Staying Within The Labour Law

Most newly-established companies agree that Vietnam is a special market. Local understanding, especially of the local labor market, is regarded as something of a passport to enter. There can be no doubt that the greatest concern among most foreign companies is the country’s Labour Law. Legal compliance is the top priority, not only in Vietnam but also around the world, in ensuring a company’s sustainable development.

A thorough understanding of Vietnam’s Labour Law is crucial, as it impacts directly on the heart of any organization: its workforce. However, most foreign companies, especially those that are newly established, find it difficult to comprehending and applying the Labour Law (including social insurance, health insurance, and all kinds of taxes), as it remains a complex in execution and is still to be fully developed. Many legal documents must be referred to in addressing a single issue. Decrees and circulars are usually followed by official written documents, resulting in difficulties in comprehension, though the government is now working hard to make it more easily understood so it does not get in the way efforts to attract foreign direct investment (FDI). The lack of a systematic process, complex administration procedures, and the need to deal with legal offices are what makes Vietnam different from other countries for a newly-established company.

Furthermore, not only the Labour Law but also many human resources-related matters, such as how to recruit talent and how to determine salary levels and social insurance contributions are a burden for all companies, not just new arrivals. The best and most practical solution adopted by most organizations is outsourcing – an approach where they can leave the unfamiliar to the experts. Good outsourcing vendors not only implement these tasks but do so in a manner most suitable for a client’s status. For example, clients can save a great deal of time in building a payroll system, which is used over a long period of time, when using an outsourcing vendor. Outsourcing also helps new companies to focus their time and effort on their core business and strategies to build up and enhance their positioning in a new market.

Outsourcing has become a popular trend around the world and has begun to earn a higher profile in developing countries like Vietnam. It is especially helpful to newly-established companies, for which the host country and its risks remain largely unknown. Choosing a competent outsourcing vendor that is strong in expertise and commitment and “sensitive” to the company’s status when providing advice is an important matter for any organization!

Click here to view more the article on Vietnam Economic Times in July 2014.

If you have any questions, do not hesitate to contact our HR outsourcing service.