Employment Laws in Vietnam

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. 

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

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

Social Security contributions and requirements

• 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

Public holidays and special Leaves

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

Termination and Severance

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

Probation

Grounds for Termination & Notice Period

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

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.

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• Effortless Onboarding & Compliance: We handle local payroll, taxes, benefits, and compliance, letting you concentrate on hiring.

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• Seamless Global Expansion: Skuad offers a fully compliant and secure solution for managing and paying your Vietnamese team, along with 160+ other countries.

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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.