Hire employees in Vietnam

With a labor force of currently around 60 million people (growing by another million each year as the country’s graduates join its economically active population), Vietnam offers foreign employers a considerable talent pool. The country’s competitive wages make it a great hiring destination in Southeast Asia.

What’s more, the country has recently put an increased effort into creating an open business environment and implementing several new policies designed to facilitate international integration. Labor laws and regulations have also been updated to match international standards.

Employment contracts have to be in writing to be legally valid – the only exceptions being short-term contracts with a duration of less than 1 month. Employers can choose whether they want to hire an employee via an indefinite or via a fixed-term employment contract. The duration of the latter cannot exceed 36 months – 72 months when renewed.

Every employment contract needs to contain at least the following mandatory information:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Workplace

• Job description, duties and responsibilities

• Salary (as well as other compensation or benefits), payment method and pay date

• Working hours

• Total number of holidays

• Information on social security contributions

• Professional training

• Health and safety measures at the workplace

The contract has to be in Vietnamese but it is possible to add an official translation in a foreign language.

Probation Period

Both parties can agree on a probationary period. Depending on the employee’s qualification and position, the probation period can vary between 6 days for unskilled workers and 180 days for high-level executives.

Working Hours and Breaks

An employee’s regular working time shouldn’t exceed 48 hours per week or 8 hours per day. Employers are encouraged to hire staff on the basis of a standard 40-hour week with Saturdays and Sundays off.

After 6 hours of work, the employee has the right to take a 30-minute break. Breaks are paid. There is no obligation to ensure the employee has a weekly rest day. However, within one month, the employee needs to have at least 4 days off.

Overtime

Any working hour exceeding 48 hours is considered as overtime and needs to be remunerated at a rate of 150% of the employee’s usual salary. On weekends, overtime pay is 200%. And on public holidays, the pay rate increases to 300% of the usual wages. Overtime work is limited to 40 hours per month and 200 hours per year.

Employees in Vietnam are usually paid on a monthly basis.

Minimum Wage

The Vietnamese government sets different regional minimum wages to account for the varying cost of living in the different parts of the country. Currently, there are 4 different rates which range from VND 3.25 million to VND 4.68 million per month.

Sick Pay

Sick leave in Vietnam is paid by Social Security at a rate of 75% of the employee’s salary. However, the number of paid sick days depends on how long the employee has paid social security contributions:

• Less than 15 years: 30 days of paid sick leave

• 15 – 30 years: 40 days of paid sick leave

• More than 30 years: 60 days of paid sick leave

Paid sick leave periods are longer for employees working in hazardous conditions.

Bonuses

Although there is no legal obligation to pay bonuses, it is common for employers to offer a 13th month salary.

Employees and employers in Vietnam are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

20%

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• Corporate tax rate: 20%

• VAT (standard rate): 10%

Employees

up to 35%

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Individual income tax rates range from 5% to 35%*

Social security

Employers

21.5%

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21.5% of employee salary, including:

• 17% Social insurance (sickness, maternity, pension)

• 3% Health insurance

• 1% Unemployment insurance

• 0,5% Workers compensation insurance

Employees

10.5%

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10.5% of employee salary, including:

• 8% Social insurance (sickness, maternity, pension) 

• 1.5% Health insurance

• 1% Unemployment insurance

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

Employees are entitled to at least 12 days of paid annual leave. The annual leave entitlement increases by one additional day every five years (only applicable if the employee is still working with the same employer).

Public holidays are not included in this scheme. The country observes 11 public holidays which count as paid days off.

Maternity Leave and Paternity Leave

Female employees can take 6 months of maternity leave. In the case of multiple births, maternity leave is extended by an additional month for twins and 2 additional months for triplets. During maternity leave, the mother receives maternity benefits from Social Security which amount to 100% of her normal salary (capped at 20 times the national minimum wage).

Fathers have the right to take paternity leave. The length of the latter depends on the number of births and whether the child was delivered via a C-section. It’s 5 days for 1 child (7 days in case of a C-section) and 10 days for twins (14 days in case of a C-section). There is a paternity leave allowance, but the employer is required to make a contribution.

Parental Leave

There are no legal provisions for additional parental leave.

Additional Leave and Benefits

Employees can request additional paid time off in the following cases:

• Marriage: 3 day

• Marriage of a child: 1 day

• Death of a close relative: 3 days

In addition to employment termination by default – i.e. expiry of a fixed-term contract – resignation and mutual agreement, the employment relationship can be terminated by the employer due to the following reasons (non-exhaustive list):

• Economic reason or redundancy due to restructuring

• Poor performance

• Prolonged illness

• Unexcused absence from work

• Summary dismissal due to misconduct

Both employee and employer must respect a statutory notice period. The length of the notice period is:

• 45 days for permanent employment relationships

• 30 days for fixed-term employment relationships

• 3 days for employment relationships with a duration of less than 12 months

Employees who have completed one full year of service with the employer are entitled to severance pay. The payment must be equal to half a month’s wages for each year of service. No severance pay is required if the employee is dismissed because of their conduct or if the employee resigns from the employment contract.