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 is one of the easiest ways to stay compliant and keep up with evolving laws. 

Vietnam employer of record services, like Payoneer Workforce Management (WFM), can help with handling the employee lifecycle on your behalf. Find out more about how Payoneer WFM 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 handles the employee management cycle for you, while helping you stay compliant with 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 handle the compliance side of recruitment for you. With this support, you can hand over the complex and time-consuming task of keeping up-to-date with evolving local labor laws and concentrate on finding the best talent for your business.

Payoneer WFM 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 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

Local labor law in Vietnam allows each business to choose its own payroll cycle. However, 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.

Article 97 of the Labor Code explains that employers can either be paid hourly, daily, weekly, fortnightly, or monthly, as long as both the employee and employer agree to the regular schedule.

Employees should receive at least their regional minimum wage. 

Paying a TET 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 tax deductions in Vietnam. These include income tax and social security deductions.

Using an EOR is an easy and effective way to pay employees while staying compliant. 

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: Should not exceed 50% of the employee’s normal working hours in 1 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, which is equivalent to just under $90. 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)	Minimum wage per month ($)
1	4,960,000	196
2	4,410,000	175
3	3,860,000	153
4	3,450,000	137

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. 

The easiest way to do this is with the support of an employer of record in Vietnam.

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
• 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

Leave policy in Vietnam

It’s important that you 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: Most employees are entitled to up to 30 days of paid sick leave per year.
• 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.

Work permit in Vietnam

Foreign nationals who wish to live and work in Vietnam for more than 3 months need a work permit. They also need to meet the following conditions:

• Full legal capacity: They must be over 18 and legally responsible for themselves.
• Good health: They need to be healthy enough to take on the job role.
• No criminal background: They must not have a criminal record or be under criminal investigation, either in Vietnam or abroad.
• Qualified for the role: They must either be an expert, technician, executive, or manager as outlined in Decree 152/2020/NĐ-CP, Article 3.

An employer applies for a work permit on the employee’s behalf. They first need to get permission from the Ministry of Labor or the People’s Committee to hire a foreign national.

With that granted, they can then apply for a work permit from the Ministry or the local labor department. 

Background check in Vietnam

It is legal to run employee background checks in Vietnam. 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 2 weeks’ salary for every year they have worked for you.

Company registration in Vietnam

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

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.

For many U.S.-based companies, it’s easier to hire local talent through an EOR in Vietnam.

PEO in Vietnam

EOR services in Vietnam are usually the best 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.

For businesses looking to create an international workforce without the hassle of incorporating abroad, an EOR like Payoneer WFM is one of the best solutions to go ahead with.

Payoneer WFM: Leading 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 WFM can help you stay compliant.

We’ll support with everything from onboarding new hires quickly and compliantly without a local entity to running global payroll.

Experience one of the best EOR services Vietnam has to offer. With Payoneer WFM by your side, complying with local labor laws becomes simpler.

FAQs about the Vietnam employer of record 

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 recruitment 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?

Yes. It’s allowed for employers to conduct background checks in Vietnam. Common background checks in Vietnam include identity checks, education checks, employment history checks, and reference checks.