Asian labour laws – a minefield for the unwary

minefieldIn Asia, varying stages of economic and social development necessitate different local labour laws. In Indonesia and China, authorities are implementing pension and immigration reforms while in Vietnam new visa rules have been introduced. As the region undergoes urbanisation, employment rules are changing rapidly.

In Indonesia, new rules require employers to enrol their employees into a government social security programme that provides coverage for both health and employment. The rules apply to all employees, including foreigners, who have been employed in Indonesia for at least six months. Foreigners who already receive similar benefits and protection under a policy in their home country may be exempted. Subscription to Jamsostek’s products is only mandatory for companies with more than 10 employees or a payroll exceeding IDR 1 million a month. Jamsostek is the state-owned company designated to manage social insurance fund for the private sector.
Visa rules in Indonesia can also be complicated. Foreign visitors wishing to conduct business meetings may obtain a Visa Kunjungan (VK) (single entry/single visit visa) or a Visa Kunjungan Beberapa Kali Perjalanan (VKBP) (multiple entry/multiple visit visa). Applications must be made by a sponsor, however holders of such visas aren’t eligible for a work permit.

Further, the Indonesian government prefers that companies hire locally. If expatriates are hired, companies must provide the necessary education and training programs for Indonesians who will replace the expatriates within a reasonable time. Obtaining work permits is also a complex process and companies are advised to work with a specialist agent.

In China, the government announced its first major reform of its immigration law in 2012. The new law, which took effect last year, included a new talent visa category, aimed at accelerating employment visa applications for foreigners with special skills. The current process is regarded as complex and time consuming.

In Vietnam, a work permit is approved on a case-by-case basis. Prominent Ho Chi Minh City attorney Fred Burke has reportedly said that under current requirements, “Bill Gates and Steve Jobs wouldn’t qualify for permits to work in Vietnam.” A new rule which took effect last November requires work permit applicants to obtain a legalized declaration of no criminal record issued by the applicant’s home authorities–in addition to criminal record checks issued by Vietnamese agencies–six months before the application is submitted. The implementation of these rules varies from province to province, causing confusion and concern.

The application process delays are exacerbated currently by Taiwanese companies, which are hoping to replace their foreign staff who fled the country during riots triggered by China’s deployment of an oil rig in territorial waters claimed by Vietnam.