The expansion or reduction of the labor force not only affects production and business efficiency but is also subject to legal regulation to safeguard employees’ rights and ensure effective state management. In addition, the personnel recruitment process must comply with regulations on labor contracts, insurance, working conditions, and other related legal obligations. Below, NPLaw respectfully invites readers to explore the legal provisions governing labor force and personnel recruitment.

I. Current status of the labor force and personnel recruitment

At present, labor force and recruitment activities in Vietnam are experiencing significant fluctuations due to the impacts of economic development, technological advancement, and labor market trends. Enterprises are increasingly differentiated in terms of labor force, with small and medium-sized enterprises accounting for a large proportion of the economy, while large corporations continue to expand their scale and attract high-quality human resources.

However, recruitment remains challenging, particularly due to shortages of skilled labor, intense competition among enterprises for talent, and labor migration toward sectors offering higher income levels.

In addition, digital technology and artificial intelligence are exerting a strong influence on the labor market, reshaping recruitment demand toward workers with digital skills and high adaptability to technology. Meanwhile, in certain industries such as textiles and garments, construction, and food processing, shortages of unskilled labor persist, especially in the post-COVID-19 economic recovery period. To address human resource challenges, many enterprises are promoting flexible recruitment strategies, internal training, and the application of technology in recruitment processes to optimize labor resources and ensure sustainable development.

II. Legal regulations on labor force and personnel recruitment

1. What is the labor force?

Labor force refers to the number of workers participating in the production, business, or operational activities of an organization, enterprise, or an economy within a given period of time. It may be measured by the number of employees, direct and indirect workers, or the total number of persons working in a particular industry or sector.

2. Does personnel recruitment depend on the labor force?

Personnel recruitment does not depend on the labor force; however, enterprises must comply with legal regulations on labor management.

Pursuant to Article 11 of the Labor Code 2019, employers have the right to directly recruit employees according to their production and business needs without being restricted by the labor force. Nevertheless, enterprises employing more than 10 employees are required to register internal labor regulations in accordance with Article 118 of the Labor Code 2019. In addition, under Clause 2 Article 4 of Decree No. 145/2020/ND-CP, enterprises are required to periodically report changes in their labor situation to the competent state management authorities.

Accordingly, enterprises are entitled to proactively recruit employees without limitation on labor force, provided that they fully comply with reporting and labor management obligations as prescribed by law.

III. Several questions regarding labor force and personnel recruitment

1. Are there regulations on labor recruitment procedures?

Currently, the Labor Code 2019 does not stipulate specific procedures for labor recruitment, leaving enterprises and organizations to establish their own procedures based on actual needs and conditions, provided that general legal provisions are complied with. In practice, labor recruitment usually includes the following steps:

- For employers (enterprises, recruiting organizations):

  • Recruitment announcement: Publicly disclosing information on vacancies, job requirements, benefits, and salary regimes;
  • Receipt of applications: Receiving and considering candidate applications based on recruitment criteria;
  • Interviews and competency assessments: Evaluating candidates through interviews, professional tests, or health checks where necessary;
  • Negotiation and execution of labor contracts: Upon meeting requirements, entering into labor contracts in accordance with law (probationary or official contracts);
  • Labor reporting: In certain cases, enterprises are required to report labor information to state authorities.

- For employees:

  • Preparation of job application dossiers: Including application letters, curricula vitae, diplomas, and relevant certificates;
  • Participation in interviews and competency assessments: Meeting the employer’s recruitment requirements;
  • Contract negotiation: Agreeing on salary and working conditions prior to contract execution;
  • Completion of onboarding procedures: Providing required documents, undergoing health checks (if any), and participating in initial training in accordance with company regulations.

Thus, although there are no specific statutory procedures, both employees and employers must adhere to the principle of freedom of agreement that does not contravene the law, in order to safeguard the legitimate rights and interests of both parties.

2. How is a company sanctioned if it collects fees from employees during recruitment?

Pursuant to Point b Clause 1 Article 8 of Decree No. 12/2022/ND-CP, collecting money from employees during recruitment constitutes a violation of law and may result in administrative fines ranging from 1,000,000 VND to 3,000,000 VND for individuals and from 2,000,000 VND to 6,000,000 VND for organizations (the fine applicable to organizations is twice that applicable to individuals, in accordance with Clause 1 Article 6 of the same Decree). In addition, remedial measures include the obligation to refund the collected amounts to the employees.

3. May a company reduce its labor force when downsizing?

Downsizing is a form of organizational restructuring as it involves rearranging the operational apparatus, streamlining personnel, and may affect multiple employees as provided under Article 42 of the Labor Code 2019. When organizational restructuring affects multiple employees, the enterprise must develop a labor utilization plan, prioritize retraining if new positions are available, and may only terminate employment after consulting with the employees’ representative organization and providing at least 30 days’ prior notice to the provincial-level People’s Committee. 

Accordingly, enterprises may reduce personnel when downsizing, but must strictly comply with statutory procedures.

4. How is the labor force used to classify small, medium, and large enterprises?

Under Article 4 of the Law on Support for Small and Medium-sized Enterprises 2017, the classification of small and medium-sized enterprises is based on labor force and financial criteria. Specifically, small and medium-sized enterprises include micro-enterprises, small enterprises, and medium-sized enterprises, with an average annual number of employees participating in social insurance not exceeding 200 persons, and meeting one of the following criteria:

  • Total capital not exceeding 100 billion VND; or
  • Total revenue of the preceding year not exceeding 300 billion VND.

In addition, small and medium-sized enterprises are classified by sectors, including agriculture, forestry and fisheries; industry and construction; and trade and services. Such classification serves as a basis for determining appropriate support policies for each group of enterprises in accordance with law.

5. Are there any regulations limiting the number of employees that an enterprise or household business may recruit?

Currently, labor law does not impose any limitation on the number of employees that an enterprise or household business may recruit. However, if a household business employs a large number of workers and operates on a large scale, the competent authorities may require conversion into an enterprise model to ensure full compliance with regulations on labor, taxation, and social insurance. 

For enterprises, although there is no statutory limitation on labor force, they must still comply with the Labor Code 2019, including provisions on labor contracts, social insurance, occupational safety, and employees’ rights.

Accordingly, there is presently no legal restriction on the number of employees that an enterprise or household business may recruit.

6. When increasing the labor force, must an enterprise notify labor management authorities?

When increasing the labor force, enterprises are not required to immediately notify labor management authorities of newly recruited employees. Pursuant to Article 12 of the Labor Code 2019, enterprises are obliged to periodically report on labor utilization to provincial- and district-level labor management authorities. Specifically, under Clause 2 Article 4 of Decree No. 145/2020/ND-CP, enterprises must submit semi-annual reports (before June 5) and annual reports (before December 5) on changes in labor through the electronic portal of the Department of Labor, War Invalids and Social Affairs or directly to the competent local authority. In addition, enterprises employing 10 or more employees must register internal labor regulations in accordance with Article 118 of the Labor Code 2019.

Thus, when increasing the labor force, enterprises are not required to provide immediate notification, but must comply with periodic reporting obligations as prescribed. However, where there are significant changes in labor structure or human resource policies, enterprises must fulfill relevant reporting obligations to avoid legal violations.

7. What procedures are required when recruiting foreign employees?

When recruiting foreign employees, enterprises in Vietnam are required to implement procedures for obtaining work permits. According to Article 151 of the Labor Code 2019, foreign employees working in Vietnam must possess work permits issued by competent authorities, unless they are exempt from work permit requirements. Specifically, under Clause 2 Article 1 of Decree No. 70/2023/ND-CP (amending and supplementing Decree No. 152/2020/ND-CP), prior to recruiting foreign employees, enterprises must conduct procedures to determine the demand for foreign labor and report such demand to the Ministry of Labor, War Invalids and Social Affairs or the provincial Department of Labor, War Invalids and Social Affairs. Upon approval, enterprises shall submit applications for work permits for foreign employees to the Department of Labor, War Invalids and Social Affairs where the employees are expected to work.

Dossiers for work permit issuance include: An application for work permit issuance, labor contracts, documents evidencing professional qualifications, health certificates, criminal record certificates, and other relevant documents as prescribed under Article 9 of Decree No. 152/2020/ND-CP. Work permits are valid for a maximum term of two years and may be extended in accordance with law.

Accordingly, when recruiting foreign employees, enterprises must fully complete work permit procedures prior to the commencement of employment to ensure legal compliance.

IV. Legal consulting services on labor force and personnel recruitment

The above is NPLaw’s article on labor force and personnel recruitment. With a team of experienced lawyers and legal consultants, NPLaw is always willing to accompany, advise, and support clients in matters relating to labor force and personnel recruitment. Should you require legal assistance, please contact NPLaw via the following details: