As one of the fastest and most stable-growing economies in Asia, Vietnam is an attractive market to explore and open up other developing markets in Southeast Asia. Vietnam’s macroeconomics alone are convincing, with a population of 90 million, consistent GDP growth of 5-6% over the last decade, relatively low costs and a literacy rate of over 90%.
To help entrepreneurs open a company and invest in Vietnam and prepare for business, Links has created a legislative page of the main employment laws and best practices in Vietnam. Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of laws and regulations, please visit the official government websites.
Company registration is required for any person/ company conducting business in Vietnam in accordance with Decree 01/2021/ND-CP.
Representative office and branch office of a foreign company must also register for a Licenses for Establishment of representative office/ branch office.
After obtaining a business license, a company is required to get an official seal which will be used to legally authorise documentation.
According to Law No. 68/2014/QH13 which came into force on July 1st 2015 and the latest amendment to the Law on Enterprises which took effect on January 2021, companies have the right to freely decide the form, content, and amount of their seals, provided that the contents of the seals display the company’s name and ID number without notifying the Business Registration Authority (BRA).
According to Circular 105/2020/TT-BTC, a taxpayer has to register for a tax code within 10 working days from the time the business registration is granted.
The following documents are needed to register for a tax code:
A limited liability company (LLC) or its representative office (RO) is able to open a bank account in Vietnam once it is incorporated.
Normally, the required documents are as follows:
Vietnam is at a favourable location with proximity to some of the world’s most active and flourishing economies in Asia such as Singapore, Hong Kong, Malaysia, Japan, Taiwan, India and China.
The long coastline adjacent to the South China Sea gives some of the major coastal cities a locational advantage in trading, especially via shipping routes.
Since the launch of economic reform in 1986, Vietnam has been displaying consistent economic growth over the last few decades. The effort and commitment of the Vietnamese government to improve the ease and transparency of doing business and investing in Vietnam are shown through numerous amendments of regulations, signed agreements with foreign countries and initiatives to support businesses such as funding and grant programs.
Vietnam’s population is among the largest in South East Asia. Having a relatively young population with a median age of 30.9 years, along with an over 90% literacy rate and high levels of internet penetration, it is not hard to find well-educated, tech-savvy and young workers in the country at a relatively low cost.
A newly set-up company has to obtain Social Insurance (“SI”) code in order to make declaration and payment of Social, Health and Unemployment Insurance (SHUI) contributions for its employees.
From 01 July 2022, tax offices stopped selling PIT withholding certificates printed on tax offices’ orders. Unused withholding documents that have already been purchased from tax offices or self-printed ones shall continue to be used while pending the use of Electronic PIT withholding certificate. Accordingly, based on Decree No. 123/2020/ND-CP, tax-withholding organizations are encouraged to apply for a Electronic PIT Withholding Certificate (signed by an electronic signature tool).
Pursuant to Article 33 of Decree No. 123/2020/ND-CP, tax-withholding organizations are not required to register or notify the issuance, or transfer of e-data to tax offices when using electronic PIT withholding documents. They shall develop a software system themselves that use e-documents.
The primary law regulating employment relationships in Vietnam is the Labor Code 2019, which came into force on 1 January 2021.
There are three elements in the Vietnam social security system including Social Insurance (“SI”); Health insurance (“HI”)’; unemployment insurance (“UI”); Trade Union (“TU) and accident insurance (“AI”).
Employers and employees are obligated to contribute social security at the rate below:
From January 01, 2018, the salary base for calculating social security contributions shall include basic salary and fixed allowances (excluding bonus/incentive, innovation bonus, meal allowance, childcare allowance, housing allowance, gasoline allowance, transportation allowance, mobile phone allowances and child support allowance). However, this is capped at 20 times of the common basic minimum wage for Social and Medical Insurances contributions, and 20 times the regional minimum wage for Unemployment Insurance contributions.
According to Article 4 of Decree 191/2013/NĐ-CP, an employer has to contribute trade union at the rate of 2% of employee’s salary (with its cap) regardless of having grassroot trade union or not.
For employee (pursuant to Clause 3, Article 23 of Decision 1908/QD-TLD in 2016)
– If grassroot trade union is not established: trade union fee will not be applied
– If there was grassroot trade union: employee will contribute 1% of social insurance salary paid but max is only 10% of the basic minimum wage.
Foreigner staff is required to have a work permit/work permit exemption certificate to work in Vietnam before they start working in Vietnam as well as a temporary resident card to stay in Vietnam. Considerations for visa approval for each applicant include:
However, there are some foreign employees who are not required to apply for a work permit/work permit exemption certificate provided are professors, experts, directors, technicians and come to Vietnam for less than 30 days per time and accumulated staying days is under 90 days per year. Foreigners who marry a Vietnamese citizen and reside in Vietnam will be exempt from a work permit.
Common Minimum Wage
The first type is the common minimum wage, which is used to calculate salaries for employees in state-owned organizations and enterprises. The common minimum wage in Vietnam goes from 1,390,000VND /month to 1,490,000 VND /month, starting 1 July 2019.
Regional minimum wage
The second type of minimum wage is used for employees in all non-state enterprises and is based on regions as defined by the government. These are the amounts as of 1st July 2022:
Classification of Region I, Region II, Region III and Region IV per Circular 38/2022/NĐ-CP are as follows:
– Urban/suburban districts of Hanoi City, including: Gia Lam, Dong Anh, Soc Son, Thanh Tri, Thuong Tin, Hoai Duc, Thach That, Quoc Oai, Thanh Oai, Me Linh, and Chuong My, and Son Tay Town;
– Ha Long City of Quang Ninh Province;
– Urban/suburban districts of Hai Phong City, including: Thuy Nguyen, An Duong, An Lao, Vinh Bao, Tien Lang, Cat Hai and Kien Thuy;
– Thu Duc City and other urban/suburban districts of Ho Chi Minh City, including: Cu Chi, Hoc Mon, Binh Chanh and Nha Be;
– Bien Hoa City, Long Khanh City and other suburban districts of Dong Nai Province, including: Nhon Trach, Long Thanh, Vinh Cuu, Trang Bom and Xuan Loc;
– Thu Dau Mot City, Thuan An City, Di An City, Ben Cat Town, Tan Uyen Town, and other suburban districts of Binh Duong Province, including: Bau Bang, Bac Tan Uyen, Dau Tieng and Phu Giao;
– Vung Tau City and Phu My Town of Ba Ria – Vung Tau Province.
– Remaining suburban districts of Hanoi City;
– Remaining suburban districts of Hai Phong City;
– Hai Duong City of Hai Duong Province;
– Hung Yen City, My Hao Town and other suburban districts of Hung Yen Province, including: Van Lam, Van Giang and Yen My;
– Vinh Yen City, Phuc Yen City, and two suburban districts of Vinh Phuc Province, including Binh Xuyen and Yen Lac;
– Bac Ninh City, Tu Son City and other suburban districts of Bac Ninh Province, including: Que Vo, Tien Du, Yen Phong, Thuan Thanh Gia Binh and Luong Tai;
– Cam Pha City, Uong Bi City, Mong Cai City, Quang Yen Town and Dong Trieu Town of Quang Ninh Province;
– Thai Nguyen City, Song Cong City and Pho Yen City of Thai Nguyen Province;
– Hoa Binh City and Luong Son suburban district of Hoa Binh Province;
– Viet Tri City of Phu Tho Province;
– Lao Cai City of Lao Cai Province;
– Nam Dinh City and My Loc suburban district of Nam Dinh Province;
– Ninh Binh City of Ninh Binh Province;
– Vinh City, Cua Lo Town and two suburban districts of Nghe An Province, including Nghi Loc and Hung Yen;
– Dong Hoi City of Quang Binh Province;
– Hue City of Thua Thien Hue Province;
– Hoi An City and Tam Ky City of Quang Nam Province;
– Urban/suburban districts of Da Nang City;
– Nha Trang City and Cam Ranh City of Khanh Hoa Province;
– Da Lat City and Bao Loc City of Lam Dong Province;
– Phan Thiet City of Binh Thuan Province;
– Can Gio suburban district of Ho Chi Minh City;
– Tay Ninh City, Trang Bang Town, Hoa Thanh Town, and Go Dau suburban district of Tay Ninh Province;
– Two suburban districts of Dong Nai Province, including Dinh Quan and Thong Nhat;
– Dong Xoai City and two suburban districts of Binh Phuoc Province, including Chon Thanh and Dong Phu;
– Ba Ria City of Ba Ria – Vung Tau Province;
– Tan An City and suburban districts of Long An Province, including: Duc Hoa, Ben Luc, Thu Thua, Can Duoc and Can Giuoc;
– My Tho City and Chau Thanh suburban district of Tien Giang Province;
– Ben Tre City and Chau Thanh suburban district of Ben Tre Province;
– Vinh Long City and Binh Minh Town of Vinh Long Province;
– Urban districts of Can Tho City;
– Rach Gia City, Ha Tien City and Phu Quoc City of Kien Giang Province;
– Long Xuyen City and Chau Doc City of An Giang Province;
– Tra Vinh City of Tra Vinh Province;
– Bac Lieu City of Bac Lieu Province;
– Ca Mau City of Ca Mau Province.
– Remaining provincial cities (except provincial cities of region I and region II);
– Kinh Mon Town and suburban districts of Hai Duong Province, including: Cam Giang, Nam Sach, Kim Thanh, Gia Loc, Binh Giang and Tu Ky;
– Suburban districts of Vinh Phuc Province, including: Vinh Tuong, Tam Dao, Tam Duong, Lap Thach and Song Lo;
– Phu Tho Town and suburban districts of Phu Tho Province, including: Phu Ninh, Lam Thao, Thanh Ba and Tam Nong;
– Suburban districts of Bac Giang Province, including: Viet Yen, Yen Dung, Hiep Hoa, Tan Yen and Lang Giang;
– Suburban districts of Quang Ninh Province, including: Van Don, Hai Ha, Dam Ha and Tien Yen;
– Sa Pa Town and Bao Thang suburban district of Lao Cai Province;
– Remaining suburban districts of Hung Yen Province;
– Suburban districts of Thai Nguyen Province, including: Phu Binh, Phu Luong, Dong Hy and Dai Tu;
– Remaining suburban districts of Nam Dinh Province;
– Duy Tien Town and Kim Bang suburban district of Ha Nam Province;
– Suburban districts of Ninh Binh Province, including: Gia Vien, Yen Khanh and Hoa Lu;
– Bim Son Town, Nghi Son Town and suburban districts of Thanh Hoa Province, including Dong Son and Quang Xuong;
– Thai Hoa Town, Hoang Mai Town, and other suburban districts of Nghe An Province, including: Quynh Luu, Yen Thanh, Dien Chau, Do Luong, Nam Dan, Nghia Dan.
– Ky Anh Town of Ha Tinh Province;
– Huong Thuy Town, Huong Tra Town and suburban districts of Thua Thien Hue Province, including: Phu Loc, Phong Dien, Quang Dien and Phu Vang;
– Dien Ban Town and suburban districts of Quang Nam Province, including: Dai Loc, Duy Xuyen, Nui Thanh, Que Son, Thang Binh and Phu Ninh;
– Two suburban districts of Quang Ngai Province, including: Binh Son and Son Tinh;
– Song Cau Town and Dong Hoa Town of Phu Yen Province;
– Two suburban districts of Ninh Thuan Province, including: Ninh Hai and Thuan Bac;
– Ninh Hoa Town and suburban districts of Khanh Hoa Province, including: Cam Lam, Dien Khanh and Van Ninh;
– Dak Ha suburban district of Kon Tum Province;
– Two suburban districts of Lam Dong Province, including Duc Trong and Di Linh;
– La Gi Town and two suburban districts of Binh Thuan Province, including Ham Thuan Bac and Ham Thuan Nam;
– Phuoc Long Town, Binh Long Town and suburban districts of Binh Phuoc Province, including: Hon Quan, Loc Ninh and Phu Rieng;
– Remaining suburban districts of Tay Ninh Province;
– Remaining suburban districts of Dong Nai Province;
– Suburban districts of Ba Ria – Vung Tau Province, including: Long Dien, Dat Do, Xuyen Moc, Chau Duc and Con Dao;
– Kien Tuong Town and suburban districts of Long An Province, including: Duc Hue, Chau Thanh, Tan Tru and Thanh Hoa;
– Go Cong Town, Cai Lay Town, and two suburban districts of Tien Giang Province, including Cho Gao and Tan Phuoc;
– Suburban districts of Ben Tre Province, including: Ba Tri, Binh Dai and Mo Cay Nam;
– Two suburban districts of Vinh Long Province, including: Mang Thit and Long Ho;
– Suburban districts of Can Tho City;
– Suburban districts of Kien Giang Province, including: Kien Luong, Kien Hai and Chau Thanh;
– Tan Chau Town and suburban districts of An Giang Province, including: Chau Phu, Chau Thanh and Thoai Son;
– Suburban districts of Hau Giang Province, including Chau Thanh and Chau Thanh A;
– Duyen Hai Town of Tra Vinh Province;
– Gia Rai Town and Hoa Binh suburban district of Bac Lieu Province;
– Vinh Chau Town and Nga Nam Town of Soc Trang Province;
– Suburban districts of Ca Mau Province, including: Nam Can, Cai Nuoc, U Minh and Tran Van Thoi;
– Suburban districts, including Le Thuy, Quang Ninh, Bo Trach and Quang Trach, and Ba Don Town of Quang Binh Province.
Region IV covers the remaining subregions
Employees who have worked for a full 12 months are entitled to paid annual leave as follows:
Per Resolution 17/2022/UBTVQH15 (Resolution 17) which will take effect from April 1 until December 31, 2022, overtime is increased from 40 to 60 hours a month. However, the total number of overtime working hours cannot exceed 300 hours annually.
(i) An employer and an employee may include the contents of the probation in the employment contract or enter into a separate probation contract. Accordingly, SHUI contributions are not obligation during the probationary period if this period is separated with Labor contract. However, if this period is outlined in the contract, SHUI contributions are compulsory;
(ii) Probation is not allowed if the employee works under an employment contract with a duration of less than 1 month;
(iii) The probationary period shall be negotiated by the parties on the basis of the nature and complexity of the job. Only one probationary period is allowed for a job and the probation shall satisfy the following conditions:
– Not longer than 180 days for the position of enterprise executive;
– Not longer than 60 days for positions that require junior college degrees or above;
– Not longer than 30 days positions that require a secondary vocational certificate, professional secondary school; positions of or for technicians, and skilled employees;
– Not longer than 6 working days for other jobs.
(iv) The employee’s salary during the probationary period shall be agreed upon by the two parties and shall be at least equal to 85% of the salary offered for the job.
(v) At the end of the probationary period, the employer shall notify the employee of the probation results.
If the result is satisfactory, the employer shall keep implementing the concluded employment contract, if there is one, or conclude the employment contract.
If the result is not satisfactory, the employer may terminate the concluded employment contract or the probation contract.
During the probationary period, either party has the right to terminate the concluded probation contract or employment contract without prior notice and compensation obligation.
An employer an employee may mutually agree to terminate the contract. An employer may also unilaterally terminate the contract for one of the following reasons (these reasons must be stated at Internal regulations):
Employees may not be terminated unilaterally if pregnant, on maternity leave, on annual or other leave, or before the terms under No. 2 have been reached.
In case of employer unilaterally terminate labour contracts with the employee, the employer is obligated to give notice in advance before unilaterally terminating. The notice period is 45 days for an indefinite term labour contract; 30 days for definite term contract and 3 days for contracts under 12 months.
An employee who has worked for the company for over 12 months is eligible for a severance payment. The severance payment consists of a half month’s salary for each year worked that is not contributed to unemployment insurance (i.e. probationary period, maternity period, etc.).
Benefits in Kind
Volunteer private health insurance is not required by the law. However, it is common practice in Vietnam for employers to offer insurance to employees.
When hiring a new employee, the employer is obligated to register the new employee with relevant authorities (i.e. Social Insurance Department, Department of Statistics, etc.)
Female employees are entitled to 6 months of maternity leave with 100% of social insurance salary (the average salary of the last six preceding months) paid by Vietnam Social Insurance’s authority. In case of multiple births, there shall be an extension of 1 month on the leave period for each child from the second child onwards.
When the female employee has taken at least 4 months of maternity leave, she can return to work, provided that the employer agrees. In this case, besides the wage of the working days paid by the employer, the female employee shall continue to receive the maternity allowance, in accordance with the Social Insurance Law.
Read more on the Law on Social Insurance.
A male employee is entitled to 5 to 14 days of paternity leave within the first 30 days after the day of childbirth. The number of days off depends on whether it is a single child or multiple births and if it is natural or surgical birth.
Read more on the Law on Social Insurance.
The number of days off depends on working conditions and the length of the social insurance contribution period.
Sick pay is covered by the social insurance fund, and not by the employer.
Vietnamese employees entitled to sick pay are entitled to 75% of their salary or remuneration on which social insurance premiums were based in the month preceding their leave.
Read more on the Law on Social Insurance.
Resident taxpayer is subject to Personal Income Tax (“PIT”) on worldwide employment income at progressive rates regardless of where the income is paid or earned.
Vietnam’s Progressive Rates
|Tax Bracket||Monthly Taxable Income (Million VND)||Tax Rate|
|1||Up to 5||5%|
|2||Over 5 to 10||10%|
|3||Over 10 to 18||15%|
|4||Over 18 to 32||20%|
|5||Over 32 to 52||25%|
|6||Over 52 to 80||30%|
Non-resident taxpayer is subject to PIT at a flat rate of 20% on income earned in Vietnam.
An employer is obligated to withhold PIT from employee’s salary and transfer to tax authorities on behalf of their employees.
Tax payment will be paid on a monthly or quarterly basis.
An employer is obligated to conduct PIT Finalization on behalf of employees who are qualified to authorize the employer to conduct their PIT finalization on their behalf at the end of the year.
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In Vietnam, it is common practice to pay salary to employees via their bank account. The payment period will depend on company policies or practices, but employees should be paid at least once per month.
13th month and bonus payments are not required by the current law. However, employers usually offer 13 months of pay to employees in Vietnam.
Employees are entitled to public holidays as follows:
|January 1||New Year’s Day|
|January 31 to February 4||Lunar New Year (Tet)|
|April 10||Hung King’s Temple Festival|
|April 11||Hung King’s Temple Festival Holiday|
|April 30||Reunification Day|
|May 1||International Labour Day|
|May 2||Reunification Day Holiday|
|May 3||Labour Day Holiday|
|September 2||National Day|
Local Office Working Hours and Time Zone
Working Hours: 08.00/09.00-17.00/18.00
Standard time zone: UTC + 7 hours
Useful Web Links
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