Guide to Hiring in Vietnam

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Guide to Hiring in Vietnam

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Vietnam, a nation brimming with cultural heritage and economic growth, beckons entrepreneurs seeking a foothold in Southeast Asia. With its strategic location, burgeoning markets, and favourable business climate, Vietnam presents an alluring landscape for those venturing into new business territory.

In our latest guide, we navigate the essentials of hiring in Vietnam – from minimum wage to discrimination laws and paid statutory annual leaves and more. No matter what type of business you’re aiming to establish, understanding Vietnam’s unique hiring landscape is crucial for building a thriving team.

Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Vietnam’s employment laws and regulations, please visit the official governmental websites.

Labour Law – Basics

What are the basic requirements for employers in Vietnam?

The most important labour law applied in Vietnam currently is the Labour Code 2019 which came into effect from 1 January 2021.

  • Internal Labour Regulation – Employers who employ 10 or more employees must have the internal labour regulation in writing. Written regulations are not required if the employer has fewer than 10 employees but labour discipline and material responsibility must be included in the contents of the employment contracts.
    • The key benefits of internal labour regulation must show that:
      • The employer can fully comply with local legal requirements.
      • The employer can guide the employee to do the right things.

 

    • Contents of Internal Labour Regulation:
      • Working hours and rest time,
      • Order at the workplace,
      • Occupational hygiene and safety in the workplace,
      • The employer’s regulations on preventing and combating sexual harassment in the workplace,
      • Protection of the employer’s assets, business secrets, technological secrets and intellectual property,
      • Cases in which reassignment of employees are permitted,
      • Specific cases in which employees may be temporarily reassigned against their employment contracts according to Clause 1 Article 29 of the Labour Code;
      • Material responsibility,
      • Persons having the power to take disciplinary actions.

 

 

  • Employment Contracts – Employment contracts under the Vietnamese labour law must be made in writing, unless the case of employment is of temporary work of seasonal workers working a duration of less than 1 month where a verbal employment contract can be used instead. The employer who employs 10 or more employees must have the internal labour regulation in writing.

 

    • An Employment Contract being drafted in Vietnam must include the following terms and conditions:
      • Name and address of the employer, name, and position of the authorized person of the employer to enter the employment contract,
      • Full name, date of birth, gender, place of residence, ID card/citizen card/passport of employee and other details,
      • Jobs and workplace,
      • Contract duration,
      • Job- or position-based salary, form of salary payment, due date for payment of salary, allowances, and other additional payments,
      • Advancement in pay step, pay raise,
      • Hours of work, hours of rest,
      • Personal protective equipment for the employee,
      • Social insurance, health insurance and unemployment insurance,
      • Advanced training program of occupational skills.

 

  • Rest Breaks During Working Hours – As specified in Article 64, Decree No. 145/2020/ND-CP elaboration of some articles of the labour code on working conditions and labour relations:
    • The minimum rest break of 45 consecutive minutes stated in Clause 1 Article 109 of the Labour Code applies to employees who work at least 6 hours per day, including at least 03 hours of night work as prescribed in Article 106 of the Labour Code.
    • The rest break included in working time of employees doing consecutive shifts mentioned in Clause 3 Article 63 of this Decree shall not be shorter than 30 minutes (or 45 minutes for night work).
    • The employer shall decide the time of rest break, which must not be at the beginning or the end of a shift.
    • Except for the case of doing consecutive shifts specified in Clause 3 Article 63 of this Decree, it is recommended that the employer and employees negotiate inclusion of rest breaks in working time.

 

  • Work Permits – A work permit becomes necessary for employment in Vietnam that extends beyond 3 months. The employer must begin the application process with the provincial Department of Labour, Invalids and Social Affairs (DOLISA) before employment begins.
    • Work Permits eligibility requirements:
      • Applicant must at least be of 18 years,
      • Qualifications, occupational skills, practical experience, and health record as prescribed by the Minister of Health,
      • Applicant is at manager, director or expert level carrying the knowledge required for the job,
      • Is not undergoing criminal prosecution under the home country laws or Vietnamese law,
      • A visa granted by a competent authority of Vietnam unless otherwise prescribed by the laws.

 

    • Work Permits typical exemptions:
      • Is the owner or capital contributor of a limited liability company with a capital contribution value conformable with regulations of the Government.
      • Is the Chairperson or a member of the Board of Directors of a joint-stock company a capital contribution value conformable with regulations of the Government.
      • Is the manager of a representative office, project or the person in charge of the operation of an international organisation or a foreign non-governmental organization in Vietnam.
      • Enters Vietnam for a period of less than 3 months to do marketing of a service.
      • Enters Vietnam for a period of less than 3 months to a resolve complicated technical or technological issue which (i) affects or threatens to affect business operation and (ii) cannot be resolved by Vietnamese experts or any other foreign experts currently in Vietnam.
      • Is a foreign lawyer who has been granted a lawyer’s practicing certificate in Vietnam in accordance with the Law on Lawyers.
      • In one of the cases specified in an international treaty to which the Socialist Republic of Vietnam is a signatory.
      • Gets married with a Vietnamese citizen and wishes to reside in Vietnam.
      • Other circumstances specified by the Government.

What to remember when hiring new employees?

  • Probation – The probationary period shall be negotiated by the parties on the basis of the nature and complexity of the job.
  • Onboarding – According to clause 2, article 16 labour Law 2019 about “Obligations to provide information before conclusion of an employment contract”:
    • The employee shall provide the employer with truthful information about his/her full name, date of birth, gender, residence, educational level, occupational skills and qualifications, health conditions and other issues directly related to the conclusion of the employment contract which are requested by the employer.
    • Statutory Social, Health, Unemployment Insurances and Personal Income Tax (PIT) registrations –
      • Upon one month of the labour contract, the registration for Statutory Social, Health, Unemployment Insurances and PIT registrations must be completed.
      • In case an individual does not have a PIT code, his/her income payer shall apply for taxpayer registration on his/her behalf in no later than 10 working days starting from the date tax liabilities are incurred; in case a dependant of a taxpayer does not have a Dependent tax code, the income payer shall apply for taxpayer registration for the dependant in no later than 10 working days starting from the date the taxpayer applies for dependant exemption as prescribed by law.

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What are the different discrimination laws in Vietnam?

Pursuant to Clause 8 Article 3 of the Labour Code in 2019, labour discrimination on the grounds of race, skin colour, nationality, ethnicity, gender, age, pregnancy, marital status, religion, opinion, disability, family responsibility, HIV infection, establishment of or participation in trade union or internal employee organization in a manner that affects the equality of opportunity of employment.

The fines for labour discrimination ranges from VND5 million to VND10 million for discrimination against sex, age, race, skin colour, social class, marital status, belief, religion, HIV infection or disability.

 

What are the working hours in Vietnam?

The regular working hours in Vietnam are 8 hours per day and a maximum of 48 hours per week under normal working conditions.

Overtime –

The Labour Code 2019 increases the number of overtime hours for employees in Vietnam for up to 40 hours per month at maximum. The total overtime working hours do not exceed 200 hours in 01 year, except for the cases specified in Clause 3 of the Article 107, Labour Code 2019.

For employees working overtime, the following rate is applied:

 

Overtime hoursOvertime rate
Working overtime on weekdays at day time150%
Working overtime on weekdays at night time (In case of without OT before OT nightshift)200%
Working overtime on weekdays at night time (In case of OT before OT nightshift)210%
Working overtime on weekend at day time200%
Working overtime on weekend at night time270%
Working overtime on Tet or other public holidays at day time300%
Working overtime on Tet or other public holidays at night time390%

According to article 62, decree no. 145/2020/NĐ-CP about notification of overtime work exceeding 200 hours but not exceeding 300 hours per year:

  • When organising overtime work that is exceeding 200 hours but not exceeding 300 hours per year, the employer shall notify the Departments of Labour, War Invalids and Social Affairs of:
    • The province where the overtime work takes place;
    • The province where the employer is headquartered if it is different from the province mentioned in Point a of this Clause.
  • The notification shall be sent within 15 days from the initiation date of the overtime work.
  • The notification shall be prepared according to Form No. 02/PLIV in Appendix IV hereof.

 

 

What is the legal probation period in Vietnam?

Employees undergoing a probation period in Vietnam must be paid 85% of the position’s official salary in minimum and each job cannot require more than one probation period.

Probation Periods in Vietnam:

  • Within 30 days for works that demand vocational intermediate education, technical workers, professional workers.
  • Within 60 days for works that demand college education or higher.
  • Within 6 working days for other work.
  • Within 180 days for the position of enterprise executive prescribed by the Law on Enterprises, the Law on Management and use of State investment in enterprises.

 

What are the minimum wage requirements in Vietnam?

There are two types of Minimum Wage requirements in Vietnam.

  1. Common minimum wage which is used for calculation CAP salary of Social-Medical Insurance and Trade Union contribution. This was applied from 1 July 2023 (Decree 24/2023/ND-CP) and stands at 1,800,000 VND per month.
  2. Regional private sector minimums – from 1 Jul 2022 (Decree 38/2022/ND-CP) which is used for calculation CAP salary of unemployment insurance.
    • Region I covers the rural and urban districts of Hanoi, Ho Chi Minh City, Hai Phong, Dong Nai and Binh Duong, Thu Duc City, Vung Tau City of Ba Ria-Vung Tau Province, Ha Long (Quang Ninh).
    • Region II covers the remaining rural districts of Hanoi, Hai Phong, Hai Duong City, Can Gio (Ho Chi Minh), Ba Ria City (Ba Ria Vung Tau), two suburban districts of Dong Nai, and main provincial cities of Provinces.
    • Region III covers the remaining provincial cities and suburban districts of Provinces.
    • Region IV covers the remaining localities.
RegionStatutory minimum wages per month (Unit: VND/month)Statutory minimum wages per hour (Unit: VND/hour)
Region I4.680.00022.500
Region II4.160.00020.000
Region III3.640.00017.500
Region IV3.250.00015.600

 

  • Foreign employees may base salary rates in either Vietnamese dong or foreign currencies, however, salaries that are based in foreign currencies must be converted into Vietnamese dong to calculate Super Savings Fund (SSF) and Personal Income Tax (PIT).
  • Vietnamese employees can only get paid in Vietnamese dong.
  • Employers are not required to register the salary scales to the local labour authorities anymore, however, they are still required to do it for internal filing and auditing purposes.

 

Notes on Salary:

  • Vietnamese employees: currency on employment contract is VND and can only get paid in VND.
  • Foreign employees can get paid either in VND or foreign currencies. must be converted into VND at the buying rate of the bank where the person opens the transaction account at the time incomes are earned.
  • In case a taxpayer does not have a transact account in Vietnam, foreign currencies shall be converted into VND at the buying rate of Vietcombank at the time incomes are earned.
  • The foreign currencies without rates of exchange into VND shall be converted into a foreign currency that has a rate of exchange into VND.
  • Employers aren’t required to register the salary scales to the local labour authorities – however it is still required to be done for internal filing and audit purposes.

 

 

What to note for existing employees?

  • Payroll Taxes in Vietnam for Vietnamese Employees Include:
    • Personal Income Tax of between 5%-35%
    • Social Security Contributions
      • Social Insurance – 17.5% from employer, 8% from employee
      • Medical Insurance – 3% from employer, 1.5% from employee
      • Unemployment Insurance – 1% from employer, 1% from employee
    • Trade Union of 2%

 

  • Payroll Taxes in Vietnam for Foreign Employees Include:
    • Personal Income Tax of between 5%-35% for residents, 20% for non-residents
    • Social Security Contributions (apply for foreign employees works under labour contract, not apply for inter-nation assignments)
      • Social Insurance – 17.5% from employer, 8% from employee
      • Medical Insurance – 3% from employer, 1.5% from employee
    • Trade Union of 2% (apply for foreign employees works under labour contract, not apply for inter-nation assignments)

 

Note: Compulsory insurance and 2% Trade Union only apply for foreign employees who is working under Vietnam Labour Contract, no apply for foreign employees who is working under international assignment.

 

  • Taxation on Employment –

 

Tax deduction:

  • Contributions by employees to mandatory insurance schemes (including social insurance, health insurance, unemployment insurance and other mandatory contributions as stipulated by the laws) for country of work or nationality.
  • Contributions by employees to certain approved charities (which are licensed & certified by Vietnam government)
  • Tax relief for self and dependents
    • Personal relief: VND11 million per month (for resident – automatic)
    • Dependent relief: VND4.4 million/person/month (registration, timeline required)
  • Contribution to voluntary pension fund in accordance with Ministry of Finance, capped at VND1 mil/month for both employer and employee contribution.

 

 

Termination of Employment – Employment Contract, Termination and Severance Payments

  • Termination of Employment Contract
    • Labour law is generally employee friendly in Vietnam. Employers may only unilaterally terminate employment in limited and specific instances. Critical to formally document procedures must be followed and employment termination normally needs to be mutually agreed. Since the Vietnamese Labour Laws are very specific in nature and application, employers and employees alike are fully encouraged to research and understand their specific options and courses of actions before carrying out a decision.
      • Required notice period:
        • At least 45 days’ notice period for indefinite contracts without fixed term,
        • At least 30 days’ notice period for fixed term/definite labour contracts,
        • At least 3 working days’ notice period for regular labour contract under 12 months.

 

  • Termination and Severance payments may also be applicable for local employees and foreign employees, who are working under Vietnam Labour Contract. The qualified period of work as the basis for calculation of severance allowance shall be the total period during which the employee worked for the employer minus the period over which the employee participated in the unemployment insurance in accordance with unemployment insurance laws and the period for which severance allowance or redundancy allowance has been paid by the employer. For foreign employee, who is working under Vietnam Labour contract, employer will not pay severance allowance if they were paid 1% unemployment insurance of employer into their monthly salary.
  • Vietnamese Labour Laws are very specific in nature and application, and employers and employees are encouraged to fully research and understand their specific options and courses of actions before making decisions.

 

What is the retirement age in Vietnam?

Male employees:

Retirement yearRetirement age
202160 years 3 months
202260 years 6 months
202360 years 9 months
202461 years
202561 years 3 months
202661 years 6 months
202761 years 9 months
From 202862 years

 

Female employees:

Retirement yearRetirement age
202155 years 4 months
202255 years 8 months
202356 years
202456 years 4 months
202556 years 8 months
202657 years
202757 years 4 months
202857 years 8 months
202958 years
203058 years 4 months
203158 years 8 months
203259 years
203359 years 4 months
203459 years 8 months
From 203560 years

Employment dispute channels

The following agencies, organisations and individuals have the competence to settle individual labour disputes:

  1. Labour mediators;
  2. Labour Arbitration Councils;
  3. The People’s Court.

Is employment insurance compulsory in Vietnam?

Insurance & Trade Union Rates and Caps

Local Employees (Effective 1 July 2023):

Statutory ContributionsEmployee ContributionEmployer ContributionMaximum Cap (VND)
Social Insurance8%17.5%36,000,000
Health Insurance1.5%3%36,000,000
Unemployment Insurance1%1%93,600,000
Trade Union*1% (contribution amount is capped at VND180,000/month)2%36,000,000 (for employer only)
Total11.5%23.5%

*Trade Union – It is optional for employees but compulsory for employers.

Insurance Rates and Caps

Remarks –

The maximum Cap is the maximum monthly salary at which insurance is calculated. Earnings above this cap are not included in insurance calculations. These caps are based upon maximum salaries and change as mandated minimum salaries change.

  • The employee’s salary for calculation of social insurance, labour accident and occupational disease insurance, and health insurance is capped at 20x the Common Minimum Wage.
  • The employee’s salary for calculation of unemployment insurance is capped at 20x the Regional Private Sector Minimums. These minimum salaries are subject to change during a year.

 

Trade Union Contributions

Rates and Caps

Remarks –

An employer must 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:

  • If grassroot trade union is not established trade: 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 Common Minimum Wage.

What benefits do insurances provide?

  • Sickness
  • Invalidity
  • Death
  • Maternity/Paternity
  • Unemployment
  • Child Allowance
  • Old Age Pension

 

Labour Law - Leave

  • 12 working days for employees who work in normal working conditions;
  • Employees working heavy, dangerous, or toxic jobs, or in places with harsh living conditions under the list issued by the Ministry of Labour, Invalids and Social Affairs, are entitled to 14 working days of annual leave.
  • Employees working extremely heavy, dangerous, or toxic jobs, or extremely harsh living conditions are entitled to 16 working days of annual leave.

Full Paid Personal Leave:

  • Employees are entitled to 3 days for their own marriage.
  • Employees are entitled to 1 day for marriage of one son or daughter.
  • Employees are entitled to 3 days in case of death of the parent, parent-in-law, spouse, son, or daughter.
  • Employees are entitled to 1 day in the case of the death of a grandparent, sibling or the marriage of a parent or sibling.
  • Employees can negotiate with their employer on taking unpaid leave other than the leave stipulated in Clause 1 and Clause 2 of Article 115 of the Labour Code 2019.

 

– The annual leave of an employee as prescribed in Clause 1 Article 113 of the Labour Code 2019 shall increase by 1 day for every 5 years of employment with the same employer.

Check out the latest Labour Law updates in Vietnam!

For employees working under normal working conditions, sick leave is as:

  • 30 working days per year if they have a social insurance premiums for less than 15 years,
  • 40 working days per year if they have paid social insurance premiums for 15 years to less than 30 years,
  • 60 working days per year of they have paid social insurance premiums for 30 years or more.

For employees working in heavy, hazardous, or toxic occupations or jobs on the list compiled by the Ministry of Labour and Ministry of Health, or working regularly in specified regions:

  • 40 working days per year if they have paid social insurance premiums for less than 15 years,
  • 50 working days per year if they have paid social insurance premiums for 15 years to less than 30 years,
  • 70 working days per year if they have paid social insurance premiums for 30 years or more.

Employees infected with a disease on the list of diseases requiring long-term treatment, as compiled by the Ministry of Health, are entitled to the following paid sick leave regime:

  • A maximum of 180 days in a year, including public holidays and weekends.
  • Employees still needing treatment after 180 days continue to be entitled to the paid sick leave regime at a lower level (45% to 65% of their salary or remuneration).

The salary in this period will be reviewed and paid by Social Insurance Authority.

Under Article 139 of the Labour Code 2019,

  • A working mum is entitled to 6 months of prenatal and postnatal leave – the prenatal leave should not exceed 2 months.
  • The employee may return to work before the expiry of her statutory maternity leave stipulated in Clause 1 of Article 139 of the Labour Code 2019 after 4 months of leave.

 

According to Article 137 of the Labour Code 2019, maternity protection in enterprises is:

  • An employer must not require a female employee to work at night, work overtime or travel a long distance for work in the following circumstances:
    • Employee is on her 7th month of pregnancy or her 6th month of pregnancy when working in upland, remote, border and island areas,
    • Employee is raising a child under 12 months of age, unless otherwise agreed by the employee.
  • Employee is engaged in strenuous, toxic, or risky work, the employer must reassign her to a safer role or trim her daily working hours by 1 hour without impacting her salary, rights and benefits until the child is 1 years.
  • Employer must not dismiss employee due to marriage, pregnancy, maternity leave or nursing a child under 12 months of age – except for cases where the employer that is a natural person dies or is declared incapacitated, missing, or dead by the court, or the employer that is not a natural person ceases its business operation.
  • A female employee, when on her menstruation, shall be given a 30-minute break in every working day. For female employees nursing a child under 12 months of age, a 60-minute break in every working day shall be given.

 

  • Leave period for prenatal check-ups:
    • Working moms are entitled to 5 prenatal check-ups. For working moms who live far away from health establishments, carry pathological signs or abnormal pregnancies, a 2-day leave is entitled for each checkup.
  • Leave period upon miscarriage, abortion, stillbirth, or pathological abortion:
    • 10 days for pregnancy under 5 weeks,
    • 20 days for pregnancy between 5 weeks and under 13 weeks,
    • 40 days for pregnancy between 13 weeks and under 25 weeks,
    • 50 days for pregnancy of 25 weeks or more.
  • Leave period for childbirth:
    • Working moms are entitled to 6 months leave before and after childbirth.
    • Working moms who give birth to twins or more infants is entitled to an additional leave of 1 month for each infant from the second.
    • Maternity leave pre-childbirth should not exceed 2 months.

The salary in this period will be review and payment by Social Insurance Authority

Paternity Leave:

Male employees are entitled to paternity leave if they are currently paying social insurance premiums. The entitlements for male employees are:

  • 5 working days under normal conditions,
  • 7 working days if the wife undergoes a surgical birth or give birth before 32 weeks of pregnancy,
  • 10 working days if the wife gives birth to twins, and an additional 3 working days for each infant from the second,
  • 14 working days if the wife gives birth to twins or more infants and is required to undergo childbirth operation.

Parental Leave:

  • Post-childbirth, if an under 2-month child dies, the mother is entitled to a 4-month leave from the date of childbirth.
  • If a child aged 2 months or older dies, the mother is entitled to a 2-month leave from the date of the child’s death.

Employees in Vietnam are entitled to a break of at least 1 day each week. If in the case, due to nature of work, employers are unable to give employees 1 day off per week, the employer must give employees at least 4 days off per month.

What are the upcoming public holidays in Vietnam?

  • Employees shall be entitled to fully paid days off on the following public holidays:
    • Gregorian Calendar New Year Holiday: 01 day (the 1st of January of the Gregorian calendar);
    • Lunar New Year Holidays: 05 days;
    • Victory Day: 01 day (the 30th of April of the Gregorian calendar);
    • International Labour Day: 01 day (the 1st of May of the Gregorian calendar);
    • National Day: 02 days (the 2nd of September of the Gregorian calendar and the previous or next day);
    • Hung Kings Commemoration Day: 01 day (the 10th of the third month of the Lunar calendar).
  • Foreign employees in Vietnam are entitled to 01 traditional public holiday and 01 National Day of their country, in addition to the public holidays stipulated in Clause 1 of this Article.

Vietnam Public Holidays 2024

Employees are entitled to public holidays as follows:

Regular Holidays:

HolidayDate
New Year’s Day1 January
Lunar New Year (Tet) Holidays8 February – 14 February
Hung Kings Commemoration Day18 April
Victory Day30 April
International Labor Day1 May
National Day31 August – 3 September

 

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Please note that all the information listed below are to be used as a general guideline. For more detailed accounts of Vietnam’s employment laws and regulations, please visit the official governmental websites.

Interested to explore the idea of payroll outsourcing, EOR, or Visa application services?

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Relevant Links:

  • Vietnam Briefing – Business Visas and Work Permits in Vietnam – https://www.vietnam-briefing.com/doing-business-guide/vietnam/human-resources-and-payroll/visa-and-employment-permits
  • Ministry of Labour, War Invalids and Social Affairs – http://english.molisa.gov.vn/Pages/home.aspx
  • Deparment of Labor, Invalids and Social Affairs – https://thuathienhue.gov.vn/en-us/tabid/136/language/en-US/Default.aspx/tid/General-Information/newsid/6871E0FF-7BC1-4A90-BA16-A7310118B77B/cid/B3CC0661-5791-4960-8B2E-A73100F162E9
  • Vietnam Visa – https://vietnamvisa.govt.vn/