Hire in Vietnam: A Comprehensive Guide for 2026

Introduction

Employment in Vietnam is governed by the Labor Code, which requires a written labor contract signed before work begins and makes social insurance, health insurance, and unemployment insurance compulsory on every payroll. Companies that hire in Vietnam must set salaries in Vietnamese dong and at or above the regional minimum wage that applies where they operate, under Decree No. 293/2025/ND-CP.

Unlike markets with a single national floor, Vietnam runs four regional minimum wages, so the same role carries a different legal minimum by region. That floor does more than set pay, because unemployment insurance contributions are pegged to it, so every January increase raises what you contribute as well as what you owe.

A team spread across regions is priced against several of those floors at once. Model a single national band and the shortfall surfaces twice, once as underpaid wages and again as underpaid contributions.

This guide covers entity setup, hiring through an Employer of Record (EOR) or an Agent of Record (AOR), contract types, working hours, payroll and tax rates, and the full cost of a Vietnamese hire.

How to hire remote employees in Vietnam?

Vietnam gives you three routes: register your own entity, use an Employer of Record (EOR), or engage contractors. The choice decides who signs the labor contract, who carries social insurance and tax withholding, and how exposed you are if the arrangement is reclassified later.

How to hire in Vietnam by setting up a local entity?

Form a subsidiary in Vietnam for hiring local or foreign employees. Two certificates govern that:

• The Enterprise Registration Certificate (ERC) confers legal personality and enables the enterprise to operate as a recognised business entity under Vietnamese law
• The Investment Registration Certificate (IRC) is project-specific and functions as the primary instrument through which the state supervises the implementation of the foreign-invested project.

Since Law on Investment No. 143/2025/QH15 took effect from March 1, 2026, foreign investors may obtain the ERC before securing the IRC, which lets the legal entity exist earlier and enables preparatory activities such as opening bank accounts, leasing premises, and entering preliminary contracts before the project is formally registered.

One caution before you build a plan around it. Substantive operations remain subject to subsequent project approval and applicable conditional business requirements, and the firms advising on it note that the practical effectiveness of the reform is yet to be fully tested. Treat ERC-first as a way to start earlier rather than a way to finish sooner.

Once both are in place, the Vietnamese entity signs the labor contracts and carries payroll, social insurance, and labor compliance in-house.

How to hire employees through EOR in Vietnam?

An Employer of Record (EOR) company can help you hire employees in Vietnam without forming a subsidiary.

The EOR acts as the legal employer, signs the labor contract, and takes on payroll, social insurance and unemployment insurance contributions, personal income tax withholding, statutory benefits, and offboarding. Day-to-day direction of the work stays with you, along with the decisions on pay, scope, and headcount.

The ERC-first route is new enough that its practical effect has not been tested, and substantive operations still wait on project approval regardless. Planning a hiring date around it means planning around a reform nobody has run a full cycle through yet.

Skuad helps remove that dependency. Skuad acts as the legal employer across 160+ countries, so your company can hire, onboard, and pay employees without registering a local entity or setting up in-house payroll and compliance functions.

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 tax withholding and statutory deductions applied at the point of payment
• Statutory benefits and paid leave administration in line with local requirements across supported markets
• Termination and offboarding support, including notice periods and severance calculations as required locally
• Work permit and visa support for foreign nationals joining your team

See Skuad's Vietnam hiring guide for the full breakdown of local rules before you hire.

How to hire contractors through AOR in Vietnam?

An Agent of Record (AOR) lets you engage contractors in Vietnam without setting up a local entity. It acts as a third-party intermediary and assumes responsibility for your contractor workforce, covering worker classification, contract administration, payments, and tax compliance.

Vietnamese labor laws allow global employers to hire locals or foreigners, including freelancers and remote workers, on a contractual basis. What decides whether that holds is the content of the agreement rather than its title.

Vietnamese law defines a labor contract as an agreement between an employee and an employer on paid employment, salary, working conditions, rights and obligations of each party in the labor relationship. The test then works on substance, because Vietnamese law is not based on the name but on the content of the contract.

Where the parties sign a contract under a different name but containing the contents of paid employment, salary, management, administration, and supervision of one party, it shall still be considered as an employment contract.

Management, administration, and supervision is the limb foreign companies trip on. Setting a contractor's hours, putting them on your reporting line, or paying a fixed monthly sum against no deliverable all point the same way. Keep the engagement scoped to output, invoiced against milestones, and free of internal reporting, and keep the evidence of it.

Scoping and invoicing are where that evidence gets made, and Skuad supports contractor engagement across supported markets.

Here is what Skuad helps with:

• Contractor onboarding with locally compliant agreements
• Worker classification checks that help flag engagement risk before an agreement is signed
• Invoice generation, approval workflows, and contractor payouts in 70+ currencies
• Contractor records, agreements, and payment history in one dashboard alongside full-time employees
• Conversion from contractor to full-time employee through EOR across 160+ countries

Compare EOR and contractor pricing for your Vietnamese hires.

What type of employment contract do you need in Vietnam?

Vietnam recognizes two types of employment contracts. An indefinite-term labor contract is a contract in which the two parties neither fix the term nor the time of termination of the contract. A fixed-term labor contract is a contract in which the two parties fix the term of the contract for a duration of up to 36 months from the date of its validation.

Fixed-term contracts carry two conversion rules, and both catch employers out.

• Within 30 days from the expiration date of the labor contract, both parties shall conclude a new labor contract, and if a new labor contract is not concluded after the 30 days, the existing employment contract shall become an indefinite-term labor contract.
• The parties may enter into one more fixed-term labor contract, and if the employee keeps working when that second one expires, the third labor contract shall be of indefinite term.

For an ongoing remote role, the fixed-term route buys you at most two terms before the relationship becomes indefinite anyway, so the indefinite contract is usually the honest starting point.

Two formalities apply whichever type you use:

• The contract has to be signed before the employer takes the employee on to work. And it must be entered into in writing and made in two copies (employee & employer each one)
• A verbal contract is permitted only for a term of less than 1 month.

What are the employment laws in Vietnam?

The primary legal framework governing employment relationships in Vietnam is the Labor Code of 2019.

What are the working hour rules in Vietnam?

The 48-hour week is the number that surprises employers coming from 40-hour markets. Employers can arrange the pattern flexibly, including longer days, as long as the weekly ceiling and the 12-hour daily total hold.

How is overtime paid in Vietnam?

Night and overtime stack rather than substitute. Where night work overlaps with overtime, both rates apply cumulatively, which matters for distributed teams covering US hours from Vietnam.

Overtime cannot exceed 40 hours in a month and 200 hours in a year, extendable to 300 hours with approvals in government-defined sectors. And all overtime must be based on mutual agreement, with detailed records of hours worked, so consent and timesheets are both part of the obligation.

What are the probation and termination rules in Vietnam?

Employers in Vietnam may enforce probation periods per the employee category:

Three rules govern how you use it. Probation is only allowed once for a job, so a second attempt at the same role is not available. It does not apply to labor contracts with a term of less than 1 month. And probation pay must be at least equal to 85% of the salary of that job.

After probation, notice is set by contract type rather than by length of service:

Notice is not enough on its own, because some people cannot be dismissed at all while a protected condition lasts. The employer may not exercise the right to unilateral termination where the employee is sick or injured and under treatment, is on annual leave or other agreed leave, or is pregnant, on maternity leave, or raising a child under 12 months old.

What are the payroll and tax rules in Vietnam?

Payroll in Vietnam includes the employer withholding the employee income tax and paying dues directly to the authorities. Employers must determine salaries in Vietnamese dong (VND) and above the applicable minimum wage for the region they operate in. Two of the rules below changed in 2026, so a payroll setup built before January is now out of date.

What is the minimum wage in Vietnam?

Vietnam sets four regional minimum wages rather than one national floor, and the current figures come from Decree No. 293/2025/ND-CP, which took effect on 1 January 2026. The monthly and hourly rates increased by approximately 7.2%.

The wage floor affects more than salary. The base for calculating unemployment insurance contributions is capped at 20 times the regional minimum wage, so every January increase lifts that ceiling and your contribution exposure with it.

What are the social insurance contribution rates in Vietnam?

Three compulsory contributions run on every Vietnamese payroll, and all of them are shared between employer and employee.

Social insurance is payable by Vietnamese individuals with labour contracts of at least one month, and foreign individuals working in Vietnam holding a work permit and employed under a Vietnam labour contract of at least one year.

Health insurance is required for Vietnamese and foreign individuals employed under Vietnam labour contracts for at least one month. Unemployment insurance is applicable to Vietnamese individuals only.

Two ceilings cap what you pay. Social and health insurance are capped at 20 times the reference level, while unemployment insurance is capped at 20 times the minimum regional salaries.

Above those thresholds, the contribution stops rising, so the effective employer rate falls away on senior salaries even though the headline percentages do not change.

How much income tax is withheld in Vietnam?

Vietnam rewrote its income tax rules for 2026. The New Personal Income Tax (PIT) Law takes effect on 1 July 2026, except for regulations related to income from salaries and wages of resident individuals, which apply from the 2026 tax period, so payroll teams have been on the new schedule since January.

Resident salary income is now taxed on a progressive tax schedule with five brackets, reduced from seven brackets under previous regulations:

Deductions rose alongside the brackets. From the 2026 tax period, there is a personal deduction of VND 15.5 million per month for a taxpayer, plus VND 6.2 million per month for each eligible dependent.

Between the wider bands and the larger deductions, a net salary quoted from a 2025 calculation now understates take-home pay, so any offer modelled before January needs rerunning. For non-resident employees, employers must withhold a flat 20% of the employment income.

Payroll frequency in Vietnam is on a monthly basis.

Three separate sets of numbers changed for 2026: the regional wage floors, the tax brackets, and the personal deductions. A payroll configuration carried over from last year will be wrong in these three places.

Skuad supports global payroll processing in 70+ currencies, with tax withholding and statutory deductions applied at the point of payment, alongside statutory contribution workflows across supported markets.

What is the cost of hiring remote employees in Vietnam?

Gross salary and the three social contributions are only part of the picture. A fourth mandatory payment falls outside them, a fifth is not mandatory at all yet almost nobody skips it, and the exit cost works differently from most markets.

What mandatory costs come on top of salary in Vietnam?

Trade union dues are the one most cost models miss. Enterprises pay 2% of the salary funds used as a basis for payment of compulsory social insurance premiums for employees, and this is a company obligation rather than an employee deduction. It applies whether or not a union exists at your company.

Employers across sectors may provide a 13th-month pay bonus to their employees. It is called 'tháng lương thứ 13' and is paid during the Lunar New Year Holiday. It is usually equivalent to the employee's monthly salary.

Vietnamese law treats a bonus as an amount of money, a piece of property, or an item that is provided by an employer for his/her employees on the basis of the business performance or the employees' performance, with the bonus regulation decided and publicly announced at the workplace by the employer. So the Tet bonus is not a statutory entitlement.

It is, however, deeply established practice, and employers who skip it tend to lose people around Lunar New Year. Budget it as though it were mandatory and set the basis in writing.

What does it cost to end an employment relationship in Vietnam?

Severance looks expensive on paper and is usually modest in practice. The headline rule is that severance allowance goes to an employee who has worked on a regular basis for a period of at least 12 months, and each year of work will be worth half a month's salary, calculated on the average salary of the last 6 months before termination.

The qualifying period is the total period during which the employee actually worked for the employer minus the period over which the employee participated in the unemployment insurance.

Since unemployment insurance is compulsory for Vietnamese employees, most of the tenure that would otherwise generate severance is already covered by the state scheme, and the employer's own liability is small for anyone hired in recent years.

Redundancy is priced higher. Where the exit is caused by restructuring or economic reasons, each year of work will be worth 1 month's salary and the total redundancy allowance shall not be smaller than 2 months' salary, which is double the ordinary rate with a floor underneath it.

Within 14 working days following the termination of an employment contract, both parties shall settle all payments, extendable to no more than 30 days in a narrow set of cases such as a shutdown or restructuring.

Who pays when an employee is off work in Vietnam?

Maternity is the largest absence, and it is not on your payroll. A female employee is entitled to 6 months of prenatal and postnatal leave, with the prenatal period not exceeding 2 months, and during that leave she is entitled to maternity benefits as prescribed by social insurance laws.

Six months of cover falls to the social insurance fund rather than to you, which is a genuine cost advantage against markets where the employer funds it.

Short personal absences do land on you. Employees take fully paid leave of 3 days for their own marriage, 1 day for the marriage of a child, and 3 days on the death of a parent, spouse, or child. Small individually, worth a line in the model across a team.

The costs that decide a Vietnamese budget are split between the ones the law names and the ones it does not. The Skuad employee cost calculator helps you model total employment cost before an offer goes out, using the market and the salary figure you enter. Treat the output as a budgeting estimate.

Estimate the total cost of a Vietnam hire before you make the offer.

What are the challenges of hiring in Vietnam?

Vietnam is straightforward to hire into. The exposure falls in three places: what an unlawful dismissal costs, what happens when a contractor arrangement is treated as employment, and what the labour inspectorate fines. Each one carries a number you can plan against.

1. Unlawful dismissal

An employer that terminates illegally must reinstate the employee, pay the salary, social insurance, health insurance, and unemployment insurance premiums for the period during which the employee was not allowed to work, plus at least 2 months' salary.

Skip the notice period, and you also owe compensation worth the salary for the remaining notice period. If the employee does not want the job back, severance is payable on top. If you do not want them back and they agree, you negotiate a further amount that must be at least 2 months' salary.

2. Contractor misclassification

Vietnam wrote the classification test into the social insurance regime in 2025, so this no longer waits on a labour court. Where the parties agree under a different agreement type but the content reflects paid work, wages, and the management, administration, and supervision by one party, with a duration of one month or more, they also fall under the category of mandatory Social and Health Insurance (SI & HI) participants.

Once that applies, unpaid contributions accrue 0.03% per day on the overdue amount, and the law now emphasises recovery of unpaid contributions and criminal prosecution for employers who evade payments. Contributions are due by the last day of the following month, so the timeline starts quickly.

3. Working time and overtime

This is the most inspected area and the easiest to fail on paperwork alone. Administrative fines range from VND 4 million to VND 150 million depending on severity, and labour authorities at both national and provincial levels have stepped up inspections, targeting companies that exceed overtime limits or lack proper recordkeeping.

Inspectors look for employee consent to overtime and audit-ready timesheets, so a distributed team with no time records fails on evidence before anyone examines the hours.

Documentation decides all three, and Skuad Shield supports compliance monitoring across supported markets, so your team is not following regulatory change on its own.

Here is what Skuad helps with:

• Compliance monitoring across supported markets, with updates as local employment requirements change
• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Termination and offboarding support, including notice periods, documentation, and severance calculations as required locally
• Statutory benefit and leave administration in line with local requirements across supported markets
• Worker classification checks that help flag engagement risk before an agreement is signed

None of this replaces local counsel once an inspection opens. It does mean the routine records exist before one does.

Hire in Vietnam without setting up an entity

Setting up a Vietnamese entity is a defined piece of work: two certificates and a project approval. The obligations it creates start on the same day and carry on for as long as the entity exists.

From that point, your own team answers for every classification call, filing deadline, and dismissal, and Vietnam attaches a number to each of them. An unlawful dismissal means reinstatement, back pay, back contributions, and at least two months' salary, while unpaid social insurance contributions accrue 0.03 percent a day until settled. Labour inspection fines run to VND 150 million.

An Employer of Record moves the labor contract and the filings to a party that already carries them, and an Agent of Record does the same for contractors. The hiring decision stops depending on a registration timeline.

Skuad acts as the legal employer across 160+ countries and supports contract generation, worker classification checks, payroll in 70+ currencies, and compliance monitoring from a single platform.

Book a demo to see how quickly Skuad can onboard your first Vietnam hire.

FAQs

1. What does it mean to hire in Vietnam through an EOR?

To hire in Vietnam through an Employer of Record means the provider acts as the legal employer under the Labor Code, signing the labor contract in Vietnamese. It processes payroll in dong, withholds personal income tax, and remits social, health, and unemployment insurance, while you direct the day-to-day work.

2. Can a foreign company hire in Vietnam without a local entity?

A foreign company cannot register with Vietnam Social Insurance on its own, so it cannot legally employ a Vietnamese worker without a local entity. An EOR is the usual route, since it holds the entity. Setting up directly needs both an ERC and a project-specific IRC.

3. How much does it cost to hire in Vietnam beyond gross salary?

Employer social contributions total around 21.5% of salary across social, health, and unemployment insurance, plus a 2% trade union fee. On top is the Tet bonus, usually a month's salary, which is customary rather than mandatory but rarely skipped, so budget for it as if required.

4. What are the misclassification risks when you hire contractors in Vietnam?

Vietnamese law tests substance over the contract title, so a contractor working under your management, administration, and supervision for a month or more falls under mandatory social and health insurance. Unpaid contributions accrue interest at 0.03% per day, and the 2025 law added criminal exposure for evasion.

5. What paid leave applies when you hire in Vietnam?

Maternity leave runs six months at full pay funded by social insurance, not the employer, provided the contribution condition is met. Employees also get short fully paid personal leave, such as three days for their own marriage and three days for a death in the immediate family.

6. What does it cost to dismiss an employee when you hire in Vietnam?

An unlawful dismissal generally requires reinstatement, back pay, back contributions, and at least two months' salary. Lawful severance is usually modest, since unemployment insurance covers most tenure, but redundancy is priced higher at one month per year with a two-month floor. Final settlement is due within 14 working days.