Hire Employees in Vietnam

Your own entity may be a representative office or a limited liability company, and the difference is decisive. A representative office is quick to establish but cannot generate revenue or sign commercial contracts. An LLC can trade, but investment registration, capital contribution and tax registration take two to four months before the first payroll can run.

An Employer of Record inverts the sequence: the Vietnamese entity signs the labour contract, registers the employee for social, health and unemployment insurance, withholds personal income tax and pays the trade union fee — while you direct the day-to-day work.

Whichever route you take, the obligations are the same. Vietnamese labour law applies to work performed in Vietnam regardless of where the employing company sits, and a contract governed by foreign law does not displace it.

The threshold question in Vietnam is whether you need a legal presence at all, and the honest answer is that you need one sooner than in most of Asia. A representative office is quick to establish but cannot generate revenue or sign commercial contracts, which makes it a poor vehicle for anything beyond market research and liaison. A limited liability company can trade, but investment registration, capital contribution and tax registration realistically take two to four months before the first payroll can run.

That gap is what an EOR fills. It also absorbs the two things foreign employers most often get wrong here: the contribution base and the trade union fee. Contributions run to 21.5% of the declared base, or 23.5% once the 2% union fee is counted — and that fee is payable whether or not a union exists at the workplace, which surprises employers who read it as optional.

Contracting is the model to avoid. Vietnamese labour authorities look at how the relationship actually operates, not what the agreement calls it, and reclassification brings back-contributions on the full base plus penalties. The exposure compounds because the base is uncapped for the union fee and capped at VND 46,800,000 a month for social and health insurance, so a senior contractor reclassified after two years generates a substantial and immediate liability.

The practical rule: use an EOR while headcount is under roughly fifteen or while the commercial model is still being proven. Incorporate once you need to invoice locally, hold inventory, or employ people whose work involves concluding contracts in Vietnam.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Vietnamese entity somewhere between 15 and 20 employees. Model both before committing — see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Contributions total 21.5% of the declared base, or 23.5% once the trade union fee is counted. Social insurance is 17.5%, health insurance 3% and unemployment insurance 1%, with the first two capped at VND 46,800,000 a month and unemployment capped at twenty times the regional minimum wage.

The trade union fee is 2% of the social insurance base and is payable whether or not a union exists at the workplace. Employers who read it as conditional on union presence under-contribute from the first month.

The declared base is where enforcement concentrates. It must reflect the contractual salary including salary-nature allowances, not a nominal figure chosen for convenience. Because the same base drives severance and unemployment entitlements, an under-declaration creates exposure in three directions simultaneously.

Two separate ceilings apply and they sit at very different levels. Social and health insurance cap at 20 times the base salary — VND 46,800,000 a month — while unemployment insurance caps at 20 times the regional minimum wage, reaching VND 106,200,000 in Region I. Applying one ceiling across both is a real error. Note also that foreign employees with work permits contribute to social and health insurance but are exempt from unemployment insurance, and that the base salary rises to VND 2,530,000 on 1 July 2026, lifting the first ceiling mid-year.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data — use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Because the main charges are capped, the on-cost percentage falls sharply above the ceiling. Model a senior hire explicitly rather than scaling the junior figure — the error runs in your favour but it distorts the comparison against uncapped markets.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in dong. Social, health and unemployment insurance are remitted together, and personal income tax is withheld and declared monthly or quarterly depending on the employer’s size.

Personal income tax is progressive from 5% to 35% across seven bands, with a personal deduction and an additional deduction for each registered dependant. Dependants must be registered with the tax authority to be claimed, and the registration is the employee’s responsibility but the employer’s problem when it is missed.

There is no statutory thirteenth month, but a Tet bonus of at least one month is near-universal market practice and is treated as expected rather than discretionary. Foreign employers who omit it face retention problems in the first quarter rather than a legal claim.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved — none apply on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written contract in Vietnamese is required. Where a bilingual version is used the Vietnamese text governs, and the contract must be signed before work begins.

Vietnam recognises two contract types since the 2019 Labour Code: indefinite, and definite-term of up to 36 months. A definite-term contract may be renewed only once; a second renewal converts the relationship to indefinite by operation of law, taking the notice and severance position with it.

Probation is capped by role: 180 days for enterprise managers, 60 days for roles requiring a college qualification, 30 days for intermediate roles and 6 working days for everything else. Probation pay must be at least 85% of the full rate, and it may be used only once per role with the same employer.

The standard limit is eight hours a day and 48 a week, with the state encouraging a 40-hour week. Overtime is voluntary, requires the employee's consent, and is capped at 50% of normal daily hours, 40 hours a month and 200 hours a year — extendable to 300 in specified sectors.

Premiums are statutory: 150% on a normal working day, 200% on a weekly rest day, 300% on a public holiday or paid leave day, and an additional 30% for night work between 10pm and 6am.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise — reconstructing records after a complaint is far harder than keeping them.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies — some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 11 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Vietnam observes 11 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 6 months, extendable by 1 month per additional child — 100% of the average insured salary for the preceding 6 months, paid by social insurance, not the employer. Paternity: 5 to 14 working days depending on the birth — 100% of the insured salary, paid by social insurance. Sick leave: 30 to 70 days a year depending on service and job category — 75% of the insured salary, paid by social insurance from day one; the employer does not pay. Marriage of the employee: 3 days — Full pay, employer-funded.

Marriage of a child: 1 day — Full pay, employer-funded. Death of a parent, spouse or child: 3 days — Full pay, employer-funded.

Vietnam does not permit at-will termination. An employer may end an indefinite contract only on a ground listed in the Labour Code — repeated failure to perform, prolonged illness, force majeure, restructuring or similar — and the process matters as much as the ground. Notice is 45 days for an indefinite contract, 30 days for a definite-term contract of 12 to 36 months, and 3 working days for shorter terms.

Severance allowance is half a month's salary per year of service, payable where the employee has worked at least 12 months. It is reduced by any period covered by unemployment insurance, which for most modern employment means the statutory severance often nets to little — but the calculation must still be performed, and periods before unemployment insurance registration are not covered.

Redundancy carries an additional obligation: a labour usage plan must be prepared in consultation with the grassroots trade union and notified to the provincial labour authority 30 days before implementation. Skipping that step makes the dismissals unlawful regardless of the commercial justification.

A foreign national needs a work permit before beginning work, and it is tied to the employer, the role and the location. The employer must first obtain approval of the demand for foreign labour from the provincial People’s Committee, which is a separate step preceding the permit application.

Allow two to three months end to end. Documents including the criminal record certificate and qualifications must be legalised and translated, and the timeline is driven by that rather than by processing.

Certain roles are exempt, including some intra-corporate transferees and short assignments under 30 days. Those exemptions are narrower than they appear and still require a confirmation of exemption rather than simply proceeding.

The pattern in Vietnam is that enforcement follows the contribution base rather than headcount. Under-declaring salary is the most common finding in labour inspections, and because the base also drives severance and unemployment entitlements it creates exposure in three directions at once.

The trade union fee is the second recurring failure. At 2% of the social insurance base it is not trivial, and it applies regardless of whether a union has been established at the workplace.

Practical controls: declare the full contractual salary, pay the union fee from month one, keep work permits current for every foreign national, and record overtime against the statutory caps of 40 hours a month and 200 a year — 300 in permitted sectors, and only with the employee’s consent.

Work backwards from the start date. For a Vietnamese national through an EOR, one to two weeks is realistic. For a foreign national, add two to three months for the work permit, which must be issued before the employee begins work rather than during onboarding.

Confirm three things before making an offer: whether the candidate needs a work permit and qualifies for one, what the full declarable salary will be for contribution purposes, and whether the role will involve signing contracts locally — which raises permanent establishment questions that an EOR does not resolve.

Social, health and unemployment insurance registration must be complete before the first payroll. The employer is liable for benefits an unregistered employee would have received, so late registration is not merely a filing penalty.