Employer of Record Guide in Vietnam
Vietnam's dynamic economy and skilled workforce make it an attractive destination for global expansion, but navigating local employment laws requires expertise. Our comprehensive guide helps you hire compliantly and unlock access to Southeast Asia's fastest-growing talent market.
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Vietnam's thriving tech sector and strategic location have created a competitive landscape for in-demand skills like software development and digital marketing. Understanding the local market dynamics—from Ho Chi Minh City's startup ecosystem to the country's progressive tax structure—is essential for successful hiring.
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Your EOR guide in Vietnam
Getting payroll, benefits, and compliance right in Vietnam requires navigating regional wage variations, mandatory social contributions, and cultural nuances that impact your hiring success. This guide breaks down the essential requirements every global employer needs to know.
Minimum Wage
Vietnam operates a regional minimum wage system with four distinct zones based on economic development levels. The minimum wage varies significantly between urban centres and rural areas.
| Region | Monthly Minimum Wage (VND) | Effective Date |
|---|---|---|
| Region I (Major cities: Hanoi, Ho Chi Minh City) | 4,680,000 | July 1, 2024 |
| Region II (Urban districts, provincial cities) | 4,160,000 | July 1, 2024 |
| Region III (Provincial towns, districts) | 3,640,000 | July 1, 2024 |
| Region IV (Rural and remote areas) | 3,250,000 | July 1, 2024 |
Note: Minimum wage rates are reviewed annually by the National Wage Council and adjusted based on economic conditions and cost of living.
Payroll Cycle
- Monthly: Most common payment frequency, typically paid by the 15th of the following month
- Bi-weekly: Less common but permitted under Vietnamese labour law
- Weekly: Rare, typically only for daily wage workers
Note: Employers must pay salaries no later than 15 days after the end of the pay period.
Individual Income Tax
Vietnam operates a progressive tax system for resident individuals:
| Monthly Income (VND) | Tax Rate |
|---|---|
| Up to 5,000,000 | 5% |
| 5,000,001 to 10,000,000 | 10% |
| 10,000,001 to 18,000,000 | 15% |
| 18,000,001 to 32,000,000 | 20% |
| 32,000,001 to 52,000,000 | 25% |
| 52,000,001 to 80,000,000 | 30% |
| Over 80,000,000 | 35% |
Tax Residency Criteria
Individuals are considered Vietnamese tax residents if they:
- Reside in Vietnam for 183 days or more in a calendar year, or
- Have a permanent residence in Vietnam
Tax residents pay Vietnamese income tax on worldwide income, while non-residents only pay tax on Vietnamese-sourced income.
Employer Payroll Contributions
Vietnamese employers must contribute to mandatory social insurance schemes in addition to the employee's gross salary:
| Contribution Type | Employer Rate | Employee Rate | Total Rate |
|---|---|---|---|
| Social Insurance | 17.5% | 8% | 25.5% |
| Health Insurance | 3% | 1.5% | 4.5% |
| Unemployment Insurance | 1% | 1% | 2% |
| Trade Union Fee | 2% | 1% | 3% |
| Total Employer Cost | 23.5% | 11.5% | 35% |
Note: Contribution rates are calculated on the employee's gross salary, subject to maximum contribution caps set annually by the government.
Working Hours
The standard working schedule in Vietnam is:
- 8 hours per day, 48 hours per week for normal working conditions
- 6 days per week is the standard work schedule
- Night work: 10 PM to 6 AM (with additional compensation requirements)
Certain categories of employees in hazardous or difficult conditions may have reduced working hours as specified by Vietnamese labour law.
Overtime Pay
- Weekday overtime: 150% of regular hourly rate for hours beyond 8 per day
- Weekend overtime: 200% of regular hourly rate
- Holiday overtime: 300% of regular hourly rate plus holiday pay
- Night work premium: Additional 30% of daytime rate
- Maximum overtime: 200 hours per year (300 hours with government approval)
Bonus Payments
Vietnamese labour law requires a 13th month bonus (Tet bonus) equivalent to at least one month's salary, typically paid before the Lunar New Year. Additional performance bonuses are common but not legally mandated.
Full-Time vs. Part-Time
- Full-time: Employees working the standard 48 hours per week
- Part-time: Employees working fewer than 48 hours per week (minimum 4 hours per day)
- Temporary contracts: Maximum duration of 12 months for seasonal work
Annual Leave
- Standard entitlement: 12 days per year for employees with less than 5 years of service
- Increased entitlement: 14 days per year for employees with 5-10 years of service
- Maximum entitlement: 16 days per year for employees with over 10 years of service
- Additional leave: 1 extra day per year for employees working in hazardous conditions
- Payout rules: Unused annual leave must be compensated upon termination
Sick Leave
- Paid sick leave: Covered by social insurance at 75% of average salary
- Duration: Up to 180 days per year for treatment
- Medical certification: Required from licensed medical facilities
- Chronic illness: Extended leave available for serious medical conditions
Maternity Leave
- Duration: 6 months (26 weeks) of paid maternity leave
- Prenatal leave: Up to 5 days for medical check-ups
- Caesarean delivery: Additional 15 days of leave
- Multiple births: Additional 30 days per additional child
- Compensation: 100% of average salary paid by social insurance
Paternity Leave
- Duration: 5 days of paid paternity leave
- Timing: Must be taken within 30 days of the child's birth
- Compensation: 100% of salary paid by the employer
Adoption Leave
- Duration: 6 weeks of paid leave for adopting children under 6 months old
- Reduced leave: 30 days for adopting children aged 6 months to 6 years
- Compensation: Paid by social insurance
Other Statutory Leave
- Bereavement leave: 3 days for immediate family members
- Marriage leave: 3 days for the employee's own wedding
- Study leave: Time off for approved professional development
- Military service: Extended leave for mandatory military obligations
Summary
| Leave Type | Duration | Compensation | Funding Source |
|---|---|---|---|
| Annual Leave | 12-16 days/year | 100% | Employer |
| Sick Leave | Up to 180 days | 75% | Social Insurance |
| Maternity Leave | 6 months | 100% | Social Insurance |
| Paternity Leave | 5 days | 100% | Employer |
| Bereavement | 3 days | 100% | Employer |
| Marriage Leave | 3 days | 100% | Employer |
Termination Types
Termination with Cause:
- Serious misconduct or repeated violations
- No notice period or severance required
- Must follow proper disciplinary procedures
Termination without Cause:
- Economic reasons or restructuring
- Requires advance notice and severance pay
- Must demonstrate legitimate business reasons
Notice Period Requirements
Notice periods vary based on contract type and length of service:
| Contract Type | Notice Period |
|---|---|
| Indefinite term contracts | 45 days |
| Fixed-term contracts (12-36 months) | 30 days |
| Fixed-term contracts (less than 12 months) | 3 days |
| Probationary period | 3 days |
Severance Pay
Severance pay is required for employees with indefinite contracts terminated without cause:
| Length of Service | Severance Pay |
|---|---|
| 12 months to under 3 years | 1 month's salary |
| 3 years to under 5 years | 1.5 months' salary |
| 5 years to under 10 years | 2 months' salary |
| 10+ years | 2.5 months' salary |
Probationary Periods
- Managers/technical roles: Up to 60 days
- Skilled workers: Up to 30 days
- Other employees: Up to 6 days
- Seasonal workers: Up to 6 days
Final Pay Requirements
Employers must settle all outstanding payments within 7 days of termination, including:
- Final salary and overtime
- Unused annual leave compensation
- Severance pay (if applicable)
- Any other contractual benefits
Legal Protections
Employees cannot be terminated for:
- Pregnancy or maternity leave
- Trade union activities
- Filing labour complaints
- Refusing to work in unsafe conditions
- Discrimination based on gender, religion, or ethnicity
National Public Holidays
Vietnam observes both traditional Vietnamese holidays and international celebrations:
| Holiday | Date | Duration |
|---|---|---|
| New Year's Day | January 1 | 1 day |
| Lunar New Year (Tet) | Late January/February | 5 days |
| Hung Kings' Day | 10th day of 3rd lunar month | 1 day |
| Liberation Day | April 30 | 1 day |
| International Labour Day | May 1 | 1 day |
| National Day | September 2 | 2 days |
Regional Variations
Some regions may observe additional local holidays or extend national holidays based on local customs and government decisions.
Holiday Pay Rules
- Working on holidays: Employees receive 300% of regular pay plus a compensatory day off
- Eligibility: All employees are entitled to holiday pay regardless of length of service
- Substitute holidays: If a holiday falls on a weekend, the following Monday typically becomes a public holiday
Tet Holiday Considerations
The Lunar New Year (Tet) is Vietnam's most important holiday:
- Extended closure: Many businesses close for 7-10 days
- Bonus requirements: 13th month salary must be paid before Tet
- Travel considerations: Significant population movement affects business operations
Required Documentation
Employment Contract Requirements:
- Job description and responsibilities
- Salary and benefit details
- Working hours and location
- Probationary period terms
- Termination clauses
Government Registration:
- Work permit (for foreign employees)
- Labour contract registration with local authorities
- Social insurance registration
- Personal income tax registration
Work Authorization
Vietnamese Citizens:
- National ID card or passport
- Educational certificates
- Health check certificate
Foreign Employees:
- Valid passport with appropriate visa
- Work permit issued by Vietnamese authorities
- Criminal background check from home country
- Health certificate from approved medical facility
- Educational credential verification
Legal Compliance
Data Protection:
- Employee consent for personal data collection
- Secure storage of employee information
- Compliance with Vietnamese cybersecurity laws
Contract Registration:
- All labour contracts must be registered with local labour authorities
- Registration must occur within 30 days of contract signing
- Failure to register can result in penalties
Onboarding Timeline
| Step | Timeline |
|---|---|
| Job offer acceptance | Day 0 |
| Work permit application (foreigners) | 15-20 days |
| Employment contract signing | Day 1-3 |
| Government registration | Day 5-10 |
| Social insurance enrollment | Day 7-14 |
| Payroll system setup | Day 10-15 |
Cultural Considerations
Communication Style:
- Hierarchical respect is important
- Indirect communication is common
- Face-saving is culturally significant
Workplace Customs:
- Formal address for senior colleagues
- Group harmony over individual achievement
- Relationship-building is essential for business success
Worker Classification
Vietnamese labour law distinguishes between employees and independent contractors:
Employees:
- Work under employer supervision and control
- Receive regular salary and benefits
- Protected by labour law provisions
- Subject to social insurance contributions
Independent Contractors:
- Provide services under civil contracts
- Invoice for services rendered
- Not covered by labour law protections
- Responsible for their own tax obligations
Note: Misclassification can result in significant penalties and back-payment of social insurance contributions.
Trade Unions and Collective Bargaining
Vietnam has a single trade union system under the Vietnam General Confederation of Labour:
- Workplace unions: Most enterprises with 10+ employees must establish trade union organisations
- Union fees: 2% employer contribution, 1% employee contribution
- Collective bargaining: Required in enterprises with trade unions
- Worker representation: Unions participate in workplace decisions affecting employees
Anti-Discrimination Laws
Vietnamese labour law prohibits discrimination based on:
- Gender and pregnancy status
- Race and ethnicity
- Religion and political beliefs
- Disability status
- Age (with some exceptions for retirement)
Remote Work Considerations
Remote work arrangements in Vietnam require:
- Written agreements: Clear policies on working hours and expectations
- Equipment provision: Employer responsibility for necessary tools
- Health and safety: Compliance with occupational safety standards
- Tax implications: Proper handling of tax obligations for remote workers
Cross-border remote work for foreign companies may require special work permits and tax registrations.
Industry-Specific Regulations
Certain industries have additional requirements:
- Manufacturing: Enhanced safety regulations and environmental compliance
- Technology: Data localisation requirements for certain types of data
- Financial services: Strict licensing and regulatory oversight
- Healthcare: Professional licensing and certification requirements
What We Handle
Borderless AI manages all aspects of Vietnamese employment compliance:
- Employment contract drafting and registration
- Work permit processing for foreign employees
- Payroll processing and tax compliance
- Social insurance enrollment and management
- Government reporting and regulatory compliance
- Local HR support and employee relations
Built-in benefits packages for Vietnam
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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