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Vietnam

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Employer of Record (EOR) in Vietnam

What you'll learn

  • Country Introduction
  • Employment Terms
  • Minimum Wage and Working Hours
  • Statutory Leave Laws
  • Termination Process
  • Additional Information
Vietnam Introduction

Vietnam is a country in southeast Asia bordered by China, Laos, and Cambodia. The country is divided into the highlands and Hong River Delta in the north, the Annamite Range and coastal lowlands in the center, and the Mekong Delta in the south. Vietnam is considered a developing country and one of the fastest growing economies of the 21st century.

Employment Terms

Types of Contracts

  • Fixed-Term Contract (from 3 to 36 months)
  • Indefinite
  • Freelance/Contractor (for hourly work, or project-based work)
  • Part-term contracts are possible (e.g. a 24-hour week) for both fixed-term and indefinite contracts, and follow the same rules governing entitlements, social security contributions etc.

Working Hours

The standard working hours in Vietnam are 8 hours per day, 48 hours per week. If an employee works beyond the maximum of 48 hours, they will be paid overtime as follows:

  • Regular days: an additional 50% of salary
  • Weekends: an additional 100% of salary
  • Holidays: an additional 200% of salary
  • Night shifts (10pm-6am): an additional 30% on the top of regular shift rate.
  • For overtime on a night shift, an additional 20% on the top of regular overtime rate (and night-shift)

The maximum overtime hours that can be worked are 12 hours per day, 40 hours per month, 200 hours per year.

Minimum Wage

Vietnam has 2 types of minimum wages: National and Regional

National minimum wage: The minimum wage in Vietnam is currently 1,800,000 Vietnamese Dong (VND) per month.

Regional minimum wages: For employees without professional training the wages are as follows:

  • Enterprises located in region I: VND 4,680,000 per month
  • Enterprises located in region II: VND 4,160,000 per month.
  • Enterprises located in region III: VND 3,630,000 per month.
  • Enterprises located in region IV: VND 3,250,000 per month.

For employees with professional training, add 7% to each amount above. Minimum wages are subject to change each year in July, and tend to increase.

Region definitions

  1. Region I: Including cities, districts, and towns with developed economies(such as Hanoi, HCMC, and central cities of province/prefecture)
  2. Regions II: Including districts, provinces, and suburban cities with relativelydeveloped economies (2-ranked cities of the province or prefecture).
  3. Region III: Including districts, and towns, with a decent economic level butlower than in Region II.
  4. Region IV: Including districts and towns with undeveloped, difficult, andextremely difficult economies (remaining regions and areas)

Probation Period

The maximum probation allowed in Vietnam is 2 months, or 60 days.

Probations are usually managed by a probation contract, which is not subject to labor law. All terms depend on agreements between employee and employer. During probation, there is no mandatory notice period and there is no notice given unless agreed in the contract.

13th Month Salary

In Vietnam, it’s common to pay employees a 13th-month salary, but not required. Overall, 99% of employers pay employees on this salary. This salary can be paid either at the end of the calendar year or on a rolling 12-month basis from the start of employment.

The amount paid is equivalent to 1 month of basic salary. If paid on a calendar-year basis and the employee has completed less than 12 months of service, the amount distributed is based on the number of months worked.

Taxes & Local Employment Costs

Please note that the contributions below all apply after probation is completed, as probation contracts are separate agreements that are not subject to labour law in Vietnam.

Employee Taxes

Income tax is based on the employee’s taxable income (gross salary minus deductions based on personal circumstances). Progressive tax bands range from 5% to 35%.

In addition to income tax, the employee must contribute to the following social security insurances from their salary:

  • Social insurance: 8% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)
  • Medical Insurance: 1.5% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)
  • Unemployment Insurance: 1% of gross salary, capped at 20 times the regional minimum wage (VND 4,680,000/month with our local partner

Employer Taxes & Contributions

  • Social insurance: 17% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)
  • Medical Insurance: 3% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)
  • Work Accident Insurance: 0.5% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)*
  • Unemployment Insurance: 1% of gross salary, capped at 20 times the regional minimum wage (VND 4,680,000/month with our local partner)
  • Labour Union Fee: 2% of gross salary, capped at 20 times the national minimum wage (VND 1,800,000/month)*
  • Health Check: Once a year, with the cost varying according to the employer’s choice of contribution (typically around USD 100)

*Note that these are often rolled up into social insurance for a total of 17.5%.

Types of Leave

Annual Leave

Employees are entitled to a minimum of 12 days of annual leave per year. This is distributed on a monthly basis for employees with less than 1 year of service.

Sick Leave

Employers are not required to pay for sick leave in Vietnam. Social and medical insurance usually cover necessary payment for sick leave. However, some companies may add sick leave as an additional benefit

In order to claim social insurance for sick leave, employees have to show official documentation from a doctor as proof.

The maximum amount of sick leave that can be taken is 30 days per month, 180 days per year.

Maternity Leave

Pre-birth Leave

In the case of female employees with prenatal care: they are entitled to take leave from work to go to prenatal care 5 times, 1 day each time. (If the employee is far from the medical examination and treatment facility or the pregnant woman has a medical condition or an abnormal pregnancy, she is entitled to 2 days off for each prenatal check-up.)

Post-birth Leave

The mother is entitled to 6 months of leave, though can voluntarily come back to work after 4 months. This cannot be enforced by the employer.

During this leave, the government pays approximately 100% of the salary used to contribute to social security over the previous 6 months (see Taxes and Contributions for more information). In addition, 80% of the hospital fees associated with the birth are reimbursed by the government.

In case the employee has twins or more and has to have surgery, she is entitled to an additional 14 working days off. If a female employee has a child less than 1 year of age, their contract cannot be terminated.

Paternity Leave

Employees are entitled to the following leave after becoming a father:

  • 5 working days with a normal birth of 1 child.
  • 7 working days when the wife gives birth to a child requiring surgery or gives birth to a child under 32 weeks old;
  • 10 working days for twins
  • For 3+ births, each additional child increases the entitlement an additional 3 working days, up to a maximum of 14 working days

Public Holidays

Public Holidays 2023 (17 days). If public holidays fall on a weekend, the following working day(s) will be given as time off.

  • 1st Jan to 2nd Jan 2023: Western New Year 2023.
  • 20th Jan to 26th Jan 2023: Lunar New Year 2023.
  • 29th April and 2nd May 2023: Hung Kings Commemoration Day (the 10th March - Lunar calendar)
  • 30th April to 1st May and 3rd May 2023: Liberation Day and International Labor Day
  • 2nd Sep to 4th Sep 2023: Vietnam's Independence Day.

Benefits

Summary

Employers in Vietnam can typically offer the following benefits:

  • Medical Insurance
  • 13th-month salary
  • Expense allowances (phone, internet, meals, uniform, transportation) - considered taxable

Private Pension

Employees do not typically contribute towards their own retirement schemes in Vietnam as there is a comprehensive state-run retirement scheme.

Termination Process

Notice Period

During probation, there is no mandatory notice period and there is no notice given unless agreed in the contract. For fixed-term contracts, if the contract is due to expire, the employer should announce this 15 days before the end date.

For termination before the contract end date, the employer must show evidence for a reason for termination, such as:

  • The person cannot do the job, causing loss/damage for the company as stipulated in registered Internal Regulations recognized by the law.
  • The person commits a crime.
  • The person resigns.
  • The company has an organizational structure change, a case of unforseen circumstances that prevents fulfillment of contract, or bankruptcy.

For fixed-term contracts terminated before the end date, the employer must give notice of termination at least 30 days. For indefinite contracts, the employer must give a notice of at least 45 days. If a female employee has a child less than 1 year of age, their contract cannot be terminated.

Statutory Payments

Employees should be paid any unused leave in the final salary, including any leave carried over from previous years.

If the contract is terminated illegally (without cause), employees can take the company to court, with a minimum payment of 2 months’ salary, increasing by 1 month per year of service. The maximum payment that can be awarded is the pay that would be due to the employee for the remainder of their contract.

Additional Information

While not mandatory, it is customary in Vietnam to pay a 13th-month salary bonus for the Lunar New Year or the end of the year.

OVERVIEW
Language(s):
Vietnamese
Currency:
Vietnamese Dong (VND)
Capital City:
Hanoi
Population:
98.2 Million
Cost of Living Rank:
87th
VAT (Valued Added Tax):
10%
Employer TaxES
23.5%
(estimated)

★  17% - Social Insurance

★  3% - Medical Insurance

★  0.5% - Work Accident Insurance

★  1% - Unemployment Insurance

★  2% - Labor Union Fee

Get Started in 3 Steps

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
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Available in 180+ countries
How Remofirst employs in Vietnam

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Vietnam get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Vietnam are paid on time in Vietnamese Dong (VND). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Vietnam, they can speak with our customer support team to get answers from our team of experts.