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Employment Laws in Vietnam

Updated on:
16 Jan, 2024
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Vietnam is a growing Southeast Asian economy, attracting an incremental share of foreign investments. With 11% of the labor force highly skilled and 26% trained with degrees and certificates, businesses may hire foreign employees to work remotely under the employment laws in Vietnam.

Vietnam labor law treats all employees the same and requires employers to pass on various statutory benefits. Our complete overview of the labor laws of Vietnam can help you keep informed and ensure that foreign talent is seamlessly integrated into your team.

Contractual Agreements

Employment contracts establish the rights and obligations of both employers and employees. To begin with, you may follow the new 2019 Vietnam Labour Code, effective from January 2021. 

You can freely choose English or Vietnamese for drafting contracts. Further, you must sign a written employment agreement with the following details: 

  • Detailed scope of the job
  • Duration of work schedule 
  • Applicable leave schemes
  • Details about the pay terms and conditions and applicable social cover

Types of employment contracts in Vietnam

  1. Open-ended: Offers long-term employment with no set end date.
  2. Fixed-term: Lasts up to 3 years and can be renewed once.

Obligations and rights for both parties

  • You must register new employees within 30 days and report workforce changes every six months.
  • You must pay salaries and allowances for local employees in Vietnamese Dong (VND). However, you can choose to pay foreign employees in any tradable currency.
  • The employment laws in Vietnam obligate you to ensure proper work permits while hiring foreign workers in Vietnam. Otherwise, it can result in a fine of up to 150 million VND (US$6,500) or deportation for the foreign worker. 

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Working Hours and Overtime

Here's a summary of key points based on the new labor law in Vietnam. 

Regular working hours

  • Vietnam labor law prescribes a standard 8-hour workday and a 48-hour workweek. 
  • Employees can take a 30-minute break for working more than six hours and a 45-minute break in case of the night shift. 

Overtime regulations and compensation

  • Overtime: Employees earn 1.5x their hourly rate for hours beyond eight daily or on night shifts.
  • Holiday Overtime: Employees are paid a 2x hourly rate for holiday hours.

Minimum Wage and Compensation

The employment laws in Vietnam prescribe a basic minimum wage for state employees and a Regional Minimum Wage for others. Effective from July 1, 2022, the minimum wage rates, varying by region, are as follows:  

The Minimum Wage Rate in 2024

Region Current statutory minimum wages per month (VND)
Region 1 (Hanoi, Da Nang, Can Tho, Bien Hoa, Da Lat, Hai Phong, Hue, Ho Chi Minh City and Hai Duong) 4,680,000
Region 2 (Bac Ninh, Bac Giang, Nam Dinh, Thai Nguyen, Quang Ninh, Vinh Long, Dong Nai, and Binh Duong) 4,160,000
Region 3 (Nghe An, Ha Tinh, Quang Binh, Quang Nam, Kon Tum, Gia Lai, Dak Lak, and Lam Dong) 3,640,000
Region 4 (Thanh Hoa, Hau Giang, Ca Mau, and Kon Tum) 3,070,000

Employee Benefits and Social Security

Workplace benefits and social security, per Vietnam labor laws, aim to support employee well-being. Here's a breakdown of key points:

Statutory benefits

  • The labor laws of Vietnam require you to participate in compulsory social, health, and unemployment insurance schemes.
  • Health insurance complements social insurance by providing paid medical coverage for preventative care, hospitalization, and outpatient treatment. 
  • Further, you must plan for an additional hour break during regular hours for childcare. 

Additional perks and benefits

  • 13th month salary -
    • In Vietnam, there's a common practice called "tháng lương thứ 13" or 13th month salary, which is not a legal requirement but is typically given before the Lunar New Year.
    • It usually equals one month's salary and serves as a gesture of appreciation from employers for their employee's hard work, providing extra funds for the Lunar New Year holiday.

Social Security contributions and requirements

Scheme Employer contribution (% of salary) Employee contribution (% of salary)
Social Insurance 17.5 8.0
Health Insurance 3 1.5
Unemployment Insurance 1 1
Trade Union 2 N/A
  • You may choose not to contribute under the unemployment insurance scheme for expatriates.
  • Moreover, Vietnam labor law caps the maximum contribution at 20 times the basic salary. 
  • Additionally, you must withhold and pay personal income tax per the employment laws in Vietnam. The progressive tax rates vary between 5% to 35% of the taxable employment income. 
  • Ultimately, the labor laws of Vietnam mandate you to not deduct more than 30% from your monthly paycheck after taxes and mandatory contributions. 

Vacations and Paid Time Off

The employment laws in Vietnam have entitled employees to the following paid leave schemes. You may also offer unpaid leave at your discretion.

Annual leave entitlement

  • You must extend at least 12 days of paid leave annually.
  • After a year of continuous employment, employees are eligible for the following paid annual leaves:
    • 12 working days for regular employees
    • 14 working days for employees under 18, disabled individuals, or those engaged in hazardous work.
    • The labor laws of Vietnam mandate you to add a day for every five years of continuous service.

Public holidays and special Leaves

Vietnam labor law mandates public holidays annually with 11 days paid off as follows:

Date Holiday
01 Jan International New Year's Day
08, 09, 10, 11, 12 Feb TET holiday
13, 14 Feb TET holiday observed
18 Apr Hung Kings Festival
30 Apr Liberation Day/Reunification Day
01 May International Labor Day
02, 03 Sep Independence Day
  • Sick leave:
    • Ten days of paid sick and hospitalization leave.
  • Sick leave:
    • Minimum six months of paid leave. It can be taken four weeks before and eight weeks after birth.
    • Maternity leave is calculated according to the employee's service length.
Service Length Paid Leave Entitlement
Less than 12 months 4 months
12 months or more 6 months
  • Paternity leave:
    • Ranges from 5-14 workdays, determined by the number of children the employee has.
      • Employees with one child get five days of paid paternity leave,
      • Those with two children receive seven days, and
      • Those with three or more children are entitled to 14 days.
    • Paternity leave must be taken within 60 days of the child's birth and doesn't require a doctor's certificate.
  • Parental leave:
    • Parental leave, available to both male and female employees after a child's birth, is determined by the number of children:
No of Children Leave Duration
Employees who have one child 6 Months
Employees who have two children 8 Months
Employees who have three or more children 12 Month
  • Compassionate leave:
    • Unpaid compassionate leave is available to all employees for taking care of a sick family member or attending a funeral ceremony.
  • Mourning leave:
    • This unpaid leave is available to all employees who are required to take time off upon the death of a member of their family.
  • Education leave:
    • Employees engaged in educational programs are entitled to unpaid education leave
  • Jury duty leave:
    • Employees asked for jury service are entitled to unpaid jury duty leave.
  • Volunteer leave:
    • Employees who choose to devote time to a cause are entitled to unpaid volunteer leave.
  • Military leave:
    • Employees deployed to active duty are provided unpaid military leave.
  • Carry Forward of Leaves:
    • No law mandates the carrying forward of leaves, although many employers offer it as a perk according to their policies.

Termination and Severance

You can devise the following termination plan in compliance with the employment law in Vietnam to avoid any potential disputes.

Probation

  • In Vietnam, the minimum probation period is six working days. The maximum probation duration is:
    • 180 days for enterprise executive positions.
    • 60 days for roles requiring a junior college degree or above.
    • 30 days for positions requiring a professional secondary school education, secondary vocational certificate, or for roles involving technicians and skilled employees.

Grounds for Termination & Notice Period

  • Vietnam labor law provides four ways to end an employment contract:
    • Automatic termination - When specific conditions in the contract are met.
    • Mutual agreement - When you and your employee can end the contract mutually with, or without a notice period.
    • Employee resignation- When an employee resigns and serves a notice period.
    • Termination by the company, including unilateral termination, dismissal, and retrenchment.
  • Notice Period
    • 30 days for less than 1 year
    • 45 days for more than 1 year but less than 3 years
    • 60 days for more than 3 years

Severance Pay

  • Notice period and compensation are usually negotiated before the start of employment, also per the contract employment law in Vietnam.
  • You may extend severance pay to employees who have worked for more than 12 months and are not covered by unemployment insurance. 

Discrimination and Equal Opportunity

The employment laws in Vietnam favor measures protecting employees from discrimination and promoting equal opportunity in the workplace. Here's a summary of key points:

Prohibitions Against Workplace Discrimination

  • The Labor Code (2021) and other related labor laws of Vietnam prohibit discrimination based on various factors, including:
    • Race, skin color, ethnicity, nationality, gender, age, pregnancy, marital status, opinion, religion, disability, family responsibilities, HIV infection, or participation in trade unions or internal employee organizations.
  • You must ensure equal opportunity for men and women when hiring, paying, assigning tasks, providing training, and setting work hours.
  • Further, the labor laws of Vietnam may restrict you from terminating the employment contract for the following protected class of employees:
    • On pregnancy, maternity leave, paternity leave, or childcare leave
    • On approved leave
    • On illness or convalescent leave
    • During temporary custody or detention (pending formal charges)
    • Awaiting results of a state agency investigation (criminal or similar)

Therefore, it is commonly advised to outsource payroll & HR compliance requirements to protect yourself from any potential disputes in the courts.

Health and Safety Regulations

The employment laws in Vietnam emphasize undertaking the following health and safety regulations: 

  • Maintain strict adherence to occupational safety and hygiene laws for each type of machinery, equipment, and workplace.
  • Providing regular health checks for employees as required by law.
  • Make regular contributions to mandatory social & health insurance schemes.

Stay Compliant with Skuad

The employment laws in Vietnam are dynamic, demanding close attention to stay compliant. From contracts to data privacy, navigating these complexities can consume your valuable time and resources.

Skuad can be your Vietnam labor law and employment partner.

Our global platform simplifies building and managing remote teams in Vietnam, tackling compliance worries so you can focus on acquiring top talent. Here's how:

  • Effortless Onboarding & Compliance: We handle local payroll, taxes, benefits, and compliance, letting you concentrate on hiring.
  • Automatic Legal Updates: Stay ahead of the curve with your employment contracts and data handling practices, automatically adapting to the latest Vietnam labor laws.
  • Seamless Global Expansion: Skuad offers a fully compliant and secure solution for managing and paying your Vietnamese team, along with 160+ other countries.

Book a demo today and unlock the power of a globally distributed workforce with Skuad.

FAQs

What is the employment policy in Vietnam?

The employment policy in Vietnam is more inclined to protect employees’ rights and ensure fair treatment. Additionally, foreign employees working under Vietnam laws may be subject to work permits and visa regulations. 

Are there labor laws in Vietnam?

Yes, there are comprehensive labor laws in Vietnam. The main legislation is the new 2019 Labor Code that regulates key aspects of employment. 

What is the notice period for employees in Vietnam?

The notice period for employees in Vietnam varies from 30 to 60 days, depending on the type of their employment contract.

limited-offer-banner
EOR in 
Vietnam
Monthly
best value
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
199
/month
(billed annually)
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Employ contractors and employees in 160+ countries

G2 badge
limited-offer-banner
EOR in 
Vietnam
Monthly
$
249
/month
(billed annually)
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
199
/month
(billed monthly)
G2 badge

Employ contractors and employees in 160+ countries

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Table of Content

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