Legal basis:

• Labor Code 2019
• Decree 152/2020/ND-CP

1. Maximum term of labor contract for foreigners working in Vietnam

According to Vietnamese law, the term of the labor contract for foreign workers working in Vietnam must not exceed the term of the Work Permit. Work permit is one of the conditions that foreign workers need to meet when working in Vietnam. Work permit is a legal document issued by a competent state agency to foreign workers, allowing them to work in Vietnam for a certain period of time.

The term of a work permit is issued according to the term of one of the following cases but must not exceed 02 years (Because the maximum term of a Work Permit is 2 years):

• Term of the labor contract expected to be signed.
• Deadline for the foreign party to send foreign workers to work in Vietnam.
• Term of contract or agreement signed between Vietnamese and foreign partners.
• Term of contract or service provision agreement signed between Vietnamese and foreign partners.
• The deadline is stated in the document of the service provider sending foreign workers to Vietnam to negotiate service provision.
• The term has been determined in the operating license of the agency, organization or enterprise.
• The term in the document of the service provider sending foreign workers to Vietnam to establish a commercial presence of that service provider.
• Time limit in the document proving that the foreign worker is allowed to participate in the operations of a foreign enterprise that has established a commercial presence in Vietnam.
• Time limit in the written approval to use foreign workers, except in cases where a report explaining the need to use foreign workers is not required.

2. How many times can foreign workers sign labor contracts?

According to the principles of labor contract duration in Vietnam, in case the two parties sign a new labor contract that is a definite-term labor contract, they can only sign one more time, after that if the employee continues to work, you must sign an indefinite-term labor contract. That is, workers in Vietnam can only sign fixed-term labor contracts twice. After that, if they continue to work, the parties must sign an indefinite-term labor contract.

However, The 2019 Labor Code stipulates that the working term of foreign workers working in Vietnam must not exceed the term of the Work Permit. Accordingly, the term of a Work Permit is specified for a maximum of 02 years. Thus, it can be seen that the term of the labor contract will depend on the term of the Work Permit, meaning foreign workers working in Vietnam are not allowed to sign labor contracts of indefinite term. Because the term of a Work Permit is only a maximum of 02 years, workers cannot sign an indefinite labor contract with a permit that legalizes the foreign worker’s right to work for a fixed term. Therefore, the 2019 Labor Code specifically stipulates that in the case of foreign workers working in Vietnam, the parties can agree to enter into multiple, fixed-term labor contracts.

Thus, signing a labor contract for foreign workers depends on the work permit and there is no specific regulation on the maximum number of times the contract can be renewed. However, each signing must ensure that the term of the contract is consistent with the time allowed to work in Vietnam according to the work permit. If the term of the labor contract expires and the employee still wants to continue working, the employer or employer must carry out procedures to extend the work permit or issue a new work permit according to the provisions of Decree 152/2020/ND-CP. After that, both parties can sign a new labor contract.

3. Meaning of regulations on maximum term of labor contracts for foreigners working in Vietnam

• Foreign labor management: Helps the state strictly manage the employment of foreign workers, ensuring they comply with Vietnamese law.
• Protecting Vietnamese workers: Limiting the situation of foreign workers competing unfairly with Vietnamese workers.
• Ensuring security and order: Controlling foreigners staying and working in Vietnam.

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