Many multinational groups standardize a global contract template under the parent company’s law. When the expert sets foot to work in Vietnam, that template meets a “legal wall”: work performed on Vietnamese territory falls under the mandatory framework of Vietnamese labor law.
The basis: Article 151 of the Labor Code and labor law territoriality
Article 151 of the 2019 Labor Code establishes that a foreign employee working in Vietnam must hold a work permit, work under a labor contract and comply with Vietnamese labor law, unless a treaty provides otherwise. The “mandatory” character shows in three layers:
- The administrative layer: work permits, foreign labor usage reports, labor authority inspections — no contractual “opt-out” exists;
- The employee-protection layer: probation caps, termination notice periods, severance/job-loss allowances, working time and rest, regional minimum wage, occupational safety — agreements below the law are void to the extent of the shortfall;
- The insurance–tax layer: compulsory social insurance for covered foreign employees, and Vietnamese personal income tax declaration for Vietnam-work income.
What can still be “under foreign law”?
International expert engagements usually have two document tiers: (1) the Vietnamese labor contract with the Vietnamese company — governed wholly by Vietnamese law; (2) an appointment letter/secondment agreement with the parent, governing elements such as group seniority, share plans, supplementary pension, and post-assignment return commitments. Tier (2) may choose foreign law and foreign dispute forums — provided it does not eat into Tier (1)’s mandatory rights and does not render the actual Vietnam labor relationship a sham.
Consequences for drafting and operating the contract
- Every clause of the global template must be “filtered” through the Labor Code: clauses contrary to mandatory rules (e.g. at-will termination without reason or notice) will have no effect in Vietnam even if the expert signed them;
- Real disputes will be resolved in Vietnam under Vietnamese procedure — employers should keep HR files, bilingual contracts and evidence to that standard, rather than relying on a foreign arbitration clause;
- For intra-company transferees (ICT), keep three documents cleanly separated: the appointment/secondment letter with the parent, the acceptance document in Vietnam, and (if any) the Vietnamese labor contract — each under one clear legal system, avoiding a “hybrid” document no system fully owns.
Frequently Asked Questions
Which law governs a foreign expert’s labor contract in Vietnam?
Vietnamese labor law is the principal and mandatory governing framework. Under Article 151 of the 2019 Labor Code, a foreign employee working in Vietnam must comply with Vietnamese labor law, unless a treaty to which Vietnam is a party provides otherwise. This covers: the work condition (work permit), contract content and termination, working time, compulsory social insurance, occupational safety and health, and labor dispute resolution procedures in Vietnam.
Can the parties agree to apply foreign law to the contract?
Not so as to escape Vietnam’s mandatory framework for work performed in Vietnam. A clause stating “this contract is governed by the law of country X” in a Vietnam-based labor contract will not be applied by Vietnamese dispute bodies to replace the Labor Code’s mandatory rules (probation caps, termination notice, severance, insurance…). The income/relationship elements with the overseas parent can be governed separately by an appointment letter or secondment agreement under foreign law — but that is a parallel relationship, not a substitute for the Vietnamese labor contract.
Where are a foreign expert’s labor disputes resolved?
Under the individual labor dispute sequence in Vietnam: a labor mediator (a mandatory step for most disputes) → a labor arbitration council or the People’s Court of the place where the company is headquartered/where work is performed. Agreements taking individual labor disputes to foreign arbitration or foreign courts are practically unenforceable in Vietnam, because labor disputes follow their own statutory resolution sequence and connect directly to state administration of foreign labor (permits, residence).
Contact us
FLAT Law Firm advises FDI companies and foreign employees on work permits, visas and temporary residence cards in Vietnam. Contact us for advice on your specific case.
This content is general information only and is not a substitute for legal advice on a specific case.
This article has been quality-reviewed by the FLAW AI Legal Council
