The Asia-Pacific region has emerged as a hotspot for remote talent in recent years, thanks to its vibrant business environment, ongoing infrastructure investments, and large pool of educated, highly skilled professionals.
Vietnam, in particular, stands out as a top hiring location due to its strong tech workforce, competitive costs, and growing global reputation.
Located in Southeast Asia, Vietnam has 54 legally recognized ethnic groups and is the 16th most populous country globally. Its population of 98 million people is expected to hit 100 million in 2023, moving the country to 15th place. And it has a vibrant, young, and dynamic workforce of over 55 million people.
Vietnam has enjoyed consistent economic growth since introducing its 1986 “Doi Moi” policy, which shifted the economy from a controlled one to a more capitalist one. The country’s GDP growth reached an all-time high of 8.02% in 2022, making it the fastest-growing economy in Asia last year.
However, harnessing the opportunities Vietnam's workforce presents requires familiarity with the country's labor laws, including how regulators expect you to treat Vietnamese employees.
This article provides an overview of Vietnam's labor laws, so you can understand what's expected regarding employment contracts, compensation structure and benefits, work hours, and more.
An Overview of Labor Laws in Vietnam
As outlined in the VietNam Labor Code 2019, Vietnam’s labor laws are designed to protect the rights and interests of employers and employees and ensure their fair and equitable treatment in the workplace.
Here’s an overview of the code’s provisions:
- General Provisions: The Labor Code applies to workers, apprentices, trainees, and persons without an employment relationship. It also applies to foreign workers working in Vietnam. The code defines various terms such as "worker," "employer," "labor relations," and more.
- Employment Contracts: The code emphasizes the importance of employment contracts and details the contents, types, and conditions for such agreements. It also provides provisions for probationary periods.
- Rights and Obligations: Both workers and employers have specific rights. For instance, workers have the right to work, receive fair wages, join workers' representative organizations, refuse to work in the face of risks to life or health, and more. Employers have the right to recruit, manage, and supervise labor.
- Prohibited Acts: The code lists several prohibited acts in the labor sector, including discrimination at work, maltreatment of workers, exacting forced labor, employing untrained workers or those without national occupational qualifications, and more.
- Employment and Recruitment: This section defines what lawful employment and recruitment entail.
- Labor Management: Employers must maintain a labor management book on paper or in electronic form, report on the employment of workers, and more.
- Other Provisions: The code also covers vocational education and training, wages, working hours, rest periods, occupational safety and health, and more.
For a detailed understanding of the VietNam Labor Code 2019, you can refer to the official document provided by Vietnam’s Ministry of Labor, War Invalids, and Social Affairs.
Vietnamese Labor Laws: Employment Contracts
The country’s labor code states that an employer must enter into a contract with any prospective employee, and an electronic contract is just as valid as a physical one.
There are two types of employment contracts outlined in Vietnam’s Labor Code:
- Indefinite-term: This is an agreement in which neither party specifies a fixed term nor a predetermined time for the termination of the contract.
- Fixed-term: In this case, the two parties agree on the duration of the contract, which can run a maximum of 36 months. If the employee continues working after the contract ends, a new agreement must be signed within 30 days. Otherwise, the contract automatically converts to an indefinite-term agreement.
A fixed-term contract can be renewed only once. At this point, a third contract would be considered an indefinite-term agreement.
It’s also worth noting that the employment terms of oral contracts are valid for less than a month.
Working Hours
The labor code sets a standard workweek at a maximum of 48 hours, with no more than eight hours per day.
Overtime is allowed if both the employer and employee agree, but it must not exceed 12 hours in a single day, 40 hours in a month, or 200 hours in a year.
However, certain industries are permitted to go beyond the 200-hour annual limit, allowing up to 300 hours of overtime per year, as long as the arrangement complies with applicable regulations, except for employees who have disabilities or who are:
- Between 15 and 18
- Performing strenuous, hazardous, or dangerous work
- Seven or more months pregnant (or 6+ months pregnant for those working in highlands, remote areas, bordering areas, or islands)
- Female employees nursing children under the age of 12 months
Leave Policies
Annual Leave
Employees who have worked for a company for a year are entitled to paid annual leave as follows:
- 12 days off for employees working in standard conditions
- 14 days off for minors, disabled workers, and employees in hazardous roles
Workers are also entitled to an additional paid day off for every five years that they remain with the same employer.
Employees who’ve worked for their employer for less than a year receive paid leave on a pro-rata basis.
Workers also receive paid time off for Vietnam’s 11 public holidays.
Sick Leave
The Vietnamese Social Insurance Fund covers sick leave. The number of sick days an employee is entitled to is based on how long they’ve made social insurance contributions.
- Less than 15 years: 30 days
- 15-30 years: 40 days
- 30+ years: 60 days
Maternity and Paternity Leave
Mothers receive six months of maternity leave and an extra month for multiple births — one for each additional child born. They can also negotiate additional unpaid leave with their employer.
Male employees are entitled to five days of paid leave for regular births and seven days if a child is born via C-section. Leave is increased to 10-14 days for multiple births.
Compensation Structure
There are two types of minimum wage in Vietnam:
- Standard minimum wage of VND 2,340,000, which employers use to calculate workers' pay in state-owned organizations
- Regional minimum wage, which applies to workers in the private sector and is based on four regions outlined by the government
There are four regional minimum salary tiers, ranging from VND 3,250,000 to VND 4,680,000 per month. You can view the regions and wages here.
Allowances and Benefits
Employers also have the option to provide employees with additional benefits and allowances beyond those legally mandated by the government.
One of the perks most widely expected in Vietnam is the 13th-month salary, commonly known as the Tet bonus. Although not a legal requirement, it has become a cultural norm, especially for employees who’ve been with a company for over a year.
Employers typically pay this bonus around the Lunar New Year, and the amount can range from one month’s salary to more, depending on company policy and employee performance.
Other popular non-mandatory perks for Vietnamese workers include:
- Meal and transport vouchers
- Private medical, dental, and accident insurance
- Training and development programs
- Company vehicles
- Travel allowances
- Remote work or home office setup stipends
Typically, monetary and non-monetary benefits are subject to taxation, with the following exceptions:
- Expenditures on housing rent, electricity, water, and related services for employees that exceed 15% of their overall taxable income
- Life insurance and optional insurance coverage
- Compensation for a membership card granting the user access to golf clubs, tennis courts, healthcare, entertainment, etc.
- Phone stipends
- Allowances for stationery
- Uniform allowances, either in kind or cash, not surpassing VND 5 million
- Lunch allowances, not exceeding VND 730,000
- Funeral expenses, limited to the actual monthly salary for the year
- Wedding expenses, capped at the actual monthly salary for the year
- Transportation allowances
- Training stipends
- Employer assistance for employees facing a fatal disease or illness
- Employer-provided funding for annual round-trip air tickets for foreign employees working in Vietnam or Vietnamese employees stationed abroad to visit their home country
- Employer-sponsored coverage of tuition fees for the education of foreign employees' children in Vietnam or Vietnamese employees' children studying abroad
- Compensation paid by the employer for deploying or reassigning foreign employees in Vietnam
Social Insurance and Statutory Contributions
Employers are required to contribute a percentage of an employee’s gross salary to fund pensions, healthcare, unemployment benefits, and more. Here’s how those contributions break down:
- Social Insurance: 17.5%
- Health Insurance: 3%
- Unemployment Insurance: 1%
Work Permits for Foreign Employees
In 2024, Vietnam ranked eighth among the top destinations for global expatriates.
Foreign nationals need a work permit to work in Vietnam. Several different types of visas allow expats to be employed in the country, but the most common is a standard work permit known as an LD visa. This visa is valid for two years and is tied to the individual’s employer.
Termination Procedures and Severance Pay
Vietnamese labor law stipulates strict procedures for terminating employment. Notice depends on the type of employment contract and the reason for termination, but the standard notice periods are as follows:
- 3 working days for seasonal contracts
- 30 days for fixed-term contracts
- 45 days for indefinite-term contracts
Employers can also offer employees pay in lieu of notice.
Severance is typically provided to employees who are terminated for reasons such as incapacity, redundancy, or the expiration of their contract. The payment amount depends on the employee’s salary and how long they’ve worked for an employer. It’s typically half a month’s salary for each year of service.
Learn more about terminating international employees.
Compliance and Penalties
The Vietnamese government enforces strict labor regulations to protect workers' rights, and violations can result in significant penalties for employers, both financially and reputationally.
For instance, failing to pay employees on time, not providing mandatory benefits, or paying below the statutory minimum wage can incur fines ranging from VND 5 million to VND 50 million, depending on the number of affected employees.
Violations related to social insurance are also taken seriously. Employers who fail to comply with social insurance requirements can face monetary fines ranging from VND 500,000 to VND 75 million, depending on the severity of the violation.
Companies may also have to pay interest charges on overdue contributions, and repeated violations can lead to the suspension of business operations.
This is why it’s so critical for employers to stay informed about Vietnam’s labor laws and remain compliant.
Hire in Vietnam with RemoFirst
Navigating the intricacies of hiring and managing employees in foreign countries, particularly those with complex labor laws, can be daunting. However, an Employer of Record (EOR) like RemoFirst can simplify this process.
With RemoFirst, you gain a trusted partner who is well-versed in the nuances of international employment, and you can easily employ workers in 185+ countries, including Vietnam.
Book a demo to learn more.
