Definitive Guide to Hiring in Vietnam

Hiring in Vietnam

Hiring employees compliantly in Vietnam means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Vietnam so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Vietnam; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Vietnam

Employee Probation Period

• It’s common practice to arrange a “probation period” in Vietnam when engaging new employees. 
• A probationary period must not exceed 60 days for work that requires specialized or highly technical skills or 30 days for other types of work.

Annual Leave in Vietnam

• Annual leave is as follows: -
  • 12 working days for employees working in normal working conditions
  • 14 working days for persons working in heavy or dangerous work
  • 16 working days for workers doing extremely heavy or hazardous work

Holidays in Vietnam

Maternity Leave Vietnam

• Female employees are eligible for 6 months of paid maternity leave at 100% of salary (the base salary of the social insurance contribution), and an additional 30 days for each additional child.
• Salary during this period is paid by the compulsory social insurance.
• In the case of miscarriage, abortion or stillbirth, 10-50 days' maternity leave is provided depending on the age of the fetus.

Paternity Leave Vietnam

• Fathers are eligible to receive the following paternity leave: -
  • 05 working days for normal delivery
  • 7 working days in case Cesarean birth or delivery under 32 weeks of age
  • 10 working days in case of twins and an additional leave of 03 days for each child from the third child
  • 14 working days in case of having Cesarean birth for twins

Sick Leave in Vietnam

• Employees who suffer from illness and/or disability or take leave in accordance with a doctor’s order receive an allowance paid by Vietnam’s social insurance fund, provided that they submit the required documentation supporting their leave (normally only doctors at the public hospitals can issue this certificate). 
• The sick leave allowance is based on the employee’s salary used to calculate the social insurance premium. The maximum entitlement is:
  • 30 days per year (if the employee has contributed to the social insurance fund for less than 15 years) or
  • 40 days per year (if the employee has contributed to the social insurance fund for between 15 and 30 years) or
  • 60 days per year (if the employee has contributed to the social insurance fund for more than 30 years).

Working Hours in Vietnam

• Normal working hours are 8 hours per day and 48 hours per week

Overtime in Vietnam

• Overtime hours cannot exceed 30 hours per month and 200 per year. 
• In special cases regulated by the government, the yearly maximum can be increased to 300 hours per year
• The overtime pay is at least 150 % of actual hourly wage on a normal working day, at least 200 % on a weekly day off and at least 300 % on a public holiday or paid days off (exclusive of wages of public holidays and paid days off prescribed by the Labor Code).

Termination of Employment in Vietnam

• The rights employees have when their employment contract is terminated depend upon the reason of dismissal and the employment contract. 
• This has effects on the notice period and possible severance payments.
• Vietnam labor code states that an employer may terminate a labor contract by serving advance notice of 30 working days for termination of a fixed term labor contract or 45 working days for an indefinite labor contract.
• Proper legal grounds must exist in order for an employer to terminate a labor contract with an employee, such as performance issues, prolonged illness, a force majeure event, or dissolution of the company. 
• Employers are required to perform various procedures prior to terminating an employee.
• If an employer fails to prove that there are legal grounds for the termination or fails to follow the proper statutory procedure, a termination may be declared wrongful. 
• In the event of a wrongful termination, employers may be required to reinstate the employee, pay their salary for the period that they were not allowed to work, and pay two months of the employee’s salary as a penalty for the wrongful termination.
• In practice, a settlement or resignation can normally be negotiated with some amount of severance pay provided to the employee.

Notice Period in Vietnam

• Vietnam labor code states that an employer may terminate a labor contract by serving advance notice of 30 working days for termination of a fixed term labor contract or 45 working days for an indefinite labor contract. 
• However, employers must have proper legal grounds for termination.

Severance in Vietnam

Vietnam Salary and Wages

13th / 14th Month Salary in Vietnam

• Yes
• There is no statutory requirement to pay the 13th or 14th month salary.
• However, it is common for employers to pay a 13th month salary as a Christmas bonus.
• Employees also can receive smaller bonuses for public holidays.

• For Vietnamese employees, the employer is required to make SI, HI, UI, and labor accident and occupational disease insurance contributions of 17%, 3%, 1%, and 0.5% (0.3% for special cases with official approval), respectively.
• Vietnamese employees are required to make SI, HI, and UI contributions at rates of 8%, 1.5%, and 1% of the employee’s salary, allowances, and other additional income, respectively.
• For foreign employees in certain circumstances, the employer is required to contribute to HI at a rate of 3% and to SI at a rate of 17.5% (including the retirement, sickness, maternity, occupational diseases, and accident funds) (17.3% for special cases with official approval).
• Foreign employees are subject to HI at a rate of 1.5% in certain circumstances and are subject to retirement and death fund contributions for SI at a rate of 8% as from 1 January 2022.
• Occupational diseases and accident funds (0.5%) from an employer’s SI contribution for both Vietnamese and foreign employees are temporarily waived from 1 July 2021 to 30 June 2022 as a COVID-19 relief measure.

Immigration Vietnam

• A work permit is required for a foreign national to legally work in Vietnam, except for cases of work permit exemptions. ;
• This document is granted only to a foreign national who is sponsored by an entity in Vietnam.
• The sponsoring entity in Vietnam must submit the demand for using foreign nationals working in Vietnam to the relevant government’s body at least 30 days before recruiting or transferring the foreign nationals to work in Vietnam. ;
• Within 15 days after receiving the demand, the local DOLISA responds to the sponsoring entity in writing regarding the acceptance or refusal of the demand.
• This letter is considered to be a pre-approval for using foreign employees in Vietnam. ;
• This pre-approval letter is one of the compulsory documents for application dossiers for work permit issuances, work permit reissuances and work permit exemptions. ;
• A work permit application must be filed with the local DOLISA at least 15 business days before the expected commencement date for the employee. ;
• The current processing time at the local authority is seven business days.
• Required documents in work permit application dossiers that are issued in foreign countries must be legalized in the country of issuance to be recognized in Vietnam. ;
• A work permit can be granted with a maximum validity period of two years. ;
• A work permit can be renewed through the reissuance process.
• A foreign national who wants to work in Vietnam must meet the required qualifications for a preapproval position. ;
• The following are the three main categories of positions that foreign nationals may apply for a work permit in Vietnam and the related qualification requirements: ;

• Management experience is required for managers, executives or higher positions according to the definition in the Law on Enterprise. ;
• At least three years of relevant professional experience and a bachelor, engineering or equivalent or higher degree are required for specialists. Alternatively, the specialist must have a document from the relevant foreign authority, organization or enterprise that recognizes him or her an expert. ;
• A minimum one year-training certificate and three years of relevant experience is required for technicians. ;
  • In addition to the above qualifications, foreign nationals will generally fall into one of two major categories: intra-company transfer and local hires.
  • An intra-company transfer must have worked for his or her home employer for at least 12 months prior to the work permit application.
  • The local hire must sign a local employment contract with the sponsoring entity in Vietnam.
• Both intra-company transfers and local hires must submit documentation proving that they meet the necessary criteria.

Work Permit Exemptions

• Under the Labor Code and the decree on work permits, 19 cases of work permit exemptions exist. 
• The following are typical examples of individuals who are exempt from the requirement to obtain a work permit in Vietnam:
  • A foreigner who is a contributing member or owner of a limited liability company.
  • A foreigner who is a member of the board of directors of a joint stock company. 
  • A foreigner who comes to Vietnam for a period of less than three months to offer services.
  • A foreigner who is an intracompany transferee of corporations operating within 11 service industries listed under Vietnam’s World Trade Organization commitments. A foreigner who enters Vietnam for less than 30 days to work as a manager, executive director, specialist or technician. However, the cumulative period of working in Vietnam in a year cannot exceed 90 days.

Value Added Tax (VAT) in Vietnam

• The standard VAT rate in Vietnam is 10%.
• The government cut the VAT rate to 8 percent from February 1 to December 31, 2022, for several services.
• There is a 5% reduced VAT rate on certain foodstuffs and a range of exempt goods and services as well as imports.

Mandatory Benefits in Vietnam

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period,  and severance pay.
• Statutory benefits also include social security benefits

Payroll Accrual in Vietnam

Country Accruals Additional Information

Payroll Accruals Additional Information

Accrued Benefits in Vietnam

Why use Global Expansion to hire in Vietnam

Establishing a branch office or subsidiary in Vietnam can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Vietnam labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Vietnam law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Vietnam. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Vietnam Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.