Introduction to Payroll in Vietnam
If you’re working with a remote team in Vietnam, you need to carefully consider the local labor laws to ensure that your payments are timely, accurate, and compliant. Staying on top of local employment legislation across multiple countries can be a challenge, but Skuad’s expertise with the legalities of payroll in Vietnam can help.
Skuad, a trusted Vietnam payroll company, can provide updated and accurate guidance about compensation and benefits requirements, as well as help with the nuances of local tax legislation.
Payroll Process in Vietnam
The general shape of a payroll process in Vietnam stays relatively similar from country to country. While you may need to adapt within some of the steps to ensure compliance with local regulations, the three main phases for Vietnam payroll are standard.
During the pre-payroll phase, your business focuses on being prepared. You’ll need to gather documentation, confirm HR policies, and generally ensure your business is ready to begin paying employees while staying compliant.
Setting up the organization
Employers are responsible for keeping proper records and paying employees properly, while also deducting necessary deductions and following labor statutes. This includes generating payslips for any specified timeline, keeping track of incentives, and recording both the gross and net salaries of employees. Thanks to Skuad’s one-click payroll option, payroll outsourcing in Vietnam can make the payroll processing quick and easy.
To ready your business profile, you’ll need to register with the local government. Gather documentation such as tax forms and invoices, and confirm your business registration numbers and other identifying information are set. You’ll need these for reporting income and payments and staying tax-compliant.
Requirements can change across locations, even if they’re all within the same country. Document location-specific policies for each workplace.
Be sure you’re documenting timesheets, doctor’s notices, or supervisor permission, as needed, to understand how each type of leave will affect payroll.
Employees are legally entitled to some categories of leave in Vietnam, including parental leave, sick leave, and paid holidays. Confirm you’ve documented a leave policy that conforms to local requirements. When employees take leave, whether paid or unpaid, you’ll need to factor it in to calculate their compensation for that pay period.
Vietnam’s labor laws have specific requirements not only around salary and leave, but others as well. Be sure to factor in statutory components like bonuses, pension funds, and any other applicable benefits.
When planning your pay and salary structure, ensure that it adheres to Vietnam’s requirements. Four regional minimum salary levels are in effect across Vietnam, ranging from VND3,070,000 on the low end to VND4,420,000 at the top, depending on the area. While Vietnam doesn’t have any specific guidelines regarding bonus pay, offering a 13th-month bonus is very common.
The typical payroll schedule in Vietnam is monthly, most commonly at the end of the month. Be sure to document the schedule and stick to it so employees can budget and plan accordingly.
Gather, document, confirm and report information about individual employees. You’ll need names, job titles, departments, worksites, and information on how employees will receive their pay.
Payroll calculation phase
The payroll in Vietnam calculation phase is the main component of the process. Depending on pay cycles, you’ll need to double-check anything that might affect payroll. Employees will likely receive different compensation packages, and absences and leave may affect the total they’re entitled to. Partnering with a payroll provider in Vietnam to use an automated system can make this process easier, assuming the pre-payroll process is in place to gather the right data.
The post-payroll phase is when employees actually receive their payments. Your organization will need to let your bank know how to process salary disbursement. An automated system can minimize the work involved in this step, once you’ve prepared your calculations.
After you’ve made payments, be sure the accounts are balanced. Salary payments are a major business expense, and you’ll want to document all the money you’ve paid out.
Payroll reporting and compliance
Tax law in Vietnam requires employer and employee contributions to social insurance, health insurance, and unemployment insurance, and employers will likely pay a trade union fee where applicable. These deductions should happen during payroll processing, but the business must file them with the applicable government agencies.
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Payroll Processing in Vietnam
Payroll processing in Vietnam isn’t necessarily harder than it would be elsewhere, but it does require familiarity with local regulations. An expert payroll processing partner such as Skuad can tackle that part of the business. Request a demo today.
Payroll Processing Company in Vietnam
Skuad can help you set up payroll processing in Vietnam, freeing up your time to focus on building your business. Get in touch and request a demo to explore the services we offer and see how we can start setting you up for success.
Payroll Management in Vietnam
Employees expect and deserve timely payment. You can automate your payroll management to help ensure your team is paid, records are kept properly, and you remain fully compliant with laws.
Payroll Compliance in Vietnam
Part of the process of managing payroll is making sure you are compliant with labor laws and benefits regulations. Some considerations include:
- Labor laws
- Minimum wage
- Overtime laws
- Payroll taxes
- Maternity leave
- Sick leave
- National holidays
- Other laws, such as termination laws
If you partner with a Vietnam payroll provider like Skuad, all of the compliance is taken care of, to make sure you have 100% payroll compliance with all laws both foreign and domestic.
Payroll Components in Vietnam
Payroll is comprised of compensation for the hours an employee has worked, the deductions that must be taken for benefits such as health insurance, and employer contributions. Late payment penalties or other statutory penalties can apply if these aren’t handled on time. You’ll also need to account for specific payroll components in Vietnam.
The minimum wage in Vietnam varies per region. At the current exchange rate, the Vietnamese dong is currently valued at 0.000043319313 U.S. Dollars. The following lists the minimum amount per person per month:
- In region 1, which is comprised of Hà Nội and HCM City urban areas, the minimum wage is VNĐ4.68 million per person per month, or about US$203.
- Region 2, which covers Hà Nội and HCM City rural areas; and Cần Thơ, Đà Nẵng, and Hải Phòng urban areas, sets the minimum per person per month at VNĐ4.16 million.
- In region 3, which covers Bắc Ninh, Bắc Giang, and Hải Dương provinces, the minimum is VNĐ3.64 million.
- Region 4 is the rest of the country not listed above, where minimum wage is VNĐ3.25 million.
The total working hours for employees in Vietnam cannot exceed 8 hours per day and 48 hours per week for employees working in normal conditions, or 6 hours per day and 36 hours per week for employees working in hazardous or toxic conditions.
Employees are entitled to overtime pay if they work beyond the normal expected hours. They must receive:
- At least one and a half their normal pay if they work beyond the normal working hours on a given day.
- At least two times normal wages for weekend hours.
- At least three times normal wages if the employee works on a public holiday or paid annual leave.
The total amount of overtime is capped at 40 hours per month and 200 hours per year.
There is a social assurance and assistance program in Vietnam in which employees pay 8% of their monthly gross earnings. The employer pays 14% of the monthly payroll. This is similar to Social Security in the United States and other countries.
Employees in Vietnam are entitled to 75% of their salary for sick days, or for remuneration of what was paid into social insurance the month before taking the leave.
Employees are entitled to six months of maternity leave paid for by the Social Insurance Fund of Vietnam. Fathers who pay social insurance may take five paid days off after the child is born, or seven if the baby was delivered by surgery. If only the father pays into social insurance and the mother dies, that employee is entitled to paid leave until the child is six months old.
According to Article 115 of the 2012 Labor Code, employees in Vietnam are entitled to at least 12 paid days off in addition to paid holidays. If a public holiday falls on a weekend, they are entitled to the following business day to be a paid day off. Employees working in Vietnam who are foreign citizens also get a day off for their own country’s national holidays.
In 2022, the public holidays in Vietnam include 11 one-day holidays and the week-long Tet holiday, which lasts from Saturday, January 29, to Sunday, February 6.
These are some of the public holidays in Vietnam:
01-Jan 2024, Monday-International New Year's Day
08-Feb 2024, Thursday- Tet holiday
09-Feb 2024, Friday- Tet holiday
10-Feb 2024, Saturday- Tet holiday
11-Feb 2024, Sunday- Tet holiday
12-Feb 2024, Monday- Tet holiday
13-Feb 2024, Tuesday- Tet holiday observed
14-Feb 2024, Wednesday- Tet holiday observed
18-Apr 2024, Thursday- Hung Kings Festival
30-Apr 2024, Tuesday- Liberation Day/Reunification Day
01-May 2024, Wednesday- International Labor Day
02-Sep 2024, Monday- Independence Day
03-Sep 2024, Tuesday- Independence Day
There are certain deductions for taxes that need to be made when you pay employees. Some of these taxes are deducted from employee pay, such as income tax, while others are paid by both the employee and the company, such as social security.
The income tax rate in Vietnam is a progressive tax rate from 5% for incomes up to VNĐ 60,000,000 to 35% for incomes above VNĐ960,00,000.
When an employee has been terminated, the employer must give advance notice within the statutory limits, ranging from 45 to 3 days’ notice, depending on contract type and tenure with the business.
Severance pay is due to employees in certain circumstances, which would be equal to one-half of one month’s wages for each year employed with the firm. For calculating the salary, take the average of the preceding six month’s wages. For employees who have been terminated and have worked for the employer for 12 months or more, severance is due. Some exceptions include brief tenure at the company, dismissal for violation of labor rules, deportation, retirement, and more.
When dismissing a Vietnamese employee, always make a record of breach of rules, send notice to the employee, hold a meeting about the potential dismissal of the employee, and keep meeting records.
Start Payroll in Vietnam
Paying independent contractors and employees in Vietnam can be easy with the right management system. If you are ready to hire someone and pay them with one-click payroll services in Vietnam, talk to some of our experts and book a demo today.