary/month/employee for settling salary for employee who are suspended from work in the period from April to June 2020 (as long as the employers have paid the other 50% of the salary);
- Financial support of VND1 million/month for the business household with revenue less than VND100 million/year and must temporarily close the business as from 01st April 2020;
- Financial support of VND1 million/month for the employees who are terminated and are not eligible for severance allowance and individuals without labour contract who lost their job;
- Financial support of VND500,000/month for citizens who are entitled to monthly allowance thanks to the social policy beneficiaries or for the citizens serving the State during the revolution and wars for the period from April to June 2020;
- Financial support of VND250,000 /month for poor and near-poor households for the period from April to June 2020;
Those eligible for more than two types of support shall only be entitled to the highest support package. The Circular for implementation is expected to be release soon, and payments should be done within April 2020 as announced by MOLISA.