Employing in Vietnam
Vietnam’s employment legal framework is primarily governed by the Labor Code, last amended in 2019 and effective since January 1, 2021.
This code serves as the foundation for regulating the relationship between employers and employees, covering various aspects such as employment contracts, wages, working hours, workplace safety, discrimination, and termination procedures.
Onboarding time
Minimum Wage
Employer costs
Employee costs
Onboarding time
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Minimum Wage
The monthly minimum wage in urban areas in Hanoi and Ho Chi Minh is VND 4.96 million.
Employer costs
- Social Insurance – 17%
- Health Insurance – 3%
- Accident Insurance – 0.5%
- Control Union Fee – 2%
- Unemployment Insurance – 1%
Employee costs
- Social Insurance (SI): 8%
- Health Insurance (HI): 1.5%
- Unemployment Insurance (UI): 1%
Payroll
The payroll process in Vietnam includes gathering employee information and calculating gross pay based on the agreed-upon salary, which must meet or exceed the regional minimum wage requirements. Companies need to withhold appropriate taxes and deductions.
Payroll cycle
Employers must pay salaries at least once a month, usually on the last working day of the month.
Payroll calculations
Salaries are calculated, including gross pay, overtime, and mandatory deductions, such as social security, medical insurance, and personal income taxes.
After deductions, payments are typically made to employees via direct deposit on a monthly basis, usually on the last working day of the month or as specified in the employment contract.
Compliance requirements
The withheld taxes are remitted to the relevant government agencies. Employers are also responsible for generating payroll reports and maintaining records for tax purposes.
Additional payments
13th Salary
In Vietnam, it is customary, although not mandatory, to pay a 13th-month salary at the Lunar New Year or the end of the year.
Bonuses
There is no legal requirement that employers provide employee bonuses. Voluntary incentive bonuses are often granted based on company earnings.
Commissions
Commissions are often provided as part of compensation packages, especially in sales roles or for services rendered as intermediaries, such as brokers or agents. These commissions are taxable income.
Other allowances
In Vietnam, common allowances include meal allowance, housing allowance, and commuting expenses.
Taxes
In Vietnam, employee income tax is determined by an individual’s tax residency status. Tax residents, defined as those residing in Vietnam for 183 days or more within a calendar year or 12 consecutive months, are subject to progressive tax rates while non-resident taxpayersare taxed at a flat rate.
Employment income includes salaries, wages, allowances, and other forms of remuneration, with deductions allowed for mandatory social insurance contributions and certain charitable or humanitarian contributions. Taxable income is calculated after these deductions, and employers typically handle Personal Income Tax (PIT) finalization at the beginning of the year for the previous year’s income.
Employee Income Tax
Resident individuals are taxed on a progressive scale ranging from 5% to 35% on their worldwide employment income. Non-resident individuals face a flat tax rate of 20% on most income derived in Vietnam.
Income Tax
- 5% 0 VND – 60 milion VND
- 10% 60 milion VND – 120 milion VND
- 15% 120 milion VND – 216 milion VND
- 20% 216 milion VND – 384 milion VND
- 25% 384 milion VND – 624 milion VND
- 30% 624 milion VND – 960 milion VND
- 35% 960 milion VND and over
Employment eligibility
Foreign workers in Vietnam must meet specific eligibility criteria to obtain a work permit, which is mandatory for most employment situations unless exempted. Key conditions include being at least 18 years old, possessing relevant professional qualifications and experience, meeting health standards prescribed by the Ministry of Health, and having no criminal record or ongoing legal issues.
Visa
Employers are required to justify hiring foreign workers by demonstrating that local talent cannot fulfill the role, often for specialized positions like managers, executives, experts, or technicians.
The company must announce recruitment for this position to job seekers in Vietnam via an online portal or a local newspaper. If there are no qualified Vietnamese applicants within 30 days, an international worker may be offered the job. A written document, establishing that an announcement has been posted or published, must be submitted in the process of applying for an LD work visa.
The application process involves submitting documentation such as health certificates, criminal records, and proof of qualifications to the Department of Labor, Invalids, and Social Affairs (DoLISA).
Visa types
Vietnam offers several types of work visas and permits for foreign nationals seeking employment in the country. Here are some of the main types:
- HN visas – intended for meetings and conferences
- DT visas – intended for investors
- DN visas – intended for individuals working with Vietnam businesses
- DH visas – intended for students and interns
- LV1-LV2 visas – intended for individuals working with authorities in Vietnam
- LD visas – intended for international workers
Compliance documents types
- A completed application form.
- A valid passport and a notarized copy of it.
- Health certificates and medical records of the applicant.
- 3 passport-sized photos taken within the last year.
- A criminal record to prove the applicant has no history of criminal activity that would prevent them from working in Vietnam.
- Copies of any relevant professional certificates
Background check
In Vietnam, background checks are a mandatory part of the work permit application process for foreign employees. Employers must ensure that the applicant has no criminal record, both in Vietnam and their home country.
The criminal record check, officially known as the Judicial Record Card, is issued by the provincial Department of Justice where the applicant resides or, for those who have lived in Vietnam, by the National Center for Judicial Records. Employers must also verify the applicant’s health condition, educational qualifications, and professional experience, ensuring compliance with Vietnamese labor laws.
Written consent from the candidate is required before conducting any background checks, and employers must adhere to data protection regulations, especially when handling sensitive personal data such as health records.
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Benefits
Employee benefits in Vietnam are governed by the Labor Code and include both mandatory and discretionary offerings. Mandatory benefits include health insurance, social insurance, unemployment insurance, annual leave. Employees are entitled to paid vacation days annually.
Maternity and paternity leave are also provided. Employers may offer discretionary benefits like housing allowances, transportation stipends, gym memberships, holiday bonuses, and supplementary health insurance among others.
Private health insurance
Private health insurance in Vietnam is designed to cover healthcare costs not fully covered by statutory health insurance.
Team APAC providers
- SafetyWings
- Henner
- IMG/ ALC Global
Mandatory benefits
Statutory benefits include health insurance, social insurance, unemployment insurance, annual leave.
Mandatory benefits in Vietnam
- Health Insurance
- Social Insurance
- Accident Insurance
- Unemployment Insurance
- Annual Leave
- Maternity Leave
- Paternity Leave
Working hours
By law, normal working time may not exceed eight hours per day and 48 hours per week, although the Labor Code encourages employers to implement a 40-hour workweek.
An employee is entitled to 30 minutes of rest—45 minutes for a night-shift worker—during a six- or eight-hour shift.
Female employees are entitled to a 30-minute rest break for menstruation for at least three days per month.
Working hours per day
The standard workday is 8 hours.
Working hours per week
The standard workweek is 48 hours.
Overtime pay
Overtime worked on a regular workday is paid at 150 percent of the regular hourly rate. Pay for work on a usual day off is 200 percent of the regular hourly rate and on holidays is 300 percent of the regular rate.
Overtime cannot exceed four hours per day, 40 hours per month and 300 hours per year.
Leave
In Vietnam, statutory leaves are primarily governed by the Labor Code. This code outlines the rights and entitlements of employees regarding various types of leave, including annual leave, public holidays, sick leave, maternity leave, and unpaid leave.
Annual leave
An employee is entitled to 12 days of annual leave with full pay after one year with an employer. The number of days of annual leave increases at the rate of one for every additional five years with an employer. An employee with less than one year with an employer receives leave in proportion to the duration of the employment. Wages for the leave time are paid in advance.
Sick leave
Employees are eligible for paid sick leave for a maximum of 30 days, during which they will receive 75% of their salary, funded by Social Security. Extensions to the leave period may be granted, but these are evaluated individually based on the employee’s specific circumstances.
Parental leave
Parental leave in Vietnam is available for childcare and entitles employees to up to 20 working days of parental leave per year until the child reaches the age of 3 and thereafter up to 15 working days per year until the child reaches the age of 7.
Vietnamese nationals will have this leave paid by the Social Insurance Authority at the rate of 75% of the salary in the month preceding the start of the leave.
Maternity leave
Pregnant employees who have paid into the social security system for a minimum of three months are eligible for six months of paid maternity leave. This includes the option to take two weeks of leave prior to the child’s birth.
During this period, the employee is entitled to receive 100% of their average salary, calculated from their social insurance contributions in the previous six months. The payment for this leave will be managed and disbursed by Social Security.
Paternity leave
Fathers who have completed a minimum of three months of contributions to the social security system are eligible for five days of paid paternity leave. During this leave, the employee will receive their full salary, which will be covered by the Social Security fund.
Other types of leave
Long service leave
Currently, there is no law requiring additional leaves relative to long service leave.
Compassionate leave
Currently, there is no law requiring compassionate leave. It is typically left to the discretion of employers or governed by company policies.
Family & domestic violence leave
Currently, the Law on Prevention and Combat against Domestic Violence (enacted in 2022) does not mandate domestic violence leave.
Termination
In Vietnam, the termination of employment is governed by a strict legal framework outlined in the Labor Code, which emphasizes employee protection. Additionally, unilateral termination by either party is permitted under certain conditions, such as employee mistreatment or economic restructuring by the employer, but must follow formal requirements to be legally valid.
Termination process
The termination process involves several key steps and considerations. The process requires adherence to procedural steps, including providing adequate notice periods and ensuring compliance with legal obligations to avoid wrongful termination claims.
Termination reasons
Employers can terminate contracts based on specific statutory grounds, such as the expiration of the labor contract, non-recovery from an illness or accident after a prescribed period, mutual agreement, or disciplinary actions like dismissal. An employer may dismiss an employee if the employee consistently fails to perform the duties of the job; has committed theft or embezzlement, disclosed business or technological secrets, or committed another act that causes serious damage to the interests of the employer; or is absent from work without a valid excuse for five days in a month or 20 days in a year. Valid grounds for termination also include closure or contraction of the business.
Notice period
In Vietnam, except for dismissals due to criminal conduct, repeat offenses, or repeated absences, an employer must give prior notice three days in advance for employees bound by seasonal contracts (or contracts lasting less than a year); 30 days for for contracts lasting between one to three years; or 45 days for indefinite labor contracts.
Severance Pay
If an employer is found to have improperly dismissed an employee, the employer must reinstate the employee and pay back wages plus at least two months’ salary. If the employee does not want to return to work, the employer must pay back wages, the two months’ salary, and one month’s wages for every year of service.
Probation period
In Vietnam, probation periods are not mandatory. The parties, however, may agree on a period from six to 60 days, depending on the skill level required for the position. Employees must be paid at least 85% of their normal wages during the probation period and should be notified of the probation outcome at least three days before the test period ends.
Probation Period days
- 6 days Minimum probation period
- 60 days Maximum probation period
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