New points in the regulations of Outsourcing service have taken effect since May 05th, 2019

Enterprises providing labor outsourcing services are established and operated under regulations of law with the function of hiring laborers under labor contracts. These enterprises do not directly employ laborers but provide to other individuals and organizations in the form of temporary work.

The purpose of outsourcing service is to temporarily satisfy to the sudden increase in labor demand during a certain period of time; to replace the employees during maternity leave, labor accident, occupational disease or having to fulfill civic obligations; or to satisfy the needs to use high-skilled employees.

Decree No. 29/2019/ND-CP (Decree 29) providing guidelines for implementation of Clause 3 Article 54 of the Labor code on licensing outsourcing services, deposit payment and list of permissible outsourced jobs, has taken effect since May 05th, 2019. The Vietnamese Government has issued new regulations for outsourcing service as the following contents: 

Firstly, simplify the requirements for a license in providing outsourcing service.

Because outsourcing service is a conditional business, enterprises have to register for a license. According to Decree 29, an enterprise issued a license for outsourcing service must satisfy 02 following requirements:

- The legal representative of the enterprise applying for the license for the outsourcing service must satisfy all of the following requirements: being the manager of the enterprise; having no criminal records; having working experience in the field of outsourcing or labor supply of at least 03 years (36 months) or more during the last 05 years preceding the date of submission of the license application dossier.

- The enterprise has made payment of a deposit of 2,000,000,000 VND (two billion VND) at a commercial bank or a foreign bank’s branch duly established and operating in Vietnam.

In comparison to Decree No. 55/2013/ND-CP (Decree 55), the new Decree abolished two requirements for an enterprise to be issued a license: requirement on the legal capital (2 billion VND) and the requirement on the location of enterprises’ offices, branches and representative offices.

Secondly, the term of the license for outsourcing service.

Decree 29 has modified the term of the license for outsourcing service, in particular:

- Extending the term of the license to a maximum of 60 months, instead of 36 months according to Decree 55.

- The license for outsourcing service shall be extended multiple times but the term of each extension shall not exceed 60 months (according to Decree 55, the license’s term was extended no more than 02 times, the term of each extension shall not exceed 24 months).

- The term of the license for outsourcing service that is re-issued shall not exceed the remaining term of the license granted previously.

Thirdly, the application for the license for outsourcing service.

An application for the license for outsourcing service according to Decree 29 includes the following documents:

1. The application form for the license for outsourcing service made by the enterprise using Form No. 02 provided in Appendix II enclosed herewith;

2. The copy of the enterprise registration certificate as regulated;

3. The resume of the legal representative of the enterprise using Form No. 04 provided in Appendix II enclosed herewith;

4. The criminal record No. 01 of the enterprise’s legal representative, which is issued in accordance with the Law on criminal records. If the enterprise’s legal representative is a foreigner who cannot apply for a Vietnamese criminal record, the criminal record No. 01 shall be replaced by a criminal record or document granted by foreign authorities and certifying that he/she has not committed any crimes or faced any criminal prosecutions.

The above-mentioned documents shall be issued within the last 06 months before the date of application submission.

5. Document proving the working experience of the enterprise’s legal representative as regulated in Point c Clause 1 Article 5 of this Decree, which may be:

• The certified true copy of the labor contract or the employment contract of the enterprise's legal representative;
• The certified true copy of the appointment decision (for appointed employees) or the notice of voting results (for voted employees) of the enterprise's legal representative.

If the documents specified in Points a and b of this Clause are made in a foreign language, they must be translated to Vietnamese.

6. The certificate of payment of deposit made using Form No. 05 provided in Appendix II enclosed herewith.

Criminal Record and Documents on proving the working experience of the legal representative of enterprises providing labor outsourcing services are regulated more clearly and specifically in Decree 29. The Decree also issues a form of the certificate of deposit for labor outsourcing service.

Fourthly, the list of permissible outsourced jobs.

The new Decree has added 03 jobs to the list of permissible outsourced jobs:

- Management, operation, maintenance and service on ships.

- Management, supervision, operation, repair, maintenance and service on oil and gas drilling rigs.

- Aircraft flight control, aircraft service/Maintenance, repair of aircraft and aircraft equipment/Flight moderation and exploitation/Flight tracker.

Fifthly, cases where outsourcing is not allowed.

Decree 29 has modified cases where outsourcing is not allowed as follows:

- Either outsourcer or outsourcing party is involved in labor disputes, settling strikes or replaces the outsourced employees who are exercising the right of striking or settling labor disputes.

- The outsourcer does not enter into an agreement with the outsourcing party about the responsibilities for paying occupational accident or disease compensations for the outsourced employees.

- No approval is made by the outsourced employees.

- he employees who are dismissed due to restructuring, changes of technologies or merger, consolidation, division, separation of enterprises or due to economic reasons are replaced.

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