Employment laws in Vietnam

Vietnam is one of Southeast Asia’s fastest-growing economies, making it an increasingly attractive destination for businesses looking to hire. For businesses looking to scale operations in the region, Vietnam presents a compelling opportunity, but one that comes with a clear set of legal responsibilities.

The employment laws in Vietnam set strict obligations for every employer operating in the country, covering everything from employment contracts and working hours to employee benefits and termination. 

In this guide, we cover everything you need to know about labor laws in Vietnam, from contract types and working hours to statutory benefits, termination rules, and employee rights.

Key employment laws in Vietnam

Here are some important elements covered by the employment laws in Vietnam that employers need to be aware of:

• Employment contracts, working hours, leave, and termination rules
• Probation periods and notice requirements during and after probation
• Regional minimum wage set by provincial governments and social partners
• Mandatory social insurance, public health insurance (PHI), and benefits managed through VSS (Vietnam Social Security)

Contract employment laws in Vietnam

An employment contract in Vietnam is a formal agreement that legally defines the working relationship between an employer and an employee. It defines the terms of paid work, including salary, working conditions, and the rights and obligations of both parties. 

Notably, Vietnamese labor law recognizes any document as an employment contract if it contains these core elements, regardless of what it is called. 

As an employer, you are also legally required to establish this contract before a new candidate begins work. 

Types of employment contracts

There are mainly two types of employment contracts in Vietnam:

1. Indefinite-term contract: This type of contract has no fixed end date or termination timeline. Neither the employer nor the employee is bound to a set duration, making it the most common choice for long-term, permanent employment relationships.
2. Fixed-term contract: A contract with a defined duration agreed upon by both parties. It can last up to 36 months from the date the contract is signed, making it suitable for project-based or temporary hiring needs.

Essential contract terms

An employer is required to mention the following information in the employment contract: 

Here’s the list:

Details of both parties (employee and employer)

• Employer’s full name, address, and representative’s name and title as per business registration
• Employee’s full name, date of birth, gender, place of residence, and ID or passport number

Contract terms

• Type of employment contract (fixed-term or indefinite)
• Contract duration and start date
• Terms for salary promotion and increases

Job and working conditions

• Job description and duties
• Designated workplace or multiple locations
• Working hours and rest breaks
• Personal protective equipment provided

Compensation

• Base salary broken down by job or title
• Allowances and bonuses
• Payment method and schedule

Minimum wage in Vietnam

Vietnam does not have a single national minimum wage. Instead, the government sets regional minimum wages in Vietnam that vary based on where a business operates. 

These rates are reviewed and determined annually by the government in consultation with the National Wage Council and social partners. 

Working hours in Vietnam 

The normal working hours in Vietnam are fixed at a maximum of 48 hours per week (8 hours a day).

If an employee is working for more than the mentioned working hours, they are eligible for overtime pay. The overtime working hours are also capped at 4 hours a day. 

For overtime pay rates, you can refer to the government regulations.

Mandatory benefits 

According to labor laws in Vietnam, all employees in Vietnam are entitled to the following mandatory benefits. 

• Social insurance (SI): This includes retirement pensions, disability benefits, survivor benefits, sickness benefits, maternity benefits, benefits for workplace accidents, and benefits for occupational diseases.
• Health Insurance (HI): It includes medical examination benefits, hospitalization benefits, outpatient benefits, and benefits for chronic diseases.
• Unemployment Insurance (UI): This provides benefits for loss of employment. It only applies to Vietnamese employees, not foreign employees.
• Annual leave: All employees are entitled to paid annual leave, which increases with years of service. Employees are entitled to a minimum of 12 days per year, increasing by one additional day for every 5 years of service with the same employer.
• Sick leave: All employees are entitled to paid sick leave based on their social insurance contribution history. Employees who have contributed for under 15 years are entitled to 30 days per year, rising to 40 days for 15–30 years of contributions, and 60 days for over 30 years.
• Public holidays: All employees are entitled to 11 paid public holidays per year.
• Maternity leave: All female employees are entitled to 6 months of paid maternity leave. The employee will be paid by the social insurance.
• Paternity leave: All male employees whose spouse has given birth are entitled to paid paternity leave ranging from 5 to 14 days. The duration depends on the birth circumstances:
  • 5 days for a normal birth
  • 7 days for caesarean or premature birth
  • 10–14 days in the case of multiple births
• Childcare leave: All employees are entitled to paid leave to care for a sick child under 7 years of age. The leave allowance is up to 20 days per year for children under 3, and up to 15 days per year for children between 3 and 7 years of age, covered by VSS up to 75% of the salary.
• Personal leave: All employees are entitled to paid personal leave for key life events. Employees are granted 3 days for their own wedding, 1 day for the wedding of a child, and 3 days upon the death of a parent, spouse, or child.

Termination

Employment can be terminated in several ways, as per the termination laws in Vietnam. 

An employee may choose to resign, or both parties may agree to end the employment together. Termination can also happen during the probationary period. In addition, you may terminate an employee for reasons such as misconduct, poor performance, or absence without leave.

Notice period

Once an employee is terminated, they are required to serve the notice period in Vietnam. 

During the probationary period, either party may terminate the probation or employment contract at any time without prior notice or compensation.

Once the probationary period has concluded, the required advance notice depends on the contract type:

Severance pay

The following is the severance pay in Vietnam:

Navigate employment laws in Vietnam with trusted support

The employment laws in Vietnam are based on the comprehensive Labor Code, mandatory social insurance, and stringent protection for workers. 

Employment contract management, social contributions, probationary periods, and compliance can be a tedious task.

Payoneer Workforce Management helps you streamline the process. 

Our Employer of Record (EOR) solutions help you engage with local talent, manage payroll, employment contracts, benefits administration, tax compliance, and social insurance management, all without the need to set up a local entity.

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FAQs

1. What is the employment policy in Vietnam?

The employment policy in Vietnam is relatively more focused on safeguarding the rights of employees. In addition, foreign workers working in Vietnam, as per Vietnamese laws, may require work permits and visas.

2. How many paid vacation days are there in Vietnam?

Employees earn 12 days of paid annual leave after completing one year of service. This allowance grows by one day for every five years spent with the same employer.

3. What is the notice period for employees in Vietnam?

The notice period for employees in Vietnam is 30 to 45 days, depending on the nature of their employment contract.

4. Is the 13th-month salary compulsory in Vietnam?

No, it is not mandatory to give a 13th-month salary in Vietnam as per the Labor Law 2019. However, some employers do offer a 13th-month salary to attract local talent. 

5. How much do employees in Vietnam get paid per hour?

The minimum monthly wage varies by region, set at VND 4,960,000 in Region I, VND 4,160,000 in Region II, VND 3,640,000 in Region III, and VND 3,250,000 in Region IV.