CAN BUSINESSES OUTSOURCE LABOR?

Enterprises can rehire previously hired labor to meet their production or service needs. Labor outsourcing can be through HR service providers or self-managed businesses. However, it is necessary to ensure the rights and safety of labor when performing labor outsourcing.

I. Concept of labor outsourcing:

Pursuant to Clause 1, Article 52 of the Labor Code 2019, labor outsourcing is when an employee signs a contract with a labor outsourcing enterprise, then is transferred to work and obeys the management of another employer, but still retain labor relations with the original enterprise. This activity is a conditional business line, so it is only carried out by enterprises that have a labor outsourcing license and only apply to certain jobs according to Appendix II of Decree 145/2020/ND-CP.

II. Conditions for labor outsourcing enterprises and outsourcing employers:

For labor outsourcing enterprises, the following conditions should be met (Article 54 of the Labor Code 2019 is detailed in Articles 12 and 21 of Decree 145/2020/ND-CP):

- The enterprise is legally established under Vietnamese law.

- Have been granted a Labor Outsourcing License.

- The legal representative of the enterprise performing labor outsourcing activities must: Be the enterprise manager in accordance with the Law on Enterprises; There were no convictions; Having worked directly as a professional or manager in labor outsourcing or labor supply for full 03 years (36 months) or more during the preceding 05 years before applying for a license.

- The enterprise has made a deposit of VND 2,000,000,000.

For outsourced employers, pursuant to Clause 2, Article 53 of the Labor Code 2019, the outsourcing party may use the outsourced labor in the following cases:

(1) Temporarily respond to a sudden increase in demand for labor within a certain period of time; 

(2) Replacing employees on maternity leave, suffering from labor accidents, occupational diseases, or having to perform civic duties; 

(3) There is a demand for employers with high professional and technical qualifications.

Cases in which the outsourcing party may not use the outsourced labor:

(1) To replace the employee who is in the process of exercising the right to strike or settle the labor dispute; 

(2) There is no specific agreement on the liability for compensation for labor accidents and occupational diseases of the outsourced employee with the outsourcing enterprise; 

(3) Replace employees who are laid off due to changes in structure, technology, economic reasons or division, separation, consolidation or merger.

III. Contents of labor leasing contract:

A labor leasing contract is a contract signed in written form between the labor leasing enterprise and the outsourcing party. According to Clause 2, Article 55 of the Labor Code, a labor leasing contract usually includes the following contents:  

- Working location, job position to be outsourced by the employer, specific contents of the job, specific requirements for the outsourced employee;

- Term of labor outsourcing; the time of commencement of work of the outsourced employee;

- Working time, rest time, occupational safety and hygiene conditions at the workplace;

- Responsibility for compensation for labor accidents and occupational diseases; - Obligations of each party towards employees. The maximum term of labor outsourcing for employees is 12 months. 

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For more information, please contact:

Hoang Pham (James) / Managing Partner at: hoang.pham@vselawyers.com

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Attention: This legal update is not an advice and should not be treated as such.