Payroll in Vietnam: A Comprehensive Guide for 2026

Introduction

Payroll in Vietnam requires compliance with the Labour Code 2019, mandatory contributions to social insurance, health insurance, and unemployment insurance through Vietnam Social Security (BHXH), and personal income tax (PIT) withholding filed with the General Department of Taxation (GDT).

Foreign companies must also apply the correct regional minimum wage across four zones under Decree 293/2025/ND-CP.

The challenge for foreign employers is that these obligations span multiple agencies with different rules, deadlines, and reporting formats. Social insurance goes to BHXH, PIT returns go to the GDT, and each has its own filing schedule. Getting any of these wrong triggers back-payments, fines, and interest penalties. Because contribution caps and wage floors change regularly, staying compliant takes ongoing attention.

This guide breaks down each part of the payroll process, from employer and employee tax obligations to social insurance rates, regional minimum wages, statutory leave entitlements, and the compliance steps foreign companies need to follow to pay employees in Vietnam correctly.

What is the 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.

What does the pre-payroll phase involve?

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.

Business profile

To prepare 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.

Work location

Requirements can change across locations, even if they’re all within the same country. Document location-specific policies for each workplace.

Attendance policy

Be sure you’re documenting timesheets, doctor’s notices, or supervisor permission, as needed, to understand how each type of leave will affect payroll.

Leave policy

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.

Statutory components

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.

Salary components

When planning your pay and salary structure, ensure that it adheres to Vietnam's requirements. Four regional minimum wage zones are in effect across Vietnam under Decree 293/2025/ND-CP, with rates ranging from VND 3,700,000 to VND 5,310,000 per month depending on the area. The full regional breakdown is covered in the payroll components section below.

While the 13th-month bonus is not mandated under the Labour Code 2019, it is widely practiced across industries and becomes contractually binding once an employer commits to it in company policy or employment contracts.

Pay schedule

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.

Employee information

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.

How does the payroll calculation phase work?

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.

What happens during the post-payroll phase?

Salary payments

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.

Payroll accounting

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. Employers are also required to pay a trade union fee of 2% of the social insurance salary fund, regardless of whether an internal trade union has been established at the company. These deductions should happen during payroll processing, but the business must file them with the applicable government agencies.

What are the payroll components in Vietnam?

Payroll is 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.

Compensation

The minimum wage in Vietnam varies by region. Under Decree 293/2025/ND-CP, effective January 1, 2026, the four regional minimum wage levels are:

• Region I, which covers Hanoi, Ho Chi Minh City, Hai Phong, Da Nang, and key industrial districts, sets the minimum at VND 5,310,000 per month.
• Region II, which covers areas with strong industrial activity including much of Binh Duong, Dong Nai, and Can Tho, sets the minimum at VND 4,730,000 per month.
• Region III, which covers provinces with moderate economic development including parts of Hai Duong, Khanh Hoa, and Long An, sets the minimum at VND 4,140,000 per month.
• Region IV covers the rest of the country, where the minimum wage is VND 3,700,000 per month.

Working hours

Under Article 105 of the Labour Code 2019, 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.

Overtime laws

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, with certain industries permitted up to 300 hours per year under Resolution No. 17/2022/UBTVQH15.

Social security

Vietnam's compulsory social insurance system requires contributions from both employers and employees. Employees contribute 8% to social insurance, 1.5% to health insurance, and 1% to unemployment insurance, totaling 10.5% of gross salary. Employers contribute 17.5% to social insurance (covering retirement, sickness and maternity, and occupational accident funds), 3% to health insurance, and 1% to unemployment insurance, totaling 21.5% of gross salary. The combined contribution rate is 32%.

Sick leave

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.

Parental 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.

Public holidays

Under Article 112 of the Labour Code 2019, employees in Vietnam are entitled to 11 paid public holiday days spread across six national holidays:

• New Year (1 day),
• Lunar New Year/Tet (5 days),
• Hung Kings' Commemoration Day (1 day),
• Reunification Day (1 day),
• International Labour Day (1 day),
• National Day (2 days)

If a public holiday falls on a weekend, employees are entitled to the following business day as a compensatory paid day off. Foreign employees working in Vietnam also receive one additional paid day off for their own country's national holiday.

In 2026, the Tet holiday runs from February 14 to February 22 (9 consecutive days including weekends), as approved by the Prime Minister.

These are the public holidays in Vietnam for 2026:

• 01-Jan - New Year's Day
• 17-Feb - Tet holiday (Lunar New Year)
• 18-Feb - Tet holiday
• 19-Feb - Tet holiday
• 20-Feb - Tet holiday
• 21-Feb - Tet holiday (observed)
• 22-Feb - Tet holiday (observed)
• 26-Apr - Hung Kings' Commemoration Day
• 30-Apr - Reunification Day
• 01-May - International Labour Day
• 02-Sep - National Day
• 03-Sep - National Day

*Dates of Tet and Hung Kings' Commemoration Day shift annually based on the lunar calendar and Prime Ministerial approval.

Payroll taxes

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.

Under Law 109/2025/QH15 on Personal Income Tax, effective for the 2026 tax year, Vietnam uses five progressive brackets on monthly taxable income: 5% up to VND 10 million, 10% from VND 10 to 30 million, 20% from VND 30 to 60 million, 30% from VND 60 to 100 million, and 35% above VND 100 million. The personal deduction is VND 15.5 million per month, with an additional VND 6.2 million per dependent. Non-residents pay a flat 20% on Vietnam-sourced income.

Calculating PIT withholding, BHXH contributions across social insurance, health insurance, and unemployment insurance, and THR-equivalent bonus payments for each employee adds up quickly, especially when regional minimum wage zones and overtime caps vary across work locations. Estimating total employment cost before committing to a hire helps avoid budget surprises.

Skuad's employee cost calculator helps you estimate the full cost of a Vietnam hire, including statutory contributions and gross-to-net breakdowns.

Estimate the cost of a Vietnam hire

Other laws

When an employee has been terminated, the employer must give advance notice within the statutory limits: 45 days for indefinite-term contracts, 30 days for definite-term contracts, and 3 working days for contracts under 12 months.

Under Article 46 of the Labour Code 2019, severance pay is due to employees who have worked for the employer for 12 months or more. The severance amount equals one-half of one month's wages for each year of service, calculated using the average of the preceding six months' wages. Severance is not payable for periods covered by unemployment insurance, or in cases of dismissal for violation of labor rules, deportation, or retirement.

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.

What are the payroll compliance requirements in Vietnam?

Vietnam's payroll compliance framework is governed primarily by the Labour Code 2019, the Social Insurance Law 2024, and Law 109/2025/QH15 on Personal Income Tax. Together, these laws cover employment contracts, wages, working hours, leave entitlements, termination procedures, social insurance obligations, and tax withholding.

Because compliance spans multiple agencies, employers face parallel filing requirements. Social insurance, health insurance, and unemployment insurance contributions are filed monthly with Vietnam Social Security (BHXH) by the last day of the following month. PIT withholding is declared to the General Department of Taxation (GDT) by the 20th of the following month for monthly filers, or by the last day of the month following the quarter for quarterly filers.

The trade union fee of 2% of the social insurance salary fund is filed separately with the trade union authority, regardless of whether the company has an internal union.

Non-compliance triggers back-payment of unpaid contributions plus a daily interest penalty of 0.03% on the overdue amount under the Social Insurance Law 2024. Administrative fines apply independently for late PIT filings, missed BHXH contributions, and underpayment below the applicable regional minimum wage. Repeated violations can lead to criminal liability.

For a detailed look at Vietnam's labor regulations, see Skuad's Vietnam employment laws guide.

Why use a payroll processing company in Vietnam?

Running payroll in-house in Vietnam means filing social insurance contributions with BHXH, withholding PIT with the GDT, applying the correct regional minimum wage zone for each employee's work location, paying the trade union fee to a separate authority, and administering statutory leave entitlements. Each filing runs on its own deadline, and late payments on any one of them trigger penalties independently of the others.

Setting up a Vietnamese LLC typically takes two to four months and requires registration with the Department of Planning and Investment, tax registration with the GDT, and social insurance registration with BHXH. Some sectors also carry foreign ownership restrictions under the Investment Law 2020. For companies hiring their first few employees in Vietnam, that setup cost and timeline often outweigh the control.

Skuad acts as the legal employer in Vietnam, so your company can hire, onboard, and pay employees without entity setup or in-house payroll infrastructure.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Termination and offboarding support aligned with local labor requirements across supported markets
• Work permit and visa support for foreign nationals joining your team

Customer story: How Microsense Networks onboarded contractors across Southeast Asia with Skuad

Microsense Networks, a technology company specializing in managed connectivity solutions for the hospitality industry, needed to hire contractors across Indonesia, Sri Lanka, and Thailand while meeting each country's employment and compliance requirements. Skuad supported the process with localized contractor agreements, cross-border payment processing in multiple currencies, and compliance onboarding across all three markets. Microsense Networks onboarded 9 contractors across the three countries through Skuad's Agent of Record platform.

Read the full case study

Run payroll in Vietnam without the compliance risk

Vietnam's payroll framework involves four regional minimum wage zones, mandatory employer contributions at 21.5% of gross salary, PIT withholding across five progressive brackets, and regular filings with both the VSS and GDT.

Skuad supports the operational complexity of payroll in Vietnam, including statutory contributions, PIT withholding, minimum wage compliance, and leave administration, so your team can focus on the work, not the paperwork.

Companies across SaaS, manufacturing, and technology use Skuad to support their payroll operations in Vietnam, stay aligned with regulations as they change, and pay employees compliantly without building local payroll infrastructure from scratch.

Book a demo to see how Skuad supports payroll for a Vietnam hire without entity setup.

FAQs

1. What is an employer of record in Vietnam?

An employer of record in Vietnam is a third-party entity that legally employs workers on behalf of a foreign company, taking responsibility for payroll, social insurance through Vietnam Social Security (BHXH), PIT withholding, and Labour Code 2019 compliance. The foreign company retains day-to-day control over work output.

2. What social insurance contributions must employers pay in Vietnam?

Employers in Vietnam generally contribute 17.5% to social insurance, 3% to health insurance, and 1% to unemployment insurance, totaling 21.5% of the employee's gross salary. These contributions are filed monthly with Vietnam Social Security (BHXH), and the social insurance and health insurance base is capped at 20 times the base salary.

3. Can a foreign company run payroll in Vietnam without setting up a local entity?

Foreign companies generally cannot enter into labour contracts or file payroll in Vietnam without a registered legal entity under the Labour Code 2019. Most companies use an employer of record, which holds the legal employment relationship through its own Vietnamese entity and files social insurance and PIT on their behalf.

4. What are the penalties for missing social insurance contributions in Vietnam?

Vietnam Social Security (BHXH) can impose administrative fines on employers who fail to register employees, underpay contributions, or miss filing deadlines. Penalties typically include back-payment of unpaid contributions plus interest at 0.03% per day on the overdue amount under the Social Insurance Law 2024. Repeated violations can lead to criminal liability.

5. What is the difference between payroll outsourcing and using an EOR in Vietnam?

Payroll outsourcing in Vietnam typically covers salary calculations, PIT withholding, and BHXH filings, but the company still needs a local entity to sign labour contracts. An EOR acts as the legal employer through its own Vietnamese entity, removing the need for the foreign company to incorporate locally.

6. Are foreign employees subject to social insurance in Vietnam?

Foreign employees with work permits and labour contracts of 12 months or more generally participate in social insurance and health insurance at the same rates as Vietnamese employees. They are typically exempt from unemployment insurance, which reduces the total contribution to 20.5% for the employer and 9.5% for the employee.