Using an employer of record in Vietnam

All foreign employers, U.S.-based or otherwise, hiring in Vietnam must comply with local labor and employment laws. Working with an Employer of Record (EOR) in Vietnam helps streamline the process with compliance support. 

Vietnam employer of record services, like Payoneer Workforce Management, can help with handling the employee lifecycle on your behalf. Find out more about how Payoneer can support your business.

Continue reading to learn what a Vietnam EOR does.

How to hire employees in Vietnam

There are three ways to hire remote employees in Vietnam.

1. Set up a local entity: This allows international businesses to operate smoothly within Vietnam, but it can be both expensive and time-consuming.
2. Use independent contractors: This option offers more flexibility for cross-border hiring. However, you must avoid misclassifying other contractors as employees, as it leads to fines and penalties.
3. Hire via a Vietnam employer of record: An EOR helps handle the employee lifecycle for you, with compliance support as per local labor laws.

Partnering with an employer of record in Vietnam

An EOR acts as the legal employer for your international employees. This means you don’t need to set up a legal entity in the country to bring them on board.

EOR solutions in Vietnam also help manage compliance requirements and reduce administrative tasks.

Payoneer Workforce Management offers Vietnam EOR services. Find out more about how we can help your business.

How to onboard employees in Vietnam

If you’re planning to onboard a new remote employee in Vietnam, make sure you’ve followed the steps below to stay compliant.

• Add to payroll: You should pay your Vietnamese employees in Vietnamese Dong (VND).
• Enroll in benefits and social insurance schemes: Your benefits packages should comply with local labor laws in Vietnam. You also need to enrol your employee in mandatory social insurance schemes.
• Configure work devices: Order any devices your employee needs. You should also set up logins for all required online accounts.
• Introduction to team and colleagues: Schedule time for team introductions in your employee’s first week so that they can get to know their new colleagues.

Pay employees in Vietnam

Payroll in Vietnam is processed monthly in Vietnamese Dong (VND). A company has to share its pay scale, payroll systems, and labor productivity norms openly and transparently in the workplace, as well as within employee contracts.

Employees should receive at least their regional minimum wage.

Paying a Tết bonus (a financial bonus given during the Vietnamese Lunar New Year) is also common practice in Vietnam. These bonuses are not a legal obligation, but are often expected.

As an employer, you must also consider mandatory deductions in Vietnam, including Social Insurance, Health Insurance, Unemployment Insurance, and Personal Income Tax.

Employment laws in Vietnam

In Vietnam, the Labor Code governs all local employment laws. This legislation was first established in 1994 and was most recently updated in 2019.

• Working hours: Should not exceed 8 hours per day or 48 hours per week
• Overtime: Overtime cannot exceed 4 hours per day
• Probation period: Should not exceed 60 days for positions requiring a junior college degree or above
• Rest days: At least 24 consecutive hours per week

Minimum wage in Vietnam

The common minimum wage in Vietnam is VND 2,340,000 per month. However, this only applies to employees working for state-owned organizations.

For employees working in non-state enterprises, regional minimum wage rates apply:

Region	Minimum wage per month  (VND)
1	4,960,000
2	4,160,000
3	3,640,000
4	3,250,000

Minimum wages in Vietnam are reviewed and adjusted periodically to align with inflation and the cost of living, so it’s important that you keep up with the latest rates to stay compliant. 

Employment contracts in Vietnam

There are two types of employment contracts in Vietnam. These are laid out in the country’s Labor Code, which was last revised in 2019.

• Indefinite-term employment contracts: Neither the length nor the time of termination of the contract is fixed.
• Fixed-term employment contracts: The length of the employment contract is agreed in advance, up to a maximum of 36 months.

Vietnam’s Labor Code states that an employment contract must be in writing, unless it’s less than 1 month long. In this instance, the contract can be oral. However, it’s still best to have a written contract in place, too.

When creating an employment contract in Vietnam, you must include the following:

• Employer’s name and address
• Employee’s full name, date of birth, gender, and residence
• Employee’s identity card number or passport number
• Job role and workplace
• Probation terms
• Duration of the employment contract
• Salary and form of salary payment
• Payment due date for salary, allowances, and other additional payments
• Regimes for promotion and pay rise
• Working hours and rest periods
• Personal protective equipment for the employee
• Social insurance, health insurance, and unemployment insurance
• Training information
• Occupational skill development
• Notice period

Leave policy in Vietnam

You must comply with local leave policies when hiring in Vietnam. These include:

• Public holidays: Employees in Vietnam are entitled to 11 paid public holidays.
• Vacation leave: Employees who have been working for you for 12 months or more under normal working conditions are entitled to 12 working days of paid vacation. This increases by 1 day for every 5 years they work for you.
• Sick leave: Employees are entitled to 30–60 days of paid sick leave per year, depending on social insurance contributions.
• Maternity leave: Female employees are entitled to 6 months of paid maternity leave, covered by the Social Insurance Fund.
• Other: Vietnam also has policies for marriage and bereavement leave.

Background check in Vietnam

It may be legal to run employee background checks in Vietnam with written consent. While these checks are not mandatory, they’re a helpful way to ensure that your new employee is who they say they are. 

However, you must gain explicit written consent from the employee before running any background checks in Vietnam. 

Some of the most common types of background checks in Vietnam include:

• Identity check
• Education history check
• Employment history check
• Reference check
• Credit check

Employment termination in Vietnam

You have to give notice to terminate an employee’s contract. The length of the notice depends on the conditions of the employment contract.

Contract type	Notice period
Indefinite-term	45 days
Fixed-term (12 to 36 months)	30 days
Fixed-term (up to 12 months)	3 days

If the employee has worked for you for 12 months or more, they are entitled to severance pay equal to half a month’s salary for each year of service.

Company registration in Vietnam

You may be considering registering your company in Vietnam to hire local employees. While this is a complex process, it might be a good fit for your company if you’re looking to build a significant presence in Vietnam.

To register a business in Vietnam, you need to:

• Obtain an Investment Registration Certificate (IRC)
• Obtain an Enterprise Registration Certificate (ERC)
• Get incorporated
• Make and register your company seal
• Register the tax code with the tax department

If you’re a foreign investor, you may also need an Investment License and a work permit. However, for many U.S.-based companies, it may be simpler to hire local talent through an EOR in Vietnam.

PEO in Vietnam

EOR services in Vietnam are an effective solution for U.S. businesses building an international workforce. However, you may also come across Professional Employer Organizations (PEOs) in Vietnam. 

While a PEO is a good option for outsourcing HR support, it can’t act as your local employees’ legal employer, which means you’d still need to set up a local entity in Vietnam to hire there.

Payoneer Workforce Management’s employer of record services in Vietnam

If you’re looking to hire employees in Vietnam, consider using EOR solutions.

Vietnam’s local labor and employment laws can be complex to understand, but EOR Vietnam services like Payoneer Workforce Management help manage compliance requirements. We assist with onboarding and payroll without requiring a local entity.

Book a demo to learn more.

FAQs 

1) What is an employer of record in Vietnam?

A Vietnam EOR acts as the legal employer to your employees based in the country and handles the management and compliance side of onboarding on your behalf.

2) What is the payroll system in Vietnam?

In Vietnam, employees are usually paid monthly. Employers must also consider mandatory deductions such as personal income tax and contributions to social insurance, health insurance, and unemployment insurance, as per local labor laws.

3) Does Vietnam allow employers to do a background check?

It may be allowed for employers to conduct background checks in Vietnam with written consent. Common background checks in Vietnam include identity checks, education checks, employment history checks, and reference checks.