Planning to hire employees in Vietnam? Here’s a quick guide

For international employers looking to hire abroad, Vietnam has a highly skilled, cost-effective talent market. Beyond its skilled workforce, Vietnam is home to a business-friendly government, a strong technical and digital industry, and an expanding workforce. For American companies, hiring in Vietnam is also ideal because the local professionals tend to have strong proficiency in English. 

We’ll cover how to engage employees in Vietnam, including the common methods, any vital legal requirements, employment contracts, benefits, payroll, and how an Employer of Record (EOR) like Payoneer Workforce Management can streamline the process, without the need to set up a local entity. 

How to hire in Vietnam

American companies engaging talent in Vietnam have three main pathways to consider. 

1) Set up a legal entity in Vietnam

Forming a local entity gives companies complete control and autonomy in employment decision-making. You can hire, onboard, and manage employees directly in Vietnam. However, registering a legal entity in Vietnam can be an expensive and time-consuming process. 

It can take anywhere between 3 and 6 months to register and license your business in Vietnam, plus you’ll need the help of legal counsel and to take on the responsibility of ongoing compliance. 

This route may make sense if you want to build a long-term presence in Vietnam, but it isn’t ideal for fast, flexible expansion. 

2) Hire contractors in Vietnam

If you’re looking to hire in Vietnam, hiring contractors may be a good choice for short-term or project-based work. This method is flexible and quick, but it comes with significant risk. Misclassifying workers as independent contractors when they actually function as employees can lead to severe consequences for companies.

3) Use an Employer of Record (EOR)

An Employer of Record legally employs workers on behalf of businesses that are based abroad. Partnering with an EOR enables international companies to engage international employees quickly and efficiently. 

The EOR acts as your legal employer in Vietnam, while your company directs the day-to-day work without setting up a legal entity. This option helps reduce the legal risk of engaging talent abroad because EORs like Payoneer Workforce Management offer compliance support with local labor laws. 

Learn more about using an Employer of Record in Vietnam.

Where to find employees in Vietnam

One of the most important steps of engaging talent in Vietnam is sourcing suitable candidates. Here are the key ways companies recruit workers in Vietnam. 

Popular job boards in Vietnam

Online job boards are great ways to advertise open roles. To reach candidates in Vietnam, consider posting on some local job boards. Popular places to advertise vacancies in Vietnam include:

• VietnamWorks
• ViecLam24h
• MyWork
• TopCV
• CareerLink Vietnam
• 123job

Work with local recruitment agencies

Vietnamese agencies can assist with hiring to accelerate recruitment and help you bridge language gaps. Agencies tend to be useful for niche or executive roles, where local market knowledge or language support may be necessary. The tradeoff, however, is a higher cost per hire and less direct control over finding candidates.

EOR support

If you’d like to retain control over candidate sourcing and selection, while outsourcing the burden of the administrative work, an EOR like Payoneer Workforce Management may be ideal. Your company leads the recruitment decisions, while the EOR helps handle employment contracts, onboarding, payroll, benefits, and compliance. 

Onboarding employees in Vietnam

Once you’ve found a suitable candidate, the next step to engage talent in Vietnam is onboarding. Here are some key steps for a compliant and smooth onboarding experience in Vietnam:

• Gather required documents: ID/passport, residence or local address, and educational certificates

• Add them to payroll and register them for personal income tax: Vietnamese employees are paid in Vietnamese Dong (VND).
• Enroll them in insurance and benefits: Including social insurance, health insurance, and unemployment insurance. 
• Configure work devices: Order any devices your employee will need and set up their logins for any required online accounts.
• Introduce them to the team: Schedule time for team introductions in your employee’s first week to get to know their new colleagues.

Using an EOR can streamline this entire process. 

Key employment laws and requirements in Vietnam

When you engage employees in Vietnam, you’ll need to abide by local labor laws. Here’s a look at key employment laws and statutory benefits in Vietnam.

Employment contracts

According to Vietnam’s Labor Code (last revised in 2019), an employment contract can be either:

• Indefinite-term: Neither the term of the contract nor the termination is fixed.
• Fixed-term: The term is fixed for a duration of up to 36 months.

If a fixed-term contract is not renewed within 30 days of expiring, it automatically converts to an indefinite contract. 

Indefinite-term contracts and fixed-term contracts with a duration longer than 1 month must be in writing. You need to create 2 copies of the contract, one for the employer and one for the employee. 

Employment contracts in Vietnam must contain the following information:

• Employer’s name and address
• Full name and position of the person who concludes the contract on the employer’s side
• The employee’s full name, date of birth, gender, residence, and identity card number or passport number
• Job title and workplace
• Duration of the employment contract
• Salary, form of salary payment, due date for payment of salary, allowances, and other additional payments
• Procedures for promotions and pay raises
• Working hours and rest periods
• Any required personal protective equipment for the employee
• Social insurance, health insurance, and unemployment insurance
• Basic training and advanced training, occupational skill development

Employee benefits

Any employees you engage in Vietnam are entitled to the following statutory benefits:

• Vacation days/paid time off: After 12 months with the company, employees are entitled to 12 working days of paid vacation. This increases by 1 day for every 5 years of service.
• Sick leave: Employees are entitled to 30–60 days of paid sick leave per year, depending on social insurance contributions.
• Maternity leave (and/or parental leave): Vietnam provides 6 months of paid maternity leave through the Social Insurance Fund.
• Public holidays: Under the Labor Code, employees are entitled to a minimum of 11 paid public holidays.
• Social insurance: The social insurance scheme in Vietnam offers pensions, health insurance, unemployment benefits, and occupational accident insurance.
• Bonuses: TET bonuses paid during the Vietnamese Lunar New Year are common and often expected, though not required by law. 

Working hours and overtime

The standard working hours in Vietnam are 8 hours per day or 48 hours per week. However, in practice, many industries, particularly those involving office-based or knowledge work, operate on a slightly shorter schedule, typically between 40 and 44 hours per week. Most businesses in Vietnam operate from Monday to Friday, assigning the weekend as a weekly rest period.

Any hours worked beyond the 48-hour weekly limit are classified as overtime and must be compensated accordingly. Vietnam has strict labor laws regarding overtime, designed to protect workers from excessive workloads and exploitation. Employees may not work more than 4 hours of overtime per day. Employers must obtain written employee consent before assigning overtime.

Tax obligations

Employers engaging talent in Vietnam are responsible for the following taxes and contributions:

• Income tax: Withheld from the employee’s salary, calculated based on progressive rates ranging from 5% to 35%
• Social Insurance
• Health Insurance
• Accident Insurance
• Unemployment Insurance

Termination and severance

Termination in Vietnam must adhere to the Labor Code. To terminate an employee’s contract, employers must give proper notice. The notice period can vary based on the contents of the employment contract, as well as the contract type:

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

For lawful terminations after 12 months of employment, employees receive ½ months’ salary per year of service. In cases of redundancy, the amount increases to 1 month of salary per year, with a minimum of 2 months’ salary due. 

The termination process involves:

• A dialogue held by the employer
• A written termination decision issued by the employer
• The final payment, including severance and payment in place of unused leave, must be made within 7 to 14 working days 

If an employer is found to have carried out a wrongful termination, it may result in reinstatement orders, as well as compensation to the employee (minimum 2 months’ salary). 

Explore Payoneer Workforce Management in Vietnam

For companies engaging talent in Vietnam, understanding local labor laws, including contracts, taxation, insurance, and termination, can be complex and error-prone. Setting up a local entity is expensive, misclassifying workers can result in penalties, and managing payroll and statutory benefits increases compliance risks. 

Working with an EOR, like Payoneer Workforce Management, enables you to:

• Engage talent in Vietnam without needing to establish a local entity
• Onboard local talent quickly with compliance support
• Run payroll in a few clicks
• Manage benefits, timesheets, and more

Our unified platform aims to make engaging talent in Vietnam seamless and compliant.

With Payoneer Workforce Management, engaging talent in Vietnam is quick, secure, and scalable for startups through enterprise.

Speak to our experts today.

FAQs

1) What are the options for American companies hiring in Vietnam?

There are three main options for U.S. companies looking to make internationally-based hires in Vietnam:

1. Register a legal entity in Vietnam: This gives companies full control over the hiring process, but requires you to set up a local entity. The company remains responsible for all compliance-related matters and will need a team of experts in Vietnamese payroll, tax, and employment laws. 
2. Hire independent contractors: Ideal for projects with a duration of less than 36 months. However, if your contractor operates more like an employee, your company could face serious legal penalties and fines. 
3. Partner with an EOR: EORs legally employ workers on behalf of foreign companies. This saves the company from having to set up a legal entity in Vietnam, plus, they benefit from the local legal and compliance expertise of the EOR.

2) How much does recruitment cost in Vietnam?

Candidate sourcing through recruitment agencies or setting up a local entity often costs thousands upfront. 

A recruiter’s support ends once the candidate has been chosen, so you’ll then need to consider the additional costs of legally onboarding the employee, taking care of compliance, and more.

Partnering with an EOR like Payoneer Workforce Management is a cost-effective option, offering flexibility for U.S. companies. 

3) Does Vietnam allow foreign workers?

Yes. Foreign nationals may work in Vietnam, but they must have a valid work permit and a temporary residence card sponsored by the employer. The main permit categories include experts, managers, and highly skilled specialists.