back-arrow

Back to EOR

Employer of Record (EOR) in Vietnam

Introduction

Vietnam is fast emerging as a potential regional leader in south-east Asia. A rapidly-growing economy, strategic geographic location, favorable trade agreements and an improving rank of Doing Business Index (it was ranked 70th amongst 190 nations in the world), and the opening up of the economy for FDI are some of the reasons that Vietnam is becoming a hotspot for foreign investments.

Employer of Record in Vietnam

If you plan to expand globally and look to enter Vietnam, you have many options to do so. You could incorporate a firm in Vietnam, work with a subsidiary, or appoint an Employer of Record in Vietnam.

You could alternately choose a PEO or Professional Employer Organization to facilitate commercial business on foreign shores. Skuad is one of the leading EOR solution providers in the region, with thorough knowledge of Vietnamese labor laws and a comprehensive grasp of the hiring, boarding, payroll, and taxation processes. Choosing to go ahead with Skuad as your EOR can help you save time and costs, ensure compliance with the local regulations with minimized risks.

Vietnam at a Glance

Estimated Population: 97,338,579

Currency: Vietnamese Dong (VND)

Capital: Hanoi

Number of officially recognized languages spoken: 110 officially recognized dialects

Languages frequently used: Vietnamese

GDP:  261.9 Billion

Employment In Vietnam

Vietnamese labor laws are known for being employee-friendly. The country's potential as a market for international corporations cannot be doubted even though traditionally Vietnam has been an agricultural country. There have been several changes to the Labor regulations so that the new rules are at par and coherent with international standards. Vietnam's current labor force constitutes about 58 million people, of which about 1 million are youths. Lack of skilled labor is an issue here, with only 12% of the population belonging to the skilled or trained workforce.

According to Vietnam Labor laws, there is no distinction between foreigners and the local workforce. The Vietnam employment laws also give special protection to groups of the society like the elderly, women, etc.

Even with the lack of a skilled local workforce, the laws in Vietnam are well-developed. Here is a short guide on various facets of employment in Vietnam.

Vietnam Labor Laws

2019 Labour Code

  • Effective from 1st January 2021, the Labour Contract mandatorily has to be in the Vietnamese language. In the case of foreign-invested enterprises, the Contract can be bilingual.

  • Employees need to report to the Labour Authority about the use of employees within 30 days of operations.

Decree 152/2020/ND-CP

  • Primarily meant for foreigners, the Decree offers details about work permits for foreigners.

Filing & PaymentInternal Labour Rules or ILR

  • ILR is mandatory for organizations that employ ten or more employees in Vietnam and must be registered with DOLISA.

  • The ILR is essential, especially when terminating employees or taking any disciplinary actions. If an offense is not mentioned in the ILR or the ILR is not registered, employers can find it difficult to terminate an employee based on the said offense.

Different terms of the Vietnamese Labor Code and their explanations are listed here:

Labour Contract

  • The law recognizes two types of Contracts.

  • The first is the Definite Term Labour Contract where the maximum term period can be up to 36 months.

  • Indefinite Labour Contracts have no fixed period.

  • Firms employing foreigners can have contracts with a maximum of 24 months due to work permit laws.

Working hours

  • Employees are allowed to work for 8 hours a day and 48 hours a week, maximum.

  • Though not mandatory, the Government encourages employers to let their employees work on a 40-hour per week.

Breaks and rest during working hours

  • Thirty minutes break minimum during daytime and 45 minutes break during the night.

Overtime

  • The permissible overtime as per Vietnam Labour laws is:

    1. Maximum 12 hours a day and 40 hours a month or 200 hours a year of overtime are allowed.

    2. The overtime pay is a minimum of 150% of the hourly wage during a typical working day. In case it is a weekly off, the overtime is 200% of the hourly wage. In case it is a public holiday, the overtime pay is 300% of the hourly wage.

Wages

  • Two types of minimum wages exist in Vietnam:

    1. Basic Minimum Wage

    2. Regional Minimum Wage

  • The bare minimum is used for calculating the salary for state employees. It is also the base for calculating the social and health insurance of state employees. The Basic Minimum Wage in Vietnam is 1,490,000 VND every month.

  • Regional Minimum Wage is used to calculate the salary of non-state employees and forms the base for capping unemployment insurance. It is dependent on the regional cost of living and is divided into four groups to match with economic disparities.

  • The Regional Minimum Wage with effect from January 2020 lies in the range of 3.07 million VND to 4.42 million VND.

Regional Minimum Wage Groups

Region

Cities

Minimum wage (per month)

Region 1

Hanoi, HCMC. Dong Nai Province, Binh Duong Province, Vung Tau Province, and more

4,420,000 VND

Region II

Districts of Hanoi and HCMC like Da Nang, Hue Province, Hung Yen Province, Can Tho, Rach Gia, and more

3,920,000 VND

Region III

Other provincial cities

3,430,000 VND

Region IV

Other administrative divisions

3,070,000 VND

Bonus

  • In Vietnam, employers pay a bonus called Tet Bonus based on the performance of the employee. It is usually the 13th salary.

  • Foreign companies are known to offer private health insurance to the local workforce in Vietnam.

  • Also, team outings and paid trips are common amongst employers in Vietnam.

Leaves

Annual Leave or Paid Leave

  • Twelve days of paid leave is granted mandatorily to all employees who have worked for 12 consecutive months with one Employer.

  • Employees with five years of employment get one additional day of paid leave.

Public Holidays

  • 14 Public or National Holidays. These are:

    1. 1st January – New Users Day

    2. 10th February – Tet Holiday (Vietnamese New Year)

    3. 11th February – Tet Eve (Vietnamese New Year)

    4. 12th February – Tet Nguyen Dan ( Vietnamese New Year)

    5. 13th February – Tet Holiday

    6. 14th February – Tet Holiday

    7. 15th February – Tet Holiday ( Vietnamese New Year)

    8. 16th February – Tet Holiday ( Vietnamese New Year)

    9. 21st April – Hung Kings Temple Festival

    10. 30th April – Reunification Day

    11. 1st May – Labour Day

    12. 3rd May – Labour Day

    13. 2nd September – National Day

    14. 3rd September – National Day Holiday

Sick Leave

  • Sick leaves are allowed when employees are ill or need to take care of a sick child under seven years.

  • Sick leave calculations are done based on the labor contract type.

  • Employees on indefinite-term Contracts get up to 12 months of sick leave.

  • Employees on a definite-term Contract ( for a period less than twelve months to 36 months) are entitled to sick months of sick leave.

  • Employers in Vietnam do not pay for sick leaves.

  • For eligible employees, sick leaves are paid from the government-sponsored Social Insurance Fund.

Maternity Leave

  • New or would-be mothers are eligible for maternity leave from four to six months.

  • Women workers are eligible to receive full pay and one-month additional pay from the Social Insurance Fund.

Paternity Leave

  • The paternity leave for married fathers in Vietnam is between 5 to 14 days.

  • The number of days of leave is calculated based on various parameters:

    1. Natural birth or C-section

    2. Single birth or multiple births.

Personal Leaves

  • Employees can take paid personal leaves during certain life events like the death of a family member or weddings.

Health and Safety Obligations of Employers

  • Occupational safety and hygiene are the responsibilities of the employer
  • Employers need to comply with the national and local technical regulations for every equipment or machine and workplace.
  • Health insurance is mandatory by law and needs to be provided by employers.
  • Regular health checkups yearly for employees are mandatory for employers.

Many other inclusions make the HR domain difficult to traverse all on your own, especially if you are entering the Vietnamese market for the first time. It is best to seek expert assistance by working with an EOR of repute. Skuad offers all-inclusive HR functionalities. To know about how we can help you, write to us today!

Contractors vs. Full-time Employees

Like most other nations, there is a difference between hiring full-time employees based on employment contracts in Vietnam and independent contractors.

Independent contractors are hired on a case-to-case basis depending upon the requirements of a project. Contractors bring in their materials to complete the project and operate independently. Contractors are paid a fee per the mutual agreement in writing, while employees are paid per employment agreement in Vietnam or labor contracts.

The difference between contractors and employees in Vietnam is that employers need to pay for health insurance, social security, and unemployment taxes in the latter. While in the case of contractors, the hiring company is under no such liability. Besides, employees are entitled to leaves, minimum wages, overtime pay, probation, and termination notice per terms mentioned in Vietnam’s employment contract law.

Hiring in Vietnam

There are several ways to hire employees in Vietnam. One way is to set up your company in Vietnam and outsource the recruitment process to hiring companies in Vietnam. These are third-party companies that are specialists in hiring and recruitment processes in Vietnam. Such companies help you get local and foreign workers, as per need-based.

Besides, you can use the power of social media to connect with potential employees in your business domain. Other than that, you can take the help of online job portals like Vietnam Works, Careerbuilder.vn, CareerLink.vn, Mywork.com.vn, TNH Vietnam, Timviecnhanh, Indeed, Google For Jobs, and Jobsvietnam.org.

If you are not keen to open your subsidiary or business entity in Vietnam and yet expand your business in the country, you can take the help of an Employer of Record Vietnam. Skuad is an expert in EOR Vietnam with thorough knowledge of the local labor laws and the hiring process for natives and foreigners. We are a one-stop solution provider handling payroll, taxes, employee health benefits Vietnam, social security, and more. When we are there at the backend, you can focus on your business core areas hassle-free. Speak to Skuad experts for more information.

Probation and Termination

The probationary period in Vietnam can be a part of the Labor contract or a specially-drafted probation agreement. In the latter case, employers are not required to pay Social Security contributions during the probation period. The probationary salary cannot be lower than 85% of the original salary mutually agreed by both parties.

Standard Probation period in Vietnam

  • It is a mutually agreed period between both parties.

  • The probation period usually depends on the education, qualification, and job position.

  • However, the laws state that the probation period cannot exceed 6, 30, 60, or 180 days.

Termination of Employment in Vietnam

A Labor Contract in Vietnam can be terminated on the following grounds:

  1. Labor contract term period expires. No prior notice is required.
  2. Work completion with no prior notice required.
  3. Termination mutually agreed by both parties without any prior notice required.
  4. In case an employee is served a jail sentence or capital punishment. No prior notice is required.
  5. The death of an employee or when an employee goes missing. No prior notice is required.
  6. In case the Employer closes the operation. Here too, no prior notice is required to be given to the employees.
  7. Foreign employees with an expired work permit

Statutory Notice Period

  • For an indefinite-term Contract, 45 days.
  • For definite-term contracts less than 12 months, three working days.
  • For definite-term contracts, 30 days.

EoR Solutions

If you’re looking to hire employees in Vietnam, a great way to ensure compliance with all regulations and laws is to work with Skuad, one of the leading employer of record companies in Vietnam. Skuad is a versatile and adaptable platform that can help you expand your business in Vietnam cost-effectively and get a competitive edge over other companies hiring in the country.

As your Employer of Record EOR, Skuad will handle end-to-end recruitment and hiring processes on your behalf. And, once the employee is on board, the payroll and taxes, salaries, minimum wages, leaves, overtime, probation, termination, and all other aspects of employment will be effortlessly managed by Skuad so that you can engage yourself in your expansion plans without having to worry about these things.

Skuad offers some of the most comprehensive employer of record services and is an online solution provider with a self-service platform, open 24x7 to provide professional services for easy expansion.

Types Of Visas In Vietnam

In Vietnam, a Vietnam work visa and work permit are two separate entities. The visa allows foreigners to enter and stay in Vietnam. A work permit gives the foreigner the right to work in Vietnam.  Basically, if a foreigner wishes to work in Vietnam, they need a visa and a work permit or a TRC (Temporary Residence Card).

Types of Work Visa

  • This visa type is given to foreigners who wish to enter Vietnam for work purposes.

  • The multiple-entry visa and the work permit have the same validity.

  • The maximum term of the Vietnam work visa is two years.

Vietnam work visa requirements

  1. Application form

  2. Passport copy

  3. Enterprise registration certificate

Temporary Residence Card or TRC

  • When foreigners have a work permit, they are issued the TRC. If a foreigner has a Law Practice Registration in Vietnam or an Investment Registration Certification showing investments of 3 billion VND and more, they can get TRC.

  • Only when a foreigner has worked for the Employer that has sponsored his work visa the first time can his TRC get renewed.


Work Permits

All non-Vietnamese citizens need a work permit in Vietnam issued by the Department of Labor, Invalids, and Social Affairs or DOLISA. The Employer needs to apply at the local DOLISA office before employing a foreign national. The work permit can be granted for a maximum of two years with a one-time renewal clause.

In certain cases, there are exceptions for Vietnam work permits for foreigners. It includes – short-term assignments that are less than 30 days; internal transfers in eleven service-oriented industries; board members in Vietnamese entities with more than 3 billion VND investment; and individual investors with more than three billion VND investment. Lawyers with a Foreign Registration license, trainees, and foreigners who marry a Vietnamese person can also work in Vietnam without a Vietnam work permit without a job offer.

The application process for the work permit includes:

  • The employer needs to register with the local DOLISA on the need to employ a foreign national. The office will approve of the same within ten working days.
  • Once approved, the employer needs to apply for a work permit.
  • The labor contract needs to be submitted.

Payroll and Taxes in Vietnam

Compulsory schemes

  • Health insurance, social insurance, and unemployment insurance schemes are compulsory Vietnam employer payroll taxes.

  • Both employees and employers need to contribute.

  • Employers deduct the employees' contribution from their salary and deposit the amount together with the Employer's contribution to the insurance carrier.

Social insurance

  • In the case of local employees

    • The Employer pays 17.5%

    • Employee 8%

  • In case of foreign employee

    • Currently, it is 3.5% for Employer. From 1.01.2022, it will be 17.5%.

    • Currently, it is 0% for employees. From 1.01.2022, it will be 8%.

Health insurance

  • For native employees:

    • The Employer contributes 3%, and the employee contributes 1.5%.

  • For Foreign employees:

    • The Employer contributes 3%, and the employee contributes 1.5%.

Unemployment Insurance

  • This insurance scheme does not apply to foreign employees.

  • For native employees, both the Employer and the employee contribute 1% of the salary.

Trade Union Fee

  • The Employer pays about 2% of the salary fund to the Trade Union fund.

Vietnam Payroll Tax Rates

Personal Tax

  • Non-residents get taxed on their Vietnamese-sourced income.

  • Residents get taxed on their global incomes.

  • Personal Tax is charged on incomes generated from employment, business, real estate property transfers, capital investment, capital transfers, royalties, franchising, business, prize money, inheritances, and gifts.

Personal Tax slab rates

Income range (Gross) Tax %

VND 0 – 5,000

5%

VND 5,0001 – 10,000

10%

VND 10,001 – 18,000

15%

VND 18,001 – 32,000

20%

VND 32,001 – 52,000

25%

VND 52,001 – 80,000

30%

VND 80,0001

35%

Corporate Tax

Corporate Income Tax Rate

  • 22%.

  • Companies operating in O&G and Natural Gas are subject to tax rates between 32% to 50%.

Payroll outsourcing Vietnam to an expert EOR like Skuad can be of great assistance to your growth plans as you do not need to get into the intricate details of the payroll taxes in Vietnam.

Incorporation

To set up a long-standing business in Vietnam, you need to comply with the Enterprise Law and the Investment Law. For incorporating a holding company in Vietnam, you need to get your company registered in Vietnam as per the Enterprise Law and ensure to meet all requirements of the Investment Law that have been created explicitly for foreigners.

There are ample business opportunities in Vietnam, and you might want to speak to a specialist to get your company registered for forming your company in Vietnam. For registration, you need to have the incorporation documents before conducting a feasibility study. You need to submit all these documents to the Provincial People's Committee or the Industrial and Export Processing Zones Management Authority.

Professional Employer Organization (PEO)

A PEO, just like an EOR, offers handholding support in the niche of HR functionalities. A professional employer organization in Vietnam is not the legal Employer in Vietnam, unlike an EOR. Skuad offers both types of services, and you can get in touch with us to ensure that you start your business in Vietnam without much stress and hassle.

A PEO is your co-employer, while an EOR is an independent employer with total liability and responsibility for payroll, taxes, and compliance. With a PEO, the salaries, taxes, and other employer liabilities are your responsibilities.

Conclusion

Skuad offers you world-class PEO and EOR services in Vietnam. Skuad has an outstanding and impeccable track record, having helped numerous SMEs and start-up companies expand their global footprint seamlessly. Since all countries have different labor laws, codes, rules, and regulations, you can save time and resources when working with Skuad while ensuring that you have the best local and foreign talents working with you.

Speak to Skuad experts who can help you decide between a PEO and EOR based on your unique business requirements.

Start Hiring For Free Today

Hire and pay upto 2 contractors, for free, in 150+ countries.

Get Started For Free