In the context of the increasingly developing economy, labor outsourcing has become an essential part of the business operations of many companies in Vietnam, especially those with foreign investment. Utilizing labor outsourcing services not only helps businesses reduce costs and maximize profits but also contributes to creating employment opportunities and improving the livelihoods of workers. To ensure fairness and transparency in the labor outsourcing process, the Government of Vietnam has established specific regulations governing this activity.
This article delves into the regulations related to labor outsourcing in Vietnam, focusing on fundamental principles and legal responsibilities of both the employers and the employees. Thanks to these regulations, both businesses and workers can operate in a fair and secure environment, striking a balance between the needs of the enterprises and the rights of the labor force.
Labor Outsourcing
According to Article 52 of the 2019 Labor Code, labor outsourcing refers to the act where employees enter into labor contracts with labor outsourcing enterprises, subsequently being transferred to work under the management of other employers while maintaining their labor relationship with the labor outsourcing enterprises that initially signed the labor contracts.
Labor outsourcing activities are conditional businesses, only permitted for enterprises holding a Labor Outsourcing License, and applicable to specific job categories.
Principles of Labor Outsourcing Activities
According to Article 52 of the 2019 Labor Code, the maximum duration of labor outsourcing for employees is 12 months.
Labor outsourcing can be used by the client enterprise under the following circumstances:
a) Temporary increase in labor demand for a specific period;
b) Replacement of employees during maternity leave, work-related accidents, occupational diseases, or fulfilling civic duties;
c) Demand for employees with specialized skills or high technical expertise.
The client enterprise is prohibited from using outsourced labor in the following situations:
a) To replace employees during a strike or labor dispute resolution;
b) Without a specific agreement on compensation for work-related accidents or occupational diseases of the outsourced employees with the labor outsourcing enterprise;
c) To replace employees terminated due to economic reasons, changes in technology, or business restructuring, mergers, divisions, or amalgamations.
The client enterprise cannot transfer outsourced employees to other employers, nor use employees provided by labor outsourcing enterprises without a Labor Outsourcing License.
Labor Outsourcing Enterprises
According to Article 54 of the 2019 Labor Code:
- Labor outsourcing enterprises must establish a fund and obtain a Labor Outsourcing License.
- The government regulates the establishment of the fund, conditions, procedures, issuance, renewal, extension, and revocation of Labor Outsourcing Licenses and the list of jobs applicable for labor outsourcing.
Labor Outsourcing Contracts
According to Article 55 of the 2019 Labor Code, labor outsourcing enterprises and client enterprises must enter into a written labor outsourcing contract, which should be made in duplicate, with each party holding one copy.
The labor outsourcing contract must include the following essential contents:
a) Workplace, specific job position for the outsourced labor, detailed job description, specific requirements for the outsourced employees;
b) Duration of the labor lease, start date of employment for the outsourced employees;
c) Working hours, rest periods, occupational safety and hygiene conditions at the workplace;
d) Responsibilities for compensating work-related accidents and occupational diseases;
e) Obligations of each party concerning the outsourced employees.
The labor outsourcing contract must not contain any provisions that grant lower rights or benefits to the employees compared to the regular labor contracts signed between the labor outsourcing enterprise and its employees.
Rights and Responsibilities of Labor Outsourcing Enterprises
According to Article 56 of the 2019 Labor Code, in addition to the rights and responsibilities specified in Article 6 of the 2019 Labor Code, labor outsourcing enterprises have the following rights and responsibilities:
- Ensure that the employees have the appropriate qualifications as per the requirements of the client enterprise and the terms of the labor contract signed with the employees;
- Inform the employees about the content of the labor outsourcing contract;
- Inform the client enterprise about the employees' resumes and their requirements;
- Ensure that the salaries of the outsourced employees are not lower than those of employees with the same qualifications and performing similar or equivalent work for the client enterprise;
- Maintain records specifying the number of outsourced employees and regularly report to the provincial People's Committee's labor authority;
- Enforce labor discipline on employees who violate labor regulations when returning them to the labor outsourcing enterprise due to labor discipline violations.
Rights and Responsibilities of Client enterprises
According to Article 57 of the 2019 Labor Code, the rights and responsibilities of client enterprises include:
- Inform and guide the outsourced employees about the workplace rules and other regulations;
- Not discriminate against outsourced employees regarding working conditions compared to their regular employees;
- Agree with the outsourced employees on night shifts and overtime work according to the provisions of this Law;
- Agree with the outsourced employees and the labor outsourcing enterprise to officially hire the outsourced employees in case the labor contract between the outsourced employees and the labor outsourcing enterprise has not been terminated;
- Return outsourced employees who do not meet the agreed-upon requirements or violate labor discipline to the labor outsourcing enterprise;
- Provide the labor outsourcing enterprise with evidence of labor discipline violations committed by the outsourced employees for the labor outsourcing enterprise to consider labor discipline measures.
Rights and Responsibilities of Outsourced Employees
According to Article 58 of the 2019 Labor Code, the rights and responsibilities of outsourced employees include:
- Perform the job according to the labor contract signed with the labor outsourcing enterprise;
- Observe labor discipline, workplace rules; obey the legal management, direction, and supervision of the client enterprise;
- Receive a salary not lower than that of employees with the same qualifications and performing similar or equivalent work for the client enterprise;
- File complaints with the labor outsourcing enterprise if the client enterprise violates any agreements in the labor outsourcing contract;
- Agree to terminate the labor contract with the labor outsourcing enterprise to enter into a labor contract with the client enterprise.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
